EXTON, Pa., July 29, 2021 /PRNewswire/ -- West
Pharmaceutical Services, Inc. (NYSE: WST) today announced its
financial results for the second-quarter 2021 and updated full-year
2021 financial guidance.
Second-Quarter 2021 Summary (comparisons to prior-year
period)
- Net sales of $723.6 million grew
37.3%; organic sales growth was 30.6%.
- Reported-diluted EPS of $2.47
increased 104%.
- Adjusted-diluted EPS of $2.46
increased 97%.
- Company is raising full-year 2021 net sales guidance to a new
range of $2.760 billion to
$2.785 billion, compared to a prior
range of $2.630 billion to
$2.655 billion.
- Company is raising full-year 2021 adjusted-diluted EPS guidance
to a new range of $8.05 to
$8.20, compared to a prior range of
$6.95 to $7.10.
"Adjusted-diluted EPS" and "organic sales growth" are Non-U.S.
GAAP measurements. See discussion under the heading "Non-U.S.
GAAP Financial Measures" in this release.
"Our strong second quarter performance was driven by continued
momentum in organic sales growth in both our base business as well
as increased demand for our products associated with COVID-19
vaccines," said Eric M. Green,
President and Chief Executive Officer. "Guided by our
mission, our dedicated team members remain focused on meeting the
increased demand for our high-value product (HVP) components.
Our market-led strategy coupled with our scientific leadership and
regulatory insights in primary packaging and delivery of injectable
drugs have resonated with our customers, resulting in a high
participation rate on newly approved molecular entities, especially
large molecule therapies. Over the past year and half, we have
accelerated capital spending and expanded global HVP manufacturing
capacity. Based on growing future demand from our customers,
we are announcing another tranche of capital spending to expand HVP
capacity that we expect will be ready for production in 2022.
Given the strong first half of the year, we are raising our
full-year financial guidance."
Proprietary Products Segment
Net sales grew by 47.0% to $587.3
million. Organic sales growth was 39.3%, with currency
translation increasing sales growth by 770 basis points. HVP sales
represented over 70% of segment sales and generated double-digit
organic sales growth, led by customer demand for
Westar®, NovaPure®, FluroTec®,
Daikyo® and Envision® components.
The Biologics and Pharma market units had strong double-digit
organic sales growth, and the Generics market unit had low-single
digit organic sales growth.
Contract-Manufactured Products Segment
Net sales grew by 6.7% to $136.4
million. Organic sales growth was 3.2% with currency
translation increasing sales growth by 350 basis points.
Segment performance was led by sales of healthcare-related
injection and diagnostic devices.
Financial Highlights (first six months of 2021)
Operating cash flow was $233.1
million, an increase of 13.6%. Capital expenditures
were $111.6 million, an increase of
61% over the same period last year. Free cash flow (operating
cash flow minus capital expenditures) was $121.5 million, a decrease of 10.7%.
During the first-half 2021, the Company repurchased 479,000
shares for $137.1 million at an
average share price of $286.23 under
its share repurchase program.
Our capital and financial resources, including overall
liquidity, remain strong. We believe that cash on hand and
cash generated from operations, together with availability under
our $300.0 million 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.
Full-Year 2021 Financial Guidance
- Full-year 2021 net sales are expected to be in a range of
$2.760 billion to $2.785 billion, compared to a prior guidance
range of $2.630 billion to
$2.655 billion.
-
- Organic sales growth is expected to be in a range of 24% to
25%, compared to a prior range of 19% to 20%.
- Net sales guidance includes an estimated full-year 2021 benefit
of $80 million based on current
foreign exchange rates, compared to a prior estimated benefit of
$75 million.
- Full-year 2021 adjusted-diluted EPS is expected to be in a
range of $8.05 to $8.20, compared to a prior range of $6.95 to $7.10.
-
- Full-year adjusted-diluted EPS guidance range includes an
estimated benefit of approximately $0.27 based on current foreign currency exchange
rates, compared to a prior estimated benefit of $0.23.
- The revised guidance includes a $0.24 EPS positive impact from first-half 2021
tax benefits from stock-based compensation.
- For the remainder of the year, our EPS guidance range assumes a
tax rate of 23% and does not include potential tax benefits from
stock-based compensation. Any tax benefits associated with
stock-based compensation beyond those recorded in the first-half
2021 would provide a positive adjustment to our full-year EPS
guidance.
