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Item 2 — Management's Discussion and Analysis
West Pharmaceutical Services, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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OVERVIEW
The following discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of our Company. It should be read in conjunction with our condensed consolidated financial statements and accompanying notes elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included in our 2025 Annual Report. Our historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks discussed in Part I, Item 1A of our 2025 Annual Report and in Part II, Item 1A of this Form 10-Q.
Throughout this section, references to “Notes” refer to the notes to our condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Form 10-Q, unless otherwise indicated.
Non-U.S. GAAP Financial Measures
For the purpose of aiding the comparison of our year-over-year results, we may refer to net sales and other financial results excluding the effects of changes in foreign currency exchange rates. Organic net sales exclude the impact from acquisitions and/or divestitures and translate the current-period reported sales of subsidiaries whose functional currency is other than USD at the applicable foreign exchange rates in effect during the comparable prior-year period. We may also refer to adjusted consolidated operating profit and adjusted consolidated operating profit margin, which exclude the effects of unallocated items. The unallocated items are not representative of ongoing operations, and generally include restructuring and related charges, certain asset impairments, and other specifically identified income or expense items. The re-measured results excluding effects from currency translation, the impact from acquisitions and/or divestitures, and excluding the effects of unallocated items are not in conformity with U.S. GAAP and should not be used as a substitute for the comparable U.S. GAAP financial measures. The non-U.S. GAAP financial measures are incorporated in our discussion and analysis as management uses them in evaluating our results of operations and believes that this information provides users with a valuable insight into our overall performance and financial position.
Our Operations
We are a leading global manufacturer in the design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. Our products include a variety of primary proprietary packaging, containment solutions, reconstitution and transfer systems, and drug delivery systems, as well as contract manufacturing, analytical lab services and integrated solutions. Our customers include leading biologic, generic, pharmaceutical, diagnostic, and medical device companies around the world. Our top priority is delivering quality products that meet the exact product specifications and quality standards customers require and expect. This focus on quality includes a commitment to excellence in manufacturing, scientific and technical expertise and management, which enables us to partner with our customers in order to deliver safe, effective drug products to patients quickly and efficiently.
Our business operations are organized into two global segments, Proprietary Products and West Vantage. Effective in the first quarter of 2026, the Company renamed its "Contract-Manufactured Products" reportable segment to "West Vantage™" to better align with its current strategic focus and offerings. This change in name does not affect the composition of the reportable segment, nor does it impact previously reported segment financial information. Our Proprietary Products reportable segment offers proprietary packaging, containment solutions and drug delivery systems, along with analytical lab services and other integrated services and solutions, primarily to biologic, generic and pharmaceutical drug customers. Our West Vantage reportable segment serves as a fully integrated business, focused on the design, manufacture, and automated assembly of complex devices, as well as combination product assembly and packaging, primarily for pharmaceutical, diagnostic, and medical device customers. We also maintain collaborations to share technologies and market products with affiliates in Japan and Mexico.
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Macroeconomic Factors
Beginning in 2025, the U.S. government imposed additional tariffs and trade restrictions on certain goods produced outside of the United States, and certain jurisdictions in which we operate have imposed or are considering imposing tariffs and restrictions on certain goods produced in the United States. In February 2026, the U.S. Supreme Court issued a ruling that certain tariffs imposed under the International Emergency Economics Power Act (“IEEPA”) were unauthorized. During the second quarter of 2026, the Company began applying for and receiving certain refunds for tariffs previously collected under the IEEPA. We continue to monitor this dynamic trade-policy environment, including the potential impact of existing or future tariffs, trade restrictions, retaliatory measures, available refund processes and mitigation actions. Based on information currently available, we do not expect these matters to have a material impact on our 2026 results.
We continue to monitor the conflict in the Middle East and related macroeconomic developments, including potential impacts on our operations, supply chain, transportation costs, energy costs and petroleum-based raw material inputs. While escalation or prolongation of the conflict could contribute to volatility or inflationary pressure in certain of these costs, based on information currently available and our corresponding mitigation efforts, we do not expect these matters to have a material impact on our results of operations, financial condition or liquidity. During the first six months of 2026, our Israel-based facilities continued to operate without material disruption.
