- Conference Call Scheduled for 9 a.m. EDT Today -
EXTON,
Pa., April 25, 2024 /PRNewswire/ -- West
Pharmaceutical Services, Inc. (NYSE: WST) today announced its
financial results for the first-quarter 2024 and updated full-year
2024 financial guidance.
First-Quarter 2024 Summary (comparisons to prior-year
period)
- Net sales of $695.4 million
declined 3.0%; organic net sales also declined by 3.0%.
- Reported-diluted EPS of $1.55
declined by 16.2%.
- Adjusted-diluted EPS of $1.56
declined by 21.2%.
- The Company is reaffirming full-year 2024 net sales guidance in
a range of $3.000 billion to
$3.025 billion.
- The Company is raising full-year 2024 adjusted-diluted EPS
guidance to a new range of $7.63 to
$7.88, compared to a prior range of
$7.50 to $7.75.
- The Company also announced that its Board of Directors has
approved a third-quarter 2024 dividend of $0.20 per share. The dividend will be paid on
August 7, 2024, to shareholders of
record as of July 31, 2024.
"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.
"We had a solid start to the year and our full-year 2024
financial outlook remains unchanged," said Eric M. Green, President, Chief Executive
Officer and Chair of the Board of Directors. "We are actively
managing the timing of inventory decisions by some of our
customers, and our recent order trends reinforce our prior outlook
for stronger organic sales growth in the second half of the year.
As we navigate the near-term headwinds, we are controlling our
costs while making strategic investments in new manufacturing
capacity in both our Contract Manufacturing segment and our
Proprietary Products segment, which positions us well for future
organic sales growth."
Proprietary Products Segment
Net sales declined by
4.0% to $559.5 million. Organic sales
declined by 4.0% with currency translation positively impacting
sales growth by 50 basis points. High-value products
(components and devices) represented 72% of segment sales and an
organic sales decline of low-single digits.
The Biologics market unit had low-single digit organic sales
growth. The Pharma market unit had a high-single digit
organic decline in sales, and the Generics market unit declined
double digits. Proprietary Products segment growth was led by
NovaPure®, self-injection device platforms and Daikyo Crystal
Zenith® components, which were more than offset by declines in
FluroTec®, Westar® and standard components.
Contract-Manufactured Products Segment
Net sales
increased by 1.8% to $135.9
million. Organic sales growth was 1.3% with currency
translation positively impacting sales growth by 50 basis
points. Segment performance was led by growth in sales of
components associated with diagnostic devices.
Financial Highlights
Operating cash flow was
$118.2 million, a decrease of
14.4%. Capital expenditures in the quarter were $90.6 million. Free cash flow (operating
cash flow minus capital expenditures) was $27.6 million, a decrease of 50.7%.
During the quarter, the Company repurchased 729,679 shares for
$267.0 million at an average share
price of $365.87 under its share
repurchase program.
Full-Year 2024 Financial Guidance
- The Company is reaffirming full-year 2024 financial guidance of
net sales in a range of $3.000
billion to $3.025 billion.
- Organic net sales growth is expected to be approximately 2% to
3%.
- Net sales guidance includes an estimated full-year 2024
headwind of approximately $8.0
million based on current foreign currency exchange
rates.
- The Company is raising full-year 2024 financial guidance of
adjusted-diluted EPS to a new range of $7.63 to $7.88,
compared to a prior range of $7.50 to
$7.75.
- Full-year adjusted-diluted EPS guidance range includes an
estimated headwind of approximately $0.04 based on current foreign currency exchange
rates, which is an increase from prior guidance of $0.02.
- The updated guidance also includes EPS of $0.15 associated with first-quarter 2024 tax
benefits from stock-based compensation.
- For the remaining quarters of the year, our EPS guidance range
assumes a tax rate of 22.5% 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-quarter 2024 would provide a positive adjustment to our
full-year adjusted-diluted EPS guidance.
- Full-year 2024 capital spending guidance is unchanged and is
expected to be $350 million.
First-Quarter 2024 Conference Call
The Company will
host a conference call to discuss the results and business
expectations at 9:00 a.m. Eastern
Time today. The live audio-only webcast will be made
available via the Company's Investor Relations website at
www.westpharma.com
To participate and ask questions during the conference call, you
must register in advance at
https://register.vevent.com/register/BIe5bc0234730940b7b2482d1727cc668b.
Upon registration, all telephone participants will receive the
dial-in number along with a unique PIN number that will be used to
access the call.
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.
A replay of the conference call and webcast will be available on
the Company's website for 30 days.