Second-Quarter 2021 Conference Call
The Company will
host a conference call to discuss the results and business
expectations at 9:00 a.m. Eastern
Time today. To participate on the call please dial
877-930-8295 (U.S.) or 253-336-8738 (International). The conference
ID is 3089097.
A live broadcast of the conference call will be available at the
Company's website, www.westpharma.com, in the "Investors"
section. Management will refer to a slide presentation during
the call, which will be made available on the day of the call.
To view the presentation, select "Presentations" in the
"Investors" section of the Company's website.
An online archive of the broadcast will be available at the
website three hours after the live call and will be available
through Thursday, August 5, 2021, by
dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and
entering conference ID 3089097.
Forward-Looking Statements
Certain forward-looking
statements appear in this release and include such words as
"raising," "believe," "potential," "increased," "future," "remain,"
"growing," "expect," "foreseeable," "expected," "to be,"
"includes," "estimated," "assumes," "would provide," and other
similar terminology. These statements reflect management's
current expectations regarding future events and operating
performance and speak only as of the date of this release.
There is no certainty that actual results will be achieved in-line
with current expectations. These forward-looking statements
involve a number of risks and uncertainties. The following
are some of the factors that could cause our actual results to
differ materially from those expressed in or underlying our
forward-looking statements: the duration and severity of the global
COVID-19 pandemic, including prevailing economic conditions and
general uncertainties relating thereto that may be unknown and
unforeseeable; customers' changing inventory requirements and
manufacturing plans and customer decisions to move forward with our
new products and product categories, including any
re-prioritization of product needs due to COVID-19; other potential
impacts from COVID-19, including interruptions or weaknesses in our
supply chain, illness in our workforce and access to transport for
our products; average profitability, or mix, of the products we
sell; dependence on third-party suppliers and partners; increased
raw material costs; fluctuations in currency exchange; and the
ability to meet development milestones with key customers.
This list of important factors is not all inclusive. For a
description of certain additional factors that could cause the
Company's future results to differ from those expressed in any such
forward-looking statements, see Part I Item 1A , entitled "Risk
Factors," in the Company's Annual Report on Form 10-K for the year
ended December 31, 2020.
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.
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 the U.S.
Dollar at the applicable foreign exchange rates in effect during
the comparable prior-year period. We may also refer to
financial results excluding the effects of unallocated items.
The re-measured results excluding effects from currency translation
and excluding the effects of unallocated items are not in
conformity with U.S. generally accepted accounting principles
("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 into our discussion and
analysis as management uses them in evaluating our results of
operations and believes that this information provides users a
valuable insight into our overall performance and financial
position. A reconciliation of these adjusted Non-U.S. GAAP