Financial Performance Summary
The following tables present a reconciliation from U.S. GAAP to non-U.S. GAAP financial measures for the three and six months ended June 30, 2026:
($ in millions, except per share data) Operating Profit Income tax expense Net income Diluted EPS
Three months ended June 30, 2026 U.S. GAAP $ 179.1 $ 32.2 $ 154.0 $ 2.15
Unallocated items:
Restructuring and other charges(1) 1.5 0.3 1.2 0.02
M&A activities, including SmartDose® 3.5mL sale(2) 6.4 1.5 4.9 0.07
Cost-method investment activity(3) 3.5 — 3.5 0.05
Amortization of acquisition-related intangible assets(4) — — 0.4 —
Other(5) 6.9 1.4 5.4 0.08
Three months ended June 30, 2026 adjusted amounts (non-U.S. GAAP) $ 197.4 $ 35.4 $ 169.4 $ 2.37
($ in millions, except per share data) Operating profit Income tax expense Net income Diluted EPS
Six months ended June 30, 2026 U.S. GAAP $ 356.2 $ 76.9 $ 292.8 $ 4.07
Unallocated items:
Restructuring and other charges(1) 2.9 (11.3) 14.2 0.20
M&A activities, including SmartDose® 3.5mL sale(2) 8.3 1.9 6.4 0.09
Cost-method investment activity(3) 3.5 — 3.5 0.05
Amortization of acquisition-related intangible assets(4) — — 0.9 0.01
Other(5) 7.5 1.6 5.9 0.08
Six months ended June 30, 2026 adjusted amounts (non-U.S. GAAP) $ 378.4 $ 69.1 $ 323.7 $ 4.50
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The following tables present a reconciliation from U.S. GAAP to non-U.S. GAAP financial measures for the three and six months ended June 30, 2025:
($ in millions, except per share data) Operating Profit Income tax expense Net income Diluted EPS
Three months ended June 30, 2025 U.S. GAAP $ 153.7 $ 30.2 $ 131.8 $ 1.82
Unallocated items:
Restructuring and other charges(1) 1.6 0.4 1.2 0.02
Amortization of acquisition-related intangible assets(4) — — 0.5 —
Three months ended June 30, 2025 adjusted amounts (non-U.S. GAAP) $ 155.3 $ 30.6 $ 133.5 $ 1.84
($ in millions, except per share data) Operating Profit Income tax expense Net income Diluted EPS
Six months ended June 30, 2025 U.S. GAAP $ 260.7 $ 54.3 $ 221.6 $ 3.05
Unallocated items:
Restructuring and other charges(1) 19.4 2.4 17.0 0.23
Amortization of acquisition-related intangible assets(4) 0.2 — 1.1 0.01
Six months ended June 30, 2025 adjusted amounts (non-U.S. GAAP) $ 280.3 $ 56.7 $ 239.7 $ 3.29
(1)During the three and six months ended June 30, 2026, the Company recorded pre-tax charges of $1.5 million and $2.9 million, respectively, related to our two existing restructuring programs: (i) $1.0 million and $1.9 million, respectively, within other expense (income), related to acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan and (ii) $0.5 million and $1.0 million, respectively, within selling, general and administrative expenses, for professional services relating to our 2024 plan to optimize the legal structure of the Company and its subsidiaries. In addition, we recorded a one-time tax cost of $12.0 million associated with an internal legal entity restructuring which occurred in the first quarter of 2026. During the three and six months ended June 30, 2025, the Company recorded pre-tax charges of $1.6 million and $19.4 million, respectively, related to our two existing restructuring programs: (i) $0.2 million and $16.6 million, respectively, within other expense (income), related to severance, acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan and (ii) $1.4 million and $2.8 million, respectively, within selling, general and administrative expenses, for professional services relating to our 2024 plan to optimize the legal structure of the Company and its subsidiaries. In addition, we recorded income tax charges of $2.0 million in the first quarter of 2025, related primarily to withholding tax and capital gains incurred in executing our plan to optimize our legal structure.
(2)During the three and six months ended June 30, 2026, the Company recorded pre-tax charges of $6.4 million and $8.3 million, respectively, related to M&A activities, including the Company's agreement to sell its SmartDose® 3.5mL On-Body Delivery System and associated facilities to AbbVie. The Company recorded $1.3 million and $2.2 million, respectively, of the charges within other expense (income), related to employee benefit costs in connection with the sale agreement. The Company recorded the remaining $5.1 million and $6.1 million, respectively, within selling, general and administrative expenses, relating to professional services in connection with the sale agreement and other M&A activities.
(3)During the three and six months ended June 30, 2026, the Company recorded cost-method investment impairment charges of $3.5 million within other expense (income).
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(4)During the three and six months ended June 30, 2026, the Company recorded $0.4 million and $0.9 million, respectively, of amortization expense in association with an acquisition of increased ownership interest in Daikyo. During the three and six months ended June 30, 2025, the Company recorded $0.0 million and $0.2 million, respectively, of amortization expense within selling, general and administrative expenses associated with an intangible asset acquired during the second quarter of 2020. During the three and six months ended June 30, 2025, the Company recorded $0.5 million and $0.9 million, respectively, of amortization expense in association with an acquisition of increased ownership interest in Daikyo.
