- Conference Call Scheduled for 9 a.m. EDT Today -
EXTON,
Pa., July 25, 2024 /PRNewswire/ -- West
Pharmaceutical Services, Inc. (NYSE: WST) today announced its
financial results for the second-quarter 2024 and updated full-year
2024 financial guidance.
Second-Quarter 2024 Summary (comparisons to prior-year
period)
- Net sales of $702.1 million
declined 6.9%; organic net sales declined 5.9%.
- Reported-diluted EPS of $1.51,
compared to $2.06 in the same period
last year.
- Adjusted-diluted EPS of $1.52,
compared to $2.11 in the same period
last year.
- The Company is updating full-year 2024 net sales guidance to a
range of $2.870 billion to
$2.900 billion, compared to a prior
range of $3.000 billion to
$3.025 billion.
- The Company is updating full-year 2024 adjusted-diluted EPS
guidance to a range of $6.35 to
$6.65, compared to a prior range of
$7.63 to $7.88.
"The second quarter continued to be impacted by an elevated
level of customer destocking," said Eric M.
Green, President, Chief Executive Officer and Chair of the
Board. "While the results were below our expectations, we were
encouraged to see our second-quarter revenues increase
sequentially. Our outlook anticipates that revenues in the second
half of the year will be stronger than the first half. Based on our
confirmed order book and ongoing customer conversations, we remain
confident in a return to organic growth in the fourth quarter and
as we move into 2025. We see considerable growth opportunity in the
markets we serve, and our investments position us to create
continued value for our customers, patients and shareholders well
into the future."
Proprietary Products Segment
Net sales declined by
9.4% to $559.7 million. Organic net
sales (excluding changes in currency translation and impact of a
prior year divestiture) declined by 8.4%. High-value products
(components and devices) represented more than 70% of segment sales
in the period led by customer demand for self-injection, Envision®
components and NovaPure® products.
The Generics market unit had a double digit organic net sales
decline, driven by lower volumes in FluroTec® and Westar® products.
The Biologics market unit had a mid-single digit organic net sales
decline, driven by lower sales of Daikyo CZ® and Westar® offset by
an increase in sales of self-injection device platforms. The Pharma
market unit had a low-single digit organic net sales decline,
driven by a reduction in sales of Administrative Systems and
Westar® products.
Contract-Manufactured Products Segment
Net sales grew
by 4.9% to $142.4 million. Organic
net sales grew by 5.4% with currency translation decreasing sales
growth by 50 basis points. Segment performance was led by growth in
sales of components associated with injection-related devices.
Financial Highlights (first six months of
2024)
Operating cash flow was $283.2
million, a decrease of 7.8%. Capital expenditures were
$190.8 million, an increase of 21.1%
over the same period last year. Free cash flow (operating cash flow
minus capital expenditures) was $92.4
million, a decrease of 38.3%.
During the first half of 2024, the Company repurchased 1,239,015
shares for $454.1 million at an
average share price of $366.53 under
its share repurchase program.
Full-Year 2024 Financial Guidance
- The Company is updating full-year 2024 net sales guidance to a
range of $2.870 billion to
$2.900 billion, compared to a prior
range of $3.000 billion to
$3.025 billion.
- Organic net sales are now expected decrease approximately 1% to
2%.
- Net sales guidance includes an estimated full-year 2024
headwind of approximately $5.0
million based on current foreign currency exchange rates,
compared to prior guidance of approximately $8.0 million.
- Full-year 2024 adjusted-diluted EPS is expected to be in a
range of $6.35 to $6.65, compared to prior guidance range of
$7.63 to $7.88.
- Full-year adjusted-diluted EPS guidance range includes an
estimated headwind of approximately $0.03 based on current foreign currency exchange
rates, compared to prior guidance of $0.04.
- The updated guidance also includes EPS of $0.22 associated with first-half 2024 tax
benefits from stock-based compensation.
- For the second half of the year, our EPS guidance range assumes
a tax rate of 22% 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
2024 would provide a positive adjustment to our full-year
adjusted-diluted EPS guidance.