measures to the comparable U.S. GAAP financial measures is included
in the accompanying tables.
WEST
PHARMACEUTICAL SERVICES, INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(UNAUDITED)
|
(in millions,
except per share data)
|
|
|
Three Months
Ended
June
30,
|
Six Months Ended
June 30,
|
|
2021
|
2020
|
2021
|
2020
|
Net sales
|
$723.6
|
100%
|
$527.2
|
100%
|
$1,394.3
|
100%
|
$1,018.7
|
100%
|
Cost of goods and
services sold
|
408.5
|
56
|
332.1
|
63
|
807.3
|
58
|
656.6
|
64
|
Gross
profit
|
315.1
|
44
|
195.1
|
37
|
587.0
|
42
|
362.1
|
36
|
Research and
development
|
13.8
|
2
|
10.8
|
2
|
26.0
|
2
|
21.5
|
2
|
Selling, general and
administrative expenses
|
92.7
|
13
|
77.7
|
15
|
172.9
|
12
|
149.5
|
15
|
Other expense
(income), net
|
(2.7)
|
-
|
3.0
|
-
|
1.2
|
-
|
(0.5)
|
-
|
Operating
profit
|
211.3
|
29
|
103.6
|
20
|
386.9
|
28
|
191.6
|
19
|
Interest expense,
net
|
1.7
|
-
|
1.8
|
1
|
3.5
|
-
|
3.0
|
-
|
Other nonoperating
(income) expense
|
(1.4)
|
-
|
(0.2)
|
-
|
(2.5)
|
-
|
0.1
|
-
|
Income before income
taxes
|
211.0
|
29
|
102.0
|
19
|
385.9
|
28
|
188.5
|
19
|
Income tax
expense
|
32.3
|
4
|
16.0
|
3
|
61.0
|
5
|
31.0
|
3
|
Equity in net income
of affiliated companies
|
(8.6)
|
(1)
|
(5.2)
|
(1)
|
(13.6)
|
(1)
|
(8.0)
|
(1)
|
Net income
|
$187.3
|
26%
|
$91.2
|
17%
|
$338.5
|
24%
|
$165.5
|
16%
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$2.53
|
|
$1.24
|
|
$4.58
|
|
$2.24
|
|
Diluted
|
$2.47
|
|
$1.21
|
|
$4.47
|
|
$2.19
|
|
|
|
|
|
|
|
|
|
|
Average common shares
outstanding
|
74.0
|
|
73.8
|
|
74.0
|
|
73.8
|
|
Average shares
assuming dilution
|
75.7
|
|
75.5
|
|
75.8
|
|
75.5
|
|
WEST
PHARMACEUTICAL SERVICES
|
REPORTING SEGMENT
INFORMATION
|
(UNAUDITED)
|
(in
millions)
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
Net
Sales:
|
2021
|
2020
|
2021
|
2020
|
Proprietary
Products
|
$587.3
|
$399.5
|
$1,131.0
|
$773.0
|
Contract-Manufactured
Products
|
136.4
|
127.8
|
263.5
|
245.9
|
Eliminations
|
(0.1)
|
(0.1)
|
(0.2)
|
(0.2)
|
Consolidated
Total
|
$723.6
|
$527.2
|
$1,394.3
|
$1,018.7
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
Proprietary
Products
|
$292.3
|
$170.8
|
$544.2
|
$320.9
|
Contract-Manufactured
Products
|
22.8
|
24.3
|
42.8
|
41.2
|
Gross
Profit
|
$315.1
|
$195.1
|
$587.0
|
$362.1
|
Gross Profit
Margin
|
43.5%
|
37.0%
|
42.1%
|
35.5%
|
|
|
|
|
|
Operating Profit
(Loss):
|
|
|
|
|
Proprietary
Products
|
$216.2
|
$112.2
|
$398.8
|
$205.4
|
Contract-Manufactured
Products
|
18.7
|
20.5
|
35.1
|
33.3
|
Stock-based
compensation expense
|
(10.3)
|
(12.3)
|
(16.2)
|
(17.7)
|
General corporate
costs
|
(13.4)
|
(14.4)
|
(27.3)
|
(27.0)
|
Adjusted Operating
Profit
|
$211.2
|
$106.0
|
$390.4
|
$194.0
|
Adjusted Operating
Profit Margin
|
29.2%
|
20.1%
|
28.0%
|
19.0%
|
Other unallocated
items
|
0.1
|
(2.4)
|
(3.5)
|
(2.4)
|
Reported Operating
Profit
|
$211.3
|
$103.6
|
$386.9
|
$191.6
|
Reported Operating
Profit Margin
|
29.2%
|
19.7%
|
27.7%
|
18.8%
|
WEST
PHARMACEUTICAL SERVICES
|
RECONCILIATION OF
NON-U.S. GAAP MEASURES (UNAUDITED)
|
Please refer to
"Non-U.S. GAAP Financial Measures" for more
information
|
(in millions,
except per share data)
|
|
Reconciliation of
Reported and Adjusted Operating Profit, Net Income and Diluted
EPS
|
|
Three months ended
June 30, 2021
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$211.3
|
$32.3
|
$187.3
|
$2.47
|
Unallocated
items:
|
|
|
|
|
Restructuring and
related charges (1)
|
1.0
|
0.3
|
0.7
|
0.01
|
Pension Settlement
(2)
|
-
|
-
|
0.1
|
-
|
Amortization of
Acquisition-related Intangible Assets (3)
|
0.2
|
-
|
0.7
|
0.01
|
Cost investment
activity (4)
|
(1.3)
|
(0.3)
|
(1.0)
|
(0.01)
|
Tax law changes
(5)
|
-
|
1.4
|
(1.4)
|
(0.02)
|
Adjusted (Non-U.S.