(5)Other includes nonrecurring professional fees associated with various items including certain legal matters and our cybersecurity incident from May 2026. These charges are recorded within selling, general and administrative expenses.
RESULTS OF OPERATIONS
We evaluate the performance of our segments based upon, among other things, segment net sales and operating profit. Segment operating profit excludes general corporate costs, which include executive and director compensation, stock-based compensation, certain pension and other retirement benefit costs, and other corporate facilities and administrative expenses not allocated to the segments. Also excluded are items that we consider not representative of ongoing operations. Such items are referred to as other unallocated items for which further information can be found above in the reconciliation from U.S. GAAP to non-U.S. GAAP financial measures.
Percentages in the following tables and throughout the Results of Operations section may reflect rounding adjustments.
Net Sales
The following table presents net sales, consolidated and by reportable segment, for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30, Percentage Change
($ in millions) 2026 2025 As-Reported Organic
Proprietary Products $ 722.6 $ 619.8 16.6 % 15.5 %
West Vantage 149.7 146.7 2.0 % 0.8 %
Consolidated net sales $ 872.3 $ 766.5 13.8 % 12.7 %
Consolidated net sales increased by $105.8 million, or 13.8%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $8.5 million. Excluding foreign currency translation effects, consolidated net sales for the three months ended June 30, 2026 increased by $97.3 million, or 12.7%, as compared to the same period in 2025. Volume and mix and sales price increases contributed $67.0 million and $30.3 million, respectively, of growth in the three months ended June 30, 2026.
Proprietary Products – Proprietary Products net sales increased by $102.8 million, or 16.6%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $6.7 million. Excluding foreign currency translation effects, net sales for the three months ended June 30, 2026 increased by $96.1 million, or 15.5%, as compared to the same period in 2025. Increased sales of HVP components and HVP delivery devices products contributed approximately 11 percentage points and 5 percentage points, respectively, of organic sales growth. Sales of HVP components increased $65.5 million, or 18.4%, excluding foreign currency translation effects. This increase in HVP components sales was driven by continued strong customer demand for both Biologics and GLP-1 products as well as sales price increases. Sales of HVP delivery devices increased $29.5 million, or 29.2%, excluding foreign currency translation effects. The increase in HVP delivery devices was driven primarily by customer demand for our self-injection devices, in particular SmartDose 3.5mL in advance of the July 2026 transaction closing, and sales price increases. Sales of Standard Products increased by $1.1 million, or 0.7%, excluding foreign currency translation adjustments.
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West Vantage – West Vantage net sales increased by $3.0 million, or 2.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $1.8 million. Excluding foreign currency translation effects, net sales for the three months ended June 30, 2026 increased by $1.2 million, or 0.8%, as compared to the same period in 2025. The increase was driven by sales price increases and increased production volumes at certain West Vantage sites. These increases were partially offset by our revenue growth being negatively impacted by approximately $7 million from production downtime associated with the Company’s May 2026 cyber incident.
The following table presents net sales, consolidated and by reportable segment, for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30, Percentage Change
($ in millions) 2026 2025 As-Reported Organic
Proprietary Products $ 1,416.9 $ 1,182.8 19.8 % 16.5 %
West Vantage 300.3 281.7 6.6 % 3.4 %
Consolidated net sales $ 1,717.2 $ 1,464.5 17.3 % 13.9 %
Consolidated net sales increased by $252.7 million, or 17.3%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $48.5 million. Excluding foreign currency translation effects, consolidated net sales for the six months ended June 30, 2026 increased by $204.2 million, or 13.9%, as compared to the same period in 2025. Volume and mix and sales price increases contributed $149.7 million and $54.5 million, respectively, of growth in the six months ended June 30, 2026.
Proprietary Products – Proprietary Products net sales increased by $234.1 million, or 19.8%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $39.5 million. Excluding foreign currency translation effects, net sales for the six months ended June 30, 2026 increased by $194.6 million, or 16.5%, as compared to the same period in 2025. Sales of HVP components increased $136.9 million, or 20.4%, excluding foreign currency translation effects. The increase in HVP components sales was driven by continued strong customer demand for Biologics products and GLP-1 products as well as sales price increases. Sales of HVP delivery devices increased $55.8 million, or 28.3%, excluding foreign currency translation effects. The increase in HVP delivery devices was driven by higher market demand for self-injection devices and sales price increases. Sales of Standard Products increased by $1.9 million, or 0.6%, excluding foreign currency translation adjustments.