Forward-Looking Statements
This release contains
statements that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. These statements may include such words as "outlook,"
"trends," "are," "future," "expected," "estimate," "estimated,"
"assumes," "potential," "would provide," "will," 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: 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; interruptions or weaknesses in
our supply chain, illness in our workforce and access to transport
for our products; disruptions or limitations in the Company's
manufacturing capacity; average profitability, or mix, of the
products we sell; dependence on third-party suppliers and partners;
increased raw material, energy and labor costs; fluctuations in
currency exchange; the ability to meet development milestones with
key customers; and the consequences of other geopolitical events,
including natural disasters, acts of war, and global health
crises. 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, 2023, and other
filings with the United States Securities and Exchange Commission,
including the Company's quarterly reports on Form 10-Q and current
reports on Form 8-K.
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,
therefore you should not rely on these forward-looking statements
as representing our views as of any date other than today.
Non-U.S. GAAP Financial Measures
This release contains
certain non-GAAP financial measures, including organic net sales
and adjusted-diluted EPS. 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
currency 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
March 31,
|
|
2024
|
2023
|
|
Net sales
|
$695.4
|
100 %
|
716.6
|
100 %
|
|
Cost of goods and
services sold
|
465.2
|
67
|
445.3
|
62
|
|
Gross
profit
|
230.2
|
33
|
271.3
|
38
|
|
Research and
development
|
17.6
|
2
|
17.1
|
2
|
|
Selling, general and
administrative expenses
|
86.7
|
13
|
86.0
|
12
|
|
Other expense
(income)
|
3.1
|
-
|
12.9
|
2
|
|
Operating
profit
|
122.8
|
18
|
155.3
|
22
|
|
Interest (income)
expense, net
|
(4.6)
|
-
|
(2.6)
|
-
|
|
Income before income
taxes and equity in net income of affiliated companies
|
127.4
|
18
|
157.9
|
22
|
|
Income tax
expense
|
16.4
|
2
|
23.6
|
3
|
|
Equity in net income of
affiliated companies
|
(4.3)
|
(1)
|
(5.7)
|
(1)
|
|
Net income
|
$115.3
|
17 %
|
$140.0
|
20 %
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$1.57
|
|
$1.88
|
|
|
Diluted
|
$1.55
|
|
$1.85
|
|
|
|
|
|
|
|
Average common shares
outstanding
|
73.5
|
|
74.5
|
|
|
Average shares assuming
dilution
|
74.3
|
|
75.7
|
|
|
WEST
PHARMACEUTICAL SERVICES
REPORTING SEGMENT
INFORMATION
(UNAUDITED)
(in
millions)
|
|
|
Three Months Ended
|
|
March 31,
|
|
Net Sales:
|
2024
|
2023
|
|
Proprietary
Products
|
$559.5
|
$583.1
|
|
Contract-Manufactured
Products
|
135.9
|
133.5
|
|
Eliminations
|
-
|
-
|
|
Consolidated
Total
|
$695.4
|
$716.6
|
|
|
|
|
Gross Profit:
|
|
|
|
Proprietary
Products
|
$207.1
|
$247.8
|
|
Contract-Manufactured
Products
|
23.1
|
23.5
|
|
Gross Profit
|
$230.2
|
$271.3
|
|
Gross Profit
Margin
|
33.1 %
|
37.9 %
|
|
|
|
|
Operating Profit (Loss):
|
|
|
|
Proprietary
Products
|
$126.3
|
$170.7
|
|
Contract-Manufactured
Products
|
17.1
|
17.4
|
|
Stock-based
compensation expense
|
(5.0)
|
(8.5)
|
|
General corporate
costs
|
(15.6)
|
(24.3)
|
|
Reported Operating Profit
|
$122.8
|
$155.3
|
|
Reported Operating Profit
Margin
|
17.7 %
|
21.7 %
|
|
Unallocated
items
|
0.2
|
9.6
|
|
Adjusted Operating Profit
|
$123.0
|
$164.9
|
|
Adjusted Operating Profit
Margin
|
17.7 %
|
23.0 %
|
|
WEST PHARMACEUTICAL
SERVICES
RECONCILIATION OF
NON-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 March 31,
2024
|
Operating
profit
|
Income tax
expense
|
Net
ncome
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$122.8
|
$16.4
|
$115.3
|
$1.55
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible assets (1)
|
0.2
|
-
|
0.7
|
0.01
|
|
Adjusted (Non-U.S.
GAAP)
|
$123.0
|
$16.4
|
$116.0
|
$1.56
|
|
|
|
Three months ended March 31,
2023
|
Operating
profit
|
Income tax
expense
|
Net
income
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$155.3
|
$23.6
|
$140.0
|
$1.85
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible assets (1)
|
0.2
|
-
|
0.7
|
0.01
|
|
Loss on disposal of
plant (2)
|
9.4
|
-
|
9.4
|
0.12
|
|
Adjusted (Non-U.S.