GAAP)
|
$211.2
|
$33.7
|
$186.4
|
$2.46
|
|
|
Six months ended
June 30, 2021
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$386.9
|
$61.0
|
$338.5
|
$4.47
|
Unallocated
items:
|
|
|
|
|
Restructuring and
related charges (1)
|
2.2
|
0.5
|
1.7
|
0.02
|
Pension Settlement
(2)
|
-
|
0.2
|
0.6
|
0.01
|
Amortization of
Acquisition-related Intangible Assets (3)
|
0.4
|
0.1
|
1.4
|
0.02
|
Cost investment
activity (4)
|
0.9
|
(0.3)
|
1.2
|
0.01
|
Tax law changes
(5)
|
-
|
1.4
|
(1.4)
|
(0.02)
|
Adjusted (Non-U.S.
GAAP)
|
$390.4
|
$62.9
|
$342.0
|
$4.51
|
|
|
Three months ended
June 30, 2020
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$103.6
|
$16.0
|
$91.2
|
$1.21
|
Pension Settlement
(2)
|
-
|
0.2
|
0.7
|
0.01
|
Severance related
costs (1)
|
2.2
|
0.6
|
1.6
|
0.02
|
Amortization of
Acquisition-related Intangible Assets (3)
|
0.2
|
-
|
1.1
|
0.01
|
Adjusted (Non-U.S.
GAAP)
|
$106.0
|
$16.8
|
$94.6
|
$1.25
|
|
|
Six months ended
June 30, 2020
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$191.6
|
$31.0
|
$165.5
|
$2.19
|
Pension Settlement
(2)
|
-
|
0.5
|
1.8
|
0.02
|
Severance related
costs (1)
|
2.2
|
0.6
|
1.6
|
0.02
|
Amortization of
Acquisition-related Intangible Assets (3)
|
0.2
|
-
|
2.1
|
0.03
|
Adjusted (Non-U.S.
GAAP)
|
$194.0
|
$32.1
|
$171.0
|
$2.26
|
|
|
(1)
|
During the three and
six months ended June 30, 2021, the Company recorded $1.0 million
and $2.2 million respectively in restructuring and related charges
in connection with its 2020 plan to optimize certain organizational
structures within the Company. During the three and six months
ended June 30, 2020, the Company recorded $2.2 million of severance
related costs.
|
|
|
(2)
|
During the three and
six months ended June 30, 2021, and June 30, 2020, the Company
recorded a pension settlement charge of $0.1 million, $0.7 million,
$0.9 million and $2.3 million, respectively, within other
nonoperating (income) expense, as it determined that normal-course
lump-sum payments for our U.S. qualified defined benefit pension
plan exceeded the threshold for settlement accounting.
|
|
|
(3)
|
During the three and
six months ended June 30, 2021, the Company recorded $0.2 million
and $0.4 million, respectively, of amortization expense within
operating profit associated with an intangible asset acquired
during the second quarter of 2020. During the three and six months
ended June 30, 2021, the Company recorded $0.5 million and $1.0
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, 2020, the Company
recorded $0.2 million of amortization expense within operating
profit associated with an intangible asset acquired during the
second quarter of 2020. During the three and six months ended June
30, 2020, the Company recorded $1.0 million and $2.0 million,
respectively, of amortization expense in association with an
acquisition of increased ownership interest in Daikyo.
|
|
|
(4)
|
During the three
months ended June 30, 2021, we recorded a net gain on the sale of
one of the Company's cost investments of $1.3 million. During the
six months ended June 30, 2021, we recorded a $2.2 million
impairment charge on one of our cost investments, partially offset
by the net gain on the sale of a cost investment.
|
|
|
(5)
|
During the three and
six months ended June 30, 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 quarter.