West Vantage – West Vantage net sales increased by $18.6 million, or 6.6%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $9.0 million. Excluding foreign currency translation effects, net sales for the six months ended June 30, 2026 increased by $9.6 million, or 3.4%, as compared to the same period in 2025. The increase was driven by sales price increases, partially offset by our revenue growth being negatively impacted by approximately $7 million from production downtime associated with the Company’s May 2026 cyber incident.
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Gross Profit
The following table presents gross profit and related gross profit margins, consolidated and by reportable segment:
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Proprietary Products:
Gross profit $ 308.0 $ 248.3 $ 581.1 $ 458.5
Gross profit margin 42.6 % 40.1 % 41.0 % 38.8 %
West Vantage:
Gross profit $ 21.2 $ 25.6 $ 44.5 $ 47.3
Gross profit margin 14.2 % 17.5 % 14.8 % 16.8 %
Consolidated gross profit $ 329.2 $ 273.9 $ 625.6 $ 505.8
Consolidated gross profit margin 37.7 % 35.7 % 36.4 % 34.5 %
Consolidated - Consolidated gross profit increased by $55.3 million, or 20.2%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $2.9 million for the three months ended June 30, 2026, as compared to the same period in 2025. Consolidated gross profit margin increased by 2.0 percentage points for the three months ended June 30, 2026, as compared to the same period in 2025.
Consolidated gross profit increased by $119.8 million, or 23.7%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $19.1 million for the six months ended June 30, 2026, as compared to the same period in 2025. Consolidated gross profit margin increased by 1.9 percentage points for the six months ended June 30, 2026, as compared to the same period in 2025.
Proprietary Products - Proprietary Products gross profit increased by $59.7 million, or 24.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $2.8 million. Proprietary Products gross profit margin increased by 2.5 percentage points for the three months ended June 30, 2026, as compared to the same periods in 2025, due primarily to favorable sales mix of HVP components, including GLP-1 products, as well as sales price increases. These were partially offset by inflationary pressures and plant costs.
Proprietary Products gross profit increased by $122.6 million, or 26.7%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $17.7 million. Proprietary Products gross profit margin increased by 2.2 percentage points for the six months ended June 30, 2026, as compared to the same periods in 2025, due primarily to favorable sales mix of HVP, including GLP-1 products, and sales price increases.
West Vantage - West Vantage gross profit decreased by $4.4 million, or 17.2%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $0.1 million. West Vantage gross profit margin decreased by 3.3 percentage points for the three months ended June 30, 2026, as compared to the same period in 2025, due to inefficiencies associated with production downtime related to the Company’s May 2026 cyber incident, as well as inflationary pressures on our plant spend, partially offset by sales price increases.
West Vantage gross profit decreased by $2.8 million, or 5.9%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $1.4 million. West Vantage gross profit margin decreased by 2.0 percentage points for the six months ended June 30, 2026, as compared to the same period in 2025, due to inefficiencies associated with production downtime related to the Company’s May 2026 cyber incident, as well as inflationary pressures on our plant spend, partially offset by sales price increases.
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Research and Development (“R&D”) Costs
The following table presents consolidated R&D costs:
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Consolidated R&D costs $ 19.7 $ 19.1 $ 35.5 $ 35.4
Consolidated R&D costs increased by $0.6 million, or 3.1%, and $0.1 million, or 0.3%, for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increase in R&D spend is associated with our investment in (1) primary injectables in elastomeric components, formulation development & packaging and (2) drug containment systems, self-injection systems, and drug administration consumables.
All of the R&D costs incurred in the three and six months ended June 30, 2026 and 2025 related to Proprietary Products.
Selling, General and Administrative (“SG&A”) Costs
The following table presents SG&A costs, consolidated and by reportable segment and corporate and unallocated items:
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Proprietary Products $ 69.5 $ 61.5 $ 134.5 $ 121.8
West Vantage 8.3 7.0 16.1 14.6
Corporate and unallocated items 39.8 27.4 66.5 47.5
Consolidated SG&A costs $ 117.6 $ 95.9 $ 217.1 $ 183.9
SG&A as a % of net sales 13.5 % 12.5 % 12.6 % 12.6 %
Consolidated - Consolidated SG&A costs increased by $21.7 million, or 22.6%, for the three months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of $0.6 million.
Consolidated SG&A costs increased by $33.2 million, or 18.1%, for the six months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of $2.8 million.
Proprietary Products - Proprietary Products SG&A costs increased by $8.0 million, or 13.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of $0.6 million, due primarily to increased salary and wages due to headcount increases and annual inflationary increases, higher annual incentive compensation from a higher projected incentive payout compared to the same period in 2025 and increased software license and IT costs, which contributed approximately 7%, 4% and 2%, respectively, of the SG&A cost increases.