GAAP)
|
$164.9
|
$23.6
|
$150.1
|
$1.98
|
|
|
|
(1)
|
During the three months
ended March 31, 2024 and 2023, 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 months ended March 31, 2024 and 2023, the Company
recorded $0.5 million of amortization expense in association with
an acquisition of increased ownership interest in
Daikyo.
|
|
|
|
(2)
|
During the three months
ended March 31, 2023, the Company recorded expense of $9.4 million
within other expense (income), as a result of the sale of one of
the Company's manufacturing facilities within the Proprietary
Products segment. The transaction closed during the second quarter
of 2023.
|
|
WEST
PHARMACEUTICAL SERVICES
RECONCILIATION OF
NON-GAAP 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
(3 and 4)
|
|
|
Three months ended March 31,
2024
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$559.5
|
$135.9
|
$ -
|
$695.4
|
|
Effect of changes in
currency translation rates
|
(2.8)
|
(0.6)
|
-
|
(3.4)
|
|
Organic net sales
(Non-U.S. GAAP) (3)
|
$556.7
|
$135.3
|
$ -
|
$692.0
|
|
|
Three months ended March 31,
2023
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$583.1
|
$133.5
|
$ -
|
$716.6
|
|
Effect of divestitures
and/or acquisitions
|
(3.2)
|
-
|
-
|
(3.2)
|
|
Net sales excluding
divestiture (Non-U.S. GAAP) (4)
|
$579.9
|
$133.5
|
$ -
|
$713.4
|
|
|
|
(3)
|
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 currency exchange rates in effect during the comparable
prior-year period.
|
|
|
|
(4)
|
Net sales excluding
divestitures represents the 2023 comparative sales figure used in
our organic sales growth calculation to eliminate the impact of our
2023 divestiture.
|
|
WEST
PHARMACEUTICAL SERVICES
RECONCILIATION OF
NON-GAAP 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
|
|
|
2023 Actual
|
2024
Guidance
|
% Change
|
|
Reported-diluted EPS
(U.S. GAAP)
|
$7.88
|
$7.59 to
$7.84
|
(3.7%) to
(0.5%)
|
|
Loss of disposal on
plant
|
0.16
|
|
|
|
Cost investment
activity
|
0.06
|
|
|
|
Restructuring and other
charges
|
(0.02)
|
|
|
|
|
|
|
|
Amortization of
acquisition-related intangible assets
|
0.04
|
0.04
|
|
|
Legal
settlement
|
(0.04)
|
|
|
|
|
|
|
|
Adjusted-diluted EPS
(Non-U.S. GAAP) (5)
|
$8.08
|
$7.63 to
$7.88
|
(5.6%) to
(2.5%)
|
|
|
|
|
Notes:
|
|
See "Full-year 2024
Financial Guidance" and "Non-U.S. GAAP Financial Measures" in
today's press release for additional information regarding
adjusted-diluted EPS.
|
|
|
|
|
(5)
|
We have opted not to
forecast 2024 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-quarter 2024, tax benefits associated with stock-based
compensation increased adjusted-diluted EPS by $0.15. Any future
tax benefits associated with stock-based compensation that we
receive in 2024 would provide a positive adjustment to our
full-year EPS guidance. In full-year 2023, tax benefits associated
with stock-based compensation increased adjusted-diluted EPS by
$0.42.
|
|
WEST
PHARMACEUTICAL SERVICES
CASH FLOW
ITEMS
(UNAUDITED)
(in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
2023
|
|
Depreciation and
amortization
|
$35.6
|
$31.6
|
|
Operating cash
flow
|
$118.2
|
$138.1
|
|
Capital
expenditures
|
$90.6
|
$82.1
|
|
Free cash
flow
|
$27.6
|
$56.0
|
|
WEST
PHARMACEUTICAL SERVICES
FINANCIAL
CONDITION
(UNAUDITED)
(in
millions)
|
|
|
As of
March 31,
2024
|
As of
December 31,
2023
|
|
Cash and cash
equivalents
|
$601.8
|
$853.9
|
|
Accounts receivable,
net
|
$524.0
|
$512.0
|
|
Inventories
|
$429.9
|
$434.7
|
|
Accounts
payable
|
$240.1
|
$242.4
|
|
Debt
|
$206.2
|
$206.8
|
|
Equity
|
$2,680.6
|
$2,881.0
|
|
Working
capital
|
$1,044.5
|
$1,264.6
|
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 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.