- Full-year 2024 capital spending is expected to be $375 million, an increase from the previous
estimate of $350 million.
Second-Quarter 2024 Conference Call
The live audio-only webcast will be made available via the
Company's Investor Relations website at www.westpharma.com.
To participate in the conference call by asking questions to
Management, please register in advance by clicking here. 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
"raising," "positioned," "updating," "expected," "assumes,"
"unchanged," "includes," "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:
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; 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.
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
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net sales
|
$
702.1
|
|
100 %
|
|
$
753.8
|
|
100 %
|
|
$
1,397.5
|
|
100 %
|
|
$
1,470.4
|
|
100 %
|
|
Cost of goods and
services sold
|
472.1
|
|
67
|
|
462.4
|
|
61
|
|
937.3
|
|
67
|
|
907.7
|
|
62
|
|
Gross
profit
|
230.0
|
|
33
|
|
291.4
|
|
39
|
|
460.2
|
|
33
|
|
562.7
|
|
38
|
|
Research and
development
|
17.5
|
|
2
|
|
16.5
|
|
2
|
|
35.1
|
|
3
|
|
33.6
|
|
2
|
|
Selling, general
and
administrative expenses
|
83.0
|
|
12
|
|
88.4
|
|
12
|
|
169.7
|
|
12
|
|
174.4
|
|
12
|
|
Other expense
(income)
|
3.3
|
|
1
|
|
4.0
|
|
1
|
|
6.4
|
|
—
|
|
16.9
|
|
1
|
|
Operating
profit
|
126.2
|
|
18
|
|
182.5
|
|
24
|
|
249.0
|
|
18
|
|
337.8
|
|
23
|
|
Interest (income)
expense, net
|
(2.5)
|
|
—
|
|
(2.3)
|
|
—
|
|
(7.1)
|
|
—
|
|
(4.9)
|
|
—
|
|
Other nonoperating
(income)
expense
|
—
|
|
—
|
|
(0.1)
|
|
—
|
|
—
|
|
—
|
|
(0.1)
|
|
—
|
|
Income before income
taxes
and equity in net income of
affiliated companies
|
128.7
|
|
18
|
|
184.9
|
|
24
|
|
256.1
|
|
18
|
|
342.8
|
|
23
|
|
Income tax
expense
|
21.9
|
|
3
|
|
34.8
|
|
4
|
|
38.3
|
|
3
|
|
58.4
|
|
4
|
|
Equity in net income
of
affiliated companies
|
(4.5)
|
|
(1)
|
|
(5.0)
|
|
(1)
|
|
(8.8)
|
|
(1)
|
|
(10.7)
|
|
(1)
|
|
Net income
|
$
111.3
|
|
16 %
|
|
$
155.1
|
|
21 %
|
|
$ 226.6
|
|
16 %
|
|
$ 295.1
|
|
20 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$ 1.52
|
|
|
|
$ 2.08
|
|
|
|
$
3.09
|
|
|
|
$ 3.96
|
|
|
|
Diluted
|
$ 1.51
|
|
|
|
$ 2.06
|
|
|
|
$
3.06
|
|
|
|
$ 3.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares
outstanding
|
73.0
|
|
|
|
74.3
|
|
|
|
73.3
|
|
|
|
74.4
|
|
|
|
Average shares
assuming
dilution
|
73.7
|
|
|
|
75.4
|
|
|
|
74.0
|
|
|
|
75.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEST PHARMACEUTICAL
SERVICES
REPORTING SEGMENT
INFORMATION
(UNAUDITED)
(in
millions)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
Net
Sales:
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Proprietary
Products