Proprietary Products SG&A costs increased by $12.7 million, or 10.4%, for the six months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of $2.6 million. Proprietary Products SG&A costs increased due primarily to increased salary and wages due to headcount increases and annual inflationary increases and higher annual incentive compensation from a higher projected incentive payout compared to the same period in 2025, which contributed approximately 6% and 3%, respectively, of the SG&A cost increases.
West Vantage - West Vantage SG&A costs increased by $1.3 million, or 18.6%, for the three months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of less than $0.1 million, due primarily to higher annual incentive compensation from a higher projected incentive payout compared to the same period in 2025, increased charges related to computer hardware and increased salary and wages due to annual inflationary increases.
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West Vantage SG&A costs increased by $1.5 million, or 10.3%, for the six months ended June 30, 2026, as compared to the same period in 2025, including an unfavorable foreign currency translation impact of $0.2 million, due primarily to higher annual incentive compensation from a higher projected incentive payout compared to the same period in 2025 and increased salary and wages due to annual inflationary increases.
Corporate and unallocated items - Corporate and unallocated SG&A costs increased by $12.4 million, or 45.3%, for the three months ended June 30, 2026, as compared to the same period in 2025. During the three months ended June 30, 2026, the Company recorded expense within SG&A on the following unallocated items: (i) expense of $6.9 million related to nonrecurring professional fees associated with various items including certain legal matters and our cybersecurity incident from May 2026 and (ii) expense of $5.1 million relating to professional services in connection with the Company's agreement to sell its SmartDose® 3.5mL On-Body Delivery System and other M&A activities, which were not recorded during the same period in 2025. Additionally, the Company recorded additional charges related to stock-based compensation in the three months ended June 30, 2026, as compared to the same period in 2025, of approximately $3.5 million related to improved financial performance metrics and increased mark to market charges. See the Financial Performance Summary section above for further details.
Corporate and unallocated SG&A costs increased by $19.0 million, or 40.0%, for the six months ended June 30, 2026, as compared to the same period in 2025. During the six months ended June 30, 2026, the Company recorded expense within SG&A on the following unallocated items: (i) expense of $7.5 million related to nonrecurring professional fees associated with various items including certain legal matters and our cybersecurity incident from May 2026 and (ii) expense of $6.1 million relating to professional services in connection with the Company's agreement to sell its SmartDose® 3.5mL On-Body Delivery System and other M&A activities, which were not recorded during the same period 2025. Additionally, the Company recorded additional charges related to stock-based compensation in the six months ended June 30, 2026, as compared to the same period in 2025, of approximately $9 million related to improved financial performance metrics and increased mark to market charges. See the Financial Performance Summary section above for further details.
Other Expense (Income)
The following table presents other income and expense items, consolidated and by reportable segment, corporate and unallocated items:
Expense (Income) Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Proprietary Products $ 6.9 $ 6.0 $ 10.0 $ 9.0
West Vantage — 0.8 (0.1) 1.4
Corporate and unallocated 5.9 (1.6) 6.9 15.4
Consolidated other expense (income) $ 12.8 $ 5.2 $ 16.8 $ 25.8
Other expense and income items consist of restructuring and related charges, foreign exchange transaction gains and losses, contingent consideration, gains and losses on oil hedges, asset impairments and miscellaneous income and charges.
Consolidated - Consolidated other expense (income) changed by $7.6 million for the three months ended June 30, 2026, as compared to the same period in 2025, due to the factors described below.
Consolidated other expense (income) changed by $9.0 million for the six months ended June 30, 2026, as compared to the same period in 2025, due to the factors described below.
Proprietary Products - Proprietary Products other expense (income) changed by $0.9 million for the three months ended June 30, 2026, as compared to the same period in 2025, due primarily to increased contingent consideration expense and increased losses on oil hedges recorded in the three months ended June 30, 2026, as compared to the same period in 2025.
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Proprietary Products other expense (income) changed by $1.0 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to increased contingent consideration expense in the six months ended June 30, 2026, as compared to the same period in 2025, partially offset by gains on oil hedges being recorded in the six months ended June 30, 2026, as compared losses on oil hedges being recorded in the same period in 2025.
West Vantage - West Vantage other expense (income) changed by $0.8 million for the three months ended June 30, 2026, as compared to the same period in 2025, due primarily to foreign exchange gains being recorded in the three months ended June 30, 2026, as compared to foreign exchange losses being recorded in the same period in 2025.
West Vantage other expense (income) changed by $1.5 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to foreign exchange gains being recorded in the six months ended June 30, 2026, as compared to foreign exchange losses being recorded in the same period in 2025.