|
WEST
PHARMACEUTICAL SERVICES
|
RECONCILIATION OF
NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED)
|
Please refer to
"Non-U.S. GAAP Financial Measures" for more
information
|
(in millions,
except per share data)
|
|
Reconciliation of
Net Sales to Organic Net Sales (6)
|
|
Three months ended
June 30, 2021
|
Proprietary
|
CM
|
Eliminations
|
Total
|
Reported net sales
(U.S. GAAP)
|
$587.3
|
$136.4
|
$(0.1)
|
$723.6
|
Effect of changes in
currency translation rates
|
(30.6)
|
(4.6)
|
-
|
(35.2)
|
Organic net sales
(Non-U.S. GAAP) (6)
|
$556.7
|
$131.8
|
$(0.1)
|
$688.4
|
|
|
Six months ended
June 30, 2021
|
Proprietary
|
CM
|
Eliminations
|
Total
|
Reported net sales
(U.S. GAAP)
|
$1,131.0
|
$263.5
|
$(0.2)
|
$1,394.3
|
Effect of changes in
currency translation rates
|
(52.9)
|
(8.9)
|
-
|
(61.8)
|
Organic net sales
(Non-U.S. GAAP) (6)
|
$1,078.1
|
$254.6
|
$(0.2)
|
$1,332.5
|
|
|
(6)
|
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 the U.S. Dollar at the applicable
foreign exchange rates in effect during the comparable prior-year
period.
|
WEST
PHARMACEUTICAL SERVICES
|
RECONCILIATION OF
NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED)
|
Please refer to
"Non-U.S. GAAP Financial Measures" for more
information
|
(in millions,
except per share data)
|
|
Reconciliation of
Reported-Diluted EPS Guidance to Adjusted-Diluted EPS
Guidance
|
|
|
2020
Actual
|
2021
Guidance
|
% Change
|
Reported-diluted EPS
(U.S. GAAP)
|
$4.57
|
$7.99 to
$8.14
|
74.8% to
78.1%
|
Restructuring and
related charges
|
0.07
|
0.02
|
-
|
Pension
settlement
|
0.04
|
0.01
|
-
|
Amortization of
acquisition-related intangible assets
|
0.05
|
0.04
|
-
|
Cost investment
activity
|
0.03
|
0.01
|
-
|
Tax law
change
|
-
|
(0.02)
|
|
Adjusted-diluted EPS
(Non-U.S. GAAP) (7)
|
$4.76
|
$8.05 to
$8.20
|
69.1% to
72.3%
|
|
|
|
Notes:
|
|
|
|
|
See "Full-year 2021
Financial Guidance" and "Non-U.S. GAAP Financial Measures" in
today's press release for additional information regarding
adjusted-diluted EPS.
|
|
|
|
|
(7)
|
We have opted not to
forecast 2021 tax benefits from stock-based compensation in
upcoming quarters, as they are out of the Company's control.
Instead, we recognize the benefits as they occur. In the
first-half 2021, tax benefits associated with stock-based
compensation increased adjusted-diluted EPS by $0.24. Any
future tax benefits associated with stock-based compensation that
we receive in 2021 would provide a positive adjustment to our
full-year EPS guidance. In full-year 2020, tax benefits
associated with stock-based compensation increased adjusted-diluted
EPS by $0.27.
|
WEST
PHARMACEUTICAL SERVICES
|
CASH FLOW
ITEMS
|
(UNAUDITED)
|
(in
millions)
|
|
|
Six Months Ended June
30,
|
|
2021
|
2020
|
Depreciation and
amortization
|
$57.9
|
$52.2
|
Operating cash
flow
|
$233.1
|
$205.2
|
Capital
expenditures
|
$111.6
|
$69.2
|
WEST
PHARMACEUTICAL SERVICES
|
FINANCIAL
CONDITION
|
(UNAUDITED)
|
(in
millions)
|
|
|
As of
June 30,
2021
|
As
of December 31, 2020
|
Cash and cash
equivalents
|
$576.2
|
$615.5
|
Accounts receivable,
net
|
$480.5
|
$385.3
|
Inventories
|
$345.2
|
$321.3
|
Accounts
payable
|
$205.1
|
$213.1
|
Debt
|
$254.1
|
$255.2
|
Equity
|
$2,032.6
|
$1,854.5
|
Working
capital
|
$1,004.4
|
$870.3
|
Trademark Notices
Trademarks and registered trademarks are the property of West
Pharmaceutical Services, Inc., in the
United States and other jurisdictions, unless noted
otherwise.
Daikyo®, Daikyo Crystal
Zenith® and Daikyo CZ® are registered
trademarks of Daikyo Seiko, Ltd. Daikyo Crystal Zenith
technologies are licensed from Daikyo Seiko, Ltd.
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SOURCE West Pharmaceutical Services, Inc.