|
$
559.7
|
|
$
618.0
|
|
$
1,119.2
|
|
$
1,201.1
|
|
Contract-Manufactured
Products
|
142.4
|
|
135.8
|
|
278.3
|
|
269.3
|
|
Eliminations
|
—
|
|
—
|
|
—
|
|
—
|
|
Consolidated
Total
|
$
702.1
|
|
$
753.8
|
|
$
1,397.5
|
|
$
1,470.4
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
|
|
|
|
Proprietary
Products
|
$
207.0
|
|
$
271.4
|
|
$
414.1
|
|
$
519.2
|
|
Contract-Manufactured
Products
|
23.0
|
|
20.9
|
|
46.1
|
|
44.4
|
|
Unallocated
items
|
—
|
|
(0.9)
|
|
—
|
|
(0.9)
|
|
Gross
Profit
|
$
230.0
|
|
$
291.4
|
|
$
460.2
|
|
$
562.7
|
|
Gross Profit
Margin
|
32.8 %
|
|
38.7 %
|
|
32.9 %
|
|
38.3 %
|
|
|
|
|
|
|
|
|
|
Operating Profit
(Loss):
|
|
|
|
|
|
|
|
|
Proprietary
Products
|
$
131.0
|
|
$
194.2
|
|
$
257.3
|
|
$
364.9
|
|
Contract-Manufactured
Products
|
17.2
|
|
14.9
|
|
34.3
|
|
32.3
|
|
Stock-based
compensation expense
|
(4.3)
|
|
(7.5)
|
|
(9.3)
|
|
(16.0)
|
|
General corporate
costs
|
(17.7)
|
|
(19.1)
|
|
(33.3)
|
|
(43.4)
|
|
Reported Operating
Profit
|
$
126.2
|
|
$
182.5
|
|
$
249.0
|
|
$
337.8
|
|
Reported Operating
Profit Margin
|
18.0 %
|
|
24.2 %
|
|
17.8 %
|
|
23.0 %
|
|
|
|
|
|
|
|
|
|
Unallocated
items
|
0.2
|
|
2.5
|
|
0.4
|
|
12.1
|
|
Adjusted Operating
Profit
|
$
126.4
|
|
$
185.0
|
|
$
249.4
|
|
$
349.9
|
|
Adjusted Operating
Profit Margin
|
18.0 %
|
|
24.5 %
|
|
17.8 %
|
|
23.8 %
|
|
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, 2024
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$126.2
|
$21.9
|
$111.3
|
$1.51
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible
assets (1)
|
0.2
|
—
|
0.7
|
0.01
|
|
Adjusted (Non-U.S.
GAAP)
|
$126.4
|
$21.9
|
$112.0
|
$1.52
|
|
|
Six months ended
June 30, 2024
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$249.0
|
$38.3
|
$226.6
|
$3.06
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible
assets (1)
|
0.4
|
—
|
1.4
|
0.02
|
|
Adjusted (Non-U.S.
GAAP)
|
$249.4
|
$38.3
|
$228.0
|
$3.08
|
|
|
Three months ended
June 30, 2023
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$182.5
|
$34.8
|
$155.1
|
$2.06
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible
assets (1)
|
0.2
|
—
|
0.7
|
0.01
|
|
Loss on disposal of
plant (2)
|
2.2
|
(0.7)
|
2.9
|
0.04
|
|
Restructuring and other
charges (3)
|
0.1
|
(0.3)
|
0.4
|
—
|
|
Adjusted (Non-U.S.
GAAP)
|
$185.0
|
$33.8
|
$159.1
|
$2.11
|
|
|
Six months ended
June 30, 2023
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
|
Reported (U.S.
GAAP)
|
$337.8
|
$58.4
|
$295.1
|
$3.91
|
|
Unallocated
items:
|
|
|
|
|
|
Amortization of
acquisition-related intangible
assets (1)
|
0.4
|
—
|
1.4
|
0.02
|
|
Loss on disposal of
plant (2)
|
11.6
|
(0.7)
|
12.3
|
0.16
|
|
Restructuring and other
charges (3)
|
0.1
|
(0.3)
|
0.4
|
—
|
|
Adjusted (Non-U.S.