Corporate and unallocated items - Corporate and unallocated items changed by $7.5 million for the three months ended June 30, 2026, as compared to the same period in 2025, due primarily to the Company recording restructuring and other charges of $2.3 million within the three months ended June 30, 2026, as compared to $0.2 million being recorded during the same period in 2025. The Company's 2026 restructuring and other charges within other expense (income) were (i) $1.0 million related to acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan and (ii) $1.3 million related to employee benefit costs in connection with the Company's agreement to sell its SmartDose® 3.5mL On-Body Delivery System and associated facilities to AbbVie. The Company's 2025 restructuring and other charges within other expense (income) were $0.2 million related to severance, acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan. Additionally, the Company recorded cost-method investment impairment charges of $3.5 million during the three months ended June 30, 2026 that did not occur in the same period in 2025.
Corporate and unallocated items changed by $8.5 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to the decrease of recorded restructuring and other charges within other expense. The Company's 2025 restructuring and other charges within other expense (income) were $16.6 million related to severance, acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan. The Company's 2026 restructuring and other charges within other expense (income) were (i) $1.9 million related to severance, acceleration of depreciation and lease costs in connection with the Company's January 2025 restructuring plan and (ii) $2.2 million related to employee benefit costs in connection with the Company's agreement to sell its SmartDose® 3.5mL On-Body Delivery System and associated facilities to AbbVie. The decrease in restructuring and other charges was partially offset by the Company recording cost-method investment impairment charges of $3.5 million during the six months ended June 30, 2026 that did not occur in the same period in 2025.
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Operating Profit
The following table presents adjusted operating profit, consolidated and by reportable segment, corporate and unallocated items:
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Proprietary Products $ 211.9 $ 161.7 $ 401.1 $ 292.3
West Vantage 12.9 17.8 28.5 31.3
Corporate and unallocated items (45.7) (25.8) (73.4) (62.9)
Consolidated operating profit $ 179.1 $ 153.7 $ 356.2 $ 260.7
Consolidated operating profit margin 20.5 % 20.1 % 20.7 % 17.8 %
Unallocated items 18.3 1.6 22.2 19.6
Adjusted consolidated operating profit $ 197.4 $ 155.3 $ 378.4 $ 280.3
Adjusted consolidated operating profit margin 22.6 % 20.3 % 22.0 % 19.1 %
Consolidated - Consolidated operating profit increased by $25.4 million, or 16.5%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $2.1 million for the three months ended June 30, 2026, as compared to the same period in 2025.
Consolidated operating profit increased by $95.5 million, or 36.6%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $15.5 million for the six months ended June 30, 2026, as compared to the same period in 2025.
Proprietary Products - Proprietary Products operating profit increased by $50.2 million, or 31.0%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $2.0 million, due to the factors described above, most notably favorable sales mix of HVP components, including GLP-1 products.
Proprietary Products operating profit increased by $108.8 million, or 37.2%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $14.4 million, due to the factors described above, most notably favorable sales mix of HVP components, including GLP-1 products.
West Vantage - West Vantage operating profit decreased by $4.9 million, or 27.5%, for the three months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $0.1 million, due to the factors described above, most notably inefficiencies associated with production downtime related to the Company’s May 2026 cyber incident, as well as inflationary pressures on our plant spend.
West Vantage operating profit decreased by $2.8 million, or 8.9%, for the six months ended June 30, 2026, as compared to the same period in 2025, including a favorable foreign currency translation impact of $1.1 million, due to the factors described above, most notably inefficiencies associated with production downtime related to the Company’s May 2026 cyber incident, as well as inflationary pressures on our plant spend.
Corporate and unallocated - Excluding the unallocated items, Corporate costs increased by $3.2 million, or 13.2%, for the three months ended June 30, 2026, as compared to the same period in 2025, due to the factors described above, most notably the increase in expense related to stock-based compensation.
Excluding the unallocated items, Corporate costs increased by $7.9 million, or 18.2%, for the six months ended June 30, 2026, as compared to the same period in 2025, due to the factors described above, most notably the increase in expense related to stock-based compensation.
For unallocated items, please refer to the Financial Performance Summary section above for details.
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Interest Expense, Net and Interest Income
The following table presents interest expense, net, by significant component:
Three Months Ended June 30, Six Months Ended June 30,
($ in millions) 2026 2025 2026 2025
Interest expense $ 3.8 $ 4.1 $ 7.5 $ 8.3
Capitalized interest (1.2) (4.0) (3.0) (7.8)
Interest expense, net $ 2.6 $ 0.1 $ 4.5 $ 0.5
Interest income $ (3.8) $ (3.6) $ (8.9) $ (7.7)
Interest expense, net, increased by $2.5 million and $4.0 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, due primarily to a decrease in capitalized interest, partially offset by a decline in interest rates on the Company's Term Loan in the three and six months ended June 30, 2026, as compared to the same periods in 2025.
Interest income increased by $0.2 million and $1.2 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025, due primarily to the Company having a higher average cash balance in three and six months ended June 30, 2026, as compared to the same periods in 2025.
Other Nonoperating Expense (Income)
Other nonoperating expense (income) was $0.2 million and $0.4 million for the three and six months ended June 30, 2026 and 2025, respectively.
Income Tax Expense
The provision for income taxes was $32.2 million and $30.2 million for the three months ended June 30, 2026 and 2025, respectively, and the effective tax rate was 17.9% and 19.2%, respectively. The decrease in the effective tax rate for the three months ended June 30, 2026, as compared to the same period in 2025, primarily reflects the impact of favorable changes in our geographic mix of earnings.
The provision for income taxes was $76.9 million and $54.3 million for the six months ended June 30, 2026 and 2025, respectively, and the effective tax rate was 21.3% and 20.3%, respectively. The increase in the effective tax rate for the six months ended June 30, 2026, as compared to the same period in 2025, is primarily due to a one-time tax cost of $12.0 million associated with an internal legal entity restructuring which occurred in the first quarter of 2026, partially offset by the impact of favorable changes in our geographic mix of earnings.
Equity in Net Income of Affiliated Companies
Equity in net income of affiliated companies was $6.1 million and $5.0 million for the three months ended June 30, 2026 and 2025, respectively. Equity in net income of affiliated companies increased by $1.1 million for the three months ended June 30, 2026, as compared to the same period in 2025, due primarily to favorable operating results at Daikyo, partially offset by unfavorable operating results at the Mexico affiliates.
Equity in net income of affiliated companies was $9.5 million and $8.4 million for the six months ended June 30, 2026 and 2025, respectively. Equity in net income of affiliated companies increased by $1.1 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to favorable operating results at Daikyo, partially offset by unfavorable operating results at the Mexico affiliates.
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The following table presents cash flow data for the six months ended June 30:
($ in millions) 2026 2025
Net cash provided by operating activities $ 213.9 $ 306.5
Net cash used in investing activities $ (85.9) $ (146.5)
Net cash used in financing activities $ (473.5) $ (161.9)
Net Cash Provided by Operating Activities – Net cash provided by operating activities decreased by $92.6 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to fluctuations in working capital and increased incentive payments, partially offset by improved operating results.
Net Cash Used in Investing Activities – Net cash used in investing activities decreased by $60.6 million for the six months ended June 30, 2026, as compared to the same period in 2025, due to a decrease in capital expenditures.
Net Cash Used in Financing Activities – Net cash used in financing activities increased by $311.6 million for the six months ended June 30, 2026, as compared to the same period in 2025, due primarily to an increase in purchases under our share repurchase programs.
Liquidity and Capital Resources
The table below presents selected liquidity and capital measures:
($ in millions) June 30, 2026 December 31, 2025
Cash and cash equivalents $ 435.8 $ 791.3
Accounts receivable, net $ 712.0 $ 574.4
Inventories $ 447.4 $ 443.9
Accounts payable $ 252.7 $ 253.7
Debt $ 202.9 $ 202.8
Equity $ 2,990.2 $ 3,176.0
Working capital $ 1,167.0 $ 1,323.3
Cash and cash equivalents include all instruments that have maturities of ninety days or less when purchased. Working capital is defined as current assets less current liabilities.
Cash and cash equivalents – Our cash and cash equivalents balance at June 30, 2026 consisted of cash held in depository accounts with banks around the world and cash invested in high-quality, short-term investments. The cash and cash equivalents balance at June 30, 2026 included $73.9 million of cash held by subsidiaries within the U.S., and $361.9 million of cash held by subsidiaries outside of the U.S. During the six months ended June 30, 2026, we purchased 1,760,610 shares of our common stock under the share repurchase program at a cost of $454.3 million, or an average price of $258.03 per share.
Working capital – Working capital at June 30, 2026 decreased by $156.3 million, or 11.8%, as compared to December 31, 2025, which includes a decrease of $7.2 million due to foreign currency translation. Excluding the impact of currency exchange rates, cash and cash equivalents decreased by $345.6 million, while accounts receivable increased by $144.5 million.
The decrease in cash and cash equivalents was due to share repurchases and capital expenditures during the six months ended June 30, 2026, partially offset by cash from operations. The increase in accounts receivable was due to increased net sales leading up to the June 30, 2026 balance sheet date as compared to the December 31, 2025 balance sheet date.
Debt and credit facilities – The total debt balance of $202.9 million at June 30, 2026 is consistent with the total debt balance of $202.8 million at December 31, 2025.