GAAP)
|
$349.9
|
$57.4
|
$309.2
|
$4.09
|
|
(1)
|
During the three and
six months ended June 30, 2024 and 2023, 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, 2024 and 2023, 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..
|
|
|
|
(2)
|
During the three and
six months ended June 30, 2023, the Company recorded expense of
$2.2 million and $11.6 million, respectively, within other expense
(income), as a result of the sale of one of the Company's
manufacturing facilities within the Proprietary Products segment.
The transaction closed during the second quarter of
2023.
|
|
|
|
(3)
|
Restructuring and
other charges of $0.1 million for both the three and six months
ended June 30, 2023 represents the net impact of an inventory write
down of $0.9 million within cost of goods and services sold and a
$0.8 million benefit within other expense (income) for revised
severance estimates in connection with its 2022 restructuring
plan.
|
|
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 (4 and 5)
|
|
|
Three months ended
June 30, 2024
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$559.7
|
$142.4
|
$—
|
$702.1
|
|
Effect of changes in
currency translation rates
|
5.4
|
0.7
|
—
|
6.1
|
|
Organic net sales
(Non-U.S. GAAP) (4)
|
$565.1
|
$143.1
|
$—
|
$708.2
|
|
|
Six months ended
June 30, 2024
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$1,119.2
|
$278.3
|
$—
|
$1,397.5
|
|
Effect of changes in
currency translation rates
|
2.6
|
0.1
|
—
|
2.7
|
|
Organic net sales
(Non-U.S. GAAP) (4)
|
$1,121.8
|
$278.4
|
$—
|
$1,400.2
|
|
|
Three months ended
June 30, 2023
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$618.0
|
$135.8
|
$—
|
$753.8
|
|
Effect of divestitures
and/or acquisitions
|
(1.1)
|
—
|
—
|
(1.1)
|
|
Net sales excluding
divestiture (Non-U.S.
GAAP) (5)
|
$616.9
|
$135.8
|
$—
|
$752.7
|
|
|
Six months ended
June 30, 2023
|
Proprietary
|
CM
|
Eliminations
|
Total
|
|
Reported net sales
(U.S. GAAP)
|
$1,201.1
|
$269.3
|
$—
|
$1,470.4
|
|
Effect of divestitures
and/or acquisitions
|
(4.3)
|
—
|
—
|
(4.3)
|
|
Net sales excluding
divestiture (Non-U.S.
GAAP) (5)
|
$1,196.8
|
$269.3
|
$—
|
$1,466.1
|
|
(4)
|
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.
|
|
|
|
(5)
|
Net sales excluding
divestiture 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-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
|
|
|
2023 Actual
|
2024
Guidance
|
% Change
|
|
Reported-diluted EPS
(U.S. GAAP)
|
$7.88
|
$6.31 to
$6.61
|
(19.9%) to
(16.1%)
|
|
Loss on disposal of
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) (6)
|
$8.08
|
$6.35 to
$6.65
|
(21.4%) to
(17.7%)
|
|
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.
|
|
|
|
(6)
|
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-half
of 2024, tax benefits associated with stock-based compensation
increased adjusted-diluted EPS by $0.22. 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)
|
|
|
Six Months Ended June
30,
|
|
2024
|
|
2023
|
|
Depreciation and
amortization
|
$74.5
|
|
$65.7
|
|
Operating cash
flow
|
$283.2
|
|
$307.3
|
|
Capital
expenditures
|
$190.8
|
|
$157.5
|
|
Free cash
flow
|
$92.4
|
|
$149.8
|
|
WEST PHARMACEUTICAL
SERVICES
FINANCIAL
CONDITION
(UNAUDITED)
(in
millions)
|
|
|
As of
June 30,
2024
|
|
As of
December 31,
2023
|
|
Cash and cash
equivalents
|
$446.2
|
|
$853.9
|
|
Accounts receivable,
net
|
$479.4
|
|
$512.0
|
|
Inventories
|
$419.2
|
|
$434.7
|
|
Accounts
payable
|
$211.7
|
|
$242.4
|
|
Debt
|
$205.8
|
|
$206.8
|
|
Equity
|
$2,576.8
|
|
$2,881.0
|
|
Working
capital
|
$849.3
|
|
$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.