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Our sources of liquidity include our multi-currency revolving credit facility. At June 30, 2026, we had no outstanding borrowings under the multi-currency revolving credit facility. At June 30, 2026, the borrowing capacity available under the multi-currency revolving credit facility, including outstanding letters of credit of $2.3 million, was $497.7 million. We do not expect any significant limitations on our ability to access this source of funds.
Pursuant to the financial covenants in our debt agreements, we are required to maintain established interest coverage ratios and not to exceed established leverage ratios. In addition, the agreements contain other customary covenants, none of which we consider restrictive to our operations. At June 30, 2026, we were in compliance with all of our debt covenants.
We believe that cash on hand and cash generated from operations, together with availability under our multi-currency revolving credit facility, will be adequate to address our foreseeable liquidity needs based on our current expectations of our business operations, capital expenditures and scheduled payments of debt obligations.
Commitments and Contractual Obligations
A summary of future material cash payments resulting from commitments and contractual obligations was provided in our 2025 Annual Report. During the three months ended June 30, 2026, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.
OFF-BALANCE SHEET ARRANGEMENTS
At June 30, 2026, we had no off-balance sheet financing arrangements other than unconditional purchase obligations incurred in the ordinary course of business and outstanding letters of credit related to various insurance programs, as noted in our 2025 Annual Report.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no changes to the Critical Accounting Policies and Estimates disclosed in Part II, Item 7 of our 2025 Annual Report.
NEW ACCOUNTING STANDARDS
For information on new accounting standards see Note 2, New Accounting Standards, within Item 1 of this report.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this Form 10-Q contains some forward-looking statements that are based on management’s beliefs and assumptions, current expectations, estimates and forecasts. We also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Such statements provide our current expectations or forecasts of future events. They do not relate strictly to historical or current facts. We have attempted, wherever possible, to identify forward-looking statements by using words such as “plan,” “expect,” “believe,” “intend,” “will,” “estimate,” “continue” and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance, as well as our strategy for growth, product development, market position and expenditures. All statements that address operating performance or events or developments that we expect or anticipate will occur in the future - including statements relating to sales and earnings per share growth, cash flows or uses, and statements expressing views about future operating results - are forward-looking statements.
Forward-looking statements are based on current expectations of future events. The forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events and operating performance, and speak only as of their dates. Investors should realize that, if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements.
The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements:
•sales demand and our ability to meet that demand;
•competition from other providers in our businesses, including customers’ in-house operations, and from lower-cost producers in emerging markets, which can impact unit volume, price and profitability;
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•customers’ changing inventory requirements and manufacturing plans that alter existing orders or ordering patterns for the products we supply to them;
•interruptions or weaknesses in our supply chain, including from reasons beyond our control such as extreme weather, longer-term climate changes, natural disasters, pandemic, war, accidental damage, or unauthorized access to our or our customers’ information and systems, which could cause delivery delays or restrict the availability of raw materials, key purchased components and finished products;
•the timing, regulatory approval and commercial success of customer products that incorporate our products and systems;
•whether customers agree to incorporate our products and delivery systems with their new and existing drug products, the ultimate timing and successful commercialization of those products and systems, which involves substantial evaluations of the functional, operational, clinical and economic viability of our products, and the rate, timing and success of regulatory approval for the drug products that incorporate our components and systems;
•the timely and adequate availability of filling capacity, which is essential to conducting definitive stability trials and the timing of first commercialization of customers’ products in Crystal Zenith prefilled syringes;
•profitability, or mix, of the products sold in any reporting period, including lower-than-expected sales growth of our high-value proprietary product offerings;
•maintaining or improving production efficiencies and overhead absorption;
•dependence on third-party suppliers and partners, some of which are single-source suppliers of critical materials and products, including our Japanese partner and affiliate, Daikyo;
•the loss of key personnel or highly skilled employees;
•the availability and cost of skilled employees required to meet increased production, managerial, research and other needs, including professional employees and persons employed under collective bargaining agreements;
•the successful and timely implementation of price increases necessary to offset rising production costs, including raw material prices, particularly petroleum-based raw materials;
•the cost and progress of development, regulatory approval and marketing of new products;
•our ability to obtain and maintain licenses in any jurisdiction in which we do business;
•the relative strength of USD in relation to other currencies, particularly the Euro, SGD, the Danish Krone, Yen, Colombian Peso, Brazilian Real, and the South Korean Won; and
•the potential adverse effects of global healthcare legislation on customer demand, product pricing and profitability.
This list sets forth many, but not all, of the factors that could affect our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all of the factors and should not consider this list to be a complete statement of all potential risks and uncertainties. For further discussion of these and other factors, see the risk factors disclosed in Part I, Item 1A of our 2025 Annual Report as well as Part II, section 1A of this quarterly report.
Except as required by law or regulation, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.