EXTON, Pa., Oct. 28, 2021 /PRNewswire/ -- West
Pharmaceutical Services, Inc. (NYSE: WST) today announced its
financial results for the third-quarter 2021 and updated full-year
2021 financial guidance.
Third-Quarter 2021 Summary (comparisons to prior-year
period)
- Net sales of $706.5 million grew
28.9%; organic sales growth was 27.9%.
- Reported-diluted EPS of $2.31
increased 112%.
- Adjusted-diluted EPS of $2.06
increased 79%.
- Company is raising full-year 2021 net sales guidance to a new
range of $2.800 billion to
$2.810 billion, compared to a prior
range of $2.760 billion to
$2.785 billion.
- Company is raising full-year 2021 adjusted-diluted EPS guidance
to a new range of $8.40 to
$8.50, compared to a prior range of
$8.05 to $8.20.
- The Company also announced that its Board of Directors has
approved a fourth-quarter 2021 dividend of $0.18 per share, a 5.9% increase over the
$0.17 per share paid in each of the
four preceding quarters. This is the twenty-ninth consecutive
annual increase in the Company's dividend. The dividend will be
paid on November 17, 2021, to
shareholders of record as of November 10,
2021.
"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 robust growth in all three of our Proprietary Products
market units, led by the sales of components in our High-Value
Product (HVP) portfolio," said Eric M.
Green, President and Chief Executive Officer. "This
quarter's strong performance came from both our base business,
especially in the Biologics market unit, and COVID-19 related
sales. Demand continues to grow for our premium offerings,
such as NovaPure and FluroTec components, and, as a result, we are
again increasing our planned capital expenditures, commencing next
year, to expand HVP capacity at existing sites."
Proprietary Products Segment
Net sales grew by 36.9%
to $577.0 million. Organic
sales growth was 35.7%, with currency translation increasing sales
growth by 120 basis points. HVP sales represented over 70% of
segment sales and generated double-digit organic sales growth, led
by customer demand for Westar®, FluroTec® and
NovaPure® components and Daikyo Crystal
Zenith® containers.
All three market units – Biologics, Generics and Pharma – had
strong double-digit organic sales growth.
Contract-Manufactured Products Segment
Net sales grew
by 2.4% to $129.7 million.
Organic sales growth was 2.1% with currency translation increasing
sales growth by 30 basis points. Segment performance was led
by sales of healthcare-related medical devices.
Financial Highlights (first nine months of
2021)
Operating cash flow was $423.2
million, an increase of 30.7%. Capital expenditures
were $176.9 million, an increase of
51.6% over the same period last year. Free cash flow
(operating cash flow minus capital expenditures) was $246.3 million, an increase of 18.9%.
During the first nine months of 2021, the Company repurchased
479,000 shares for $137.1 million at
an average share price of $286.23
under its share repurchase program.
Full-Year 2021 Financial Guidance
- Full-year 2021 net sales are expected to be in a range of
$2.800 billion to $2.810 billion, compared to a prior guidance
range of $2.760 billion to
$2.785 billion.
-
- Organic sales growth is expected to be 28%, compared to a prior
range of 24% to 25%.
- Net sales guidance includes an estimated full-year 2021 benefit
of $55 million based on current
foreign exchange rates. This updated guidance is a reduction of
$25 million, compared to a prior
estimated full-year benefit of $80
million.
- Full-year 2021 adjusted-diluted EPS is expected to be in a
range of $8.40 to $8.50, compared to a prior range of $8.05 to $8.20.
-
- Full-year adjusted-diluted EPS guidance range includes an
estimated benefit of approximately $0.19 based on current foreign currency exchange
rates. This updated guidance is a reduction of $0.08, compared to a prior estimated benefit of
$0.27.
- The revised guidance includes a $0.35 EPS positive impact of tax benefits from
stock-based compensation from the first nine months of 2021.
- For the remainder of the year, our EPS guidance range assumes a
tax rate of approximately 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
nine months of 2021 would provide a positive adjustment to our
full-year EPS guidance.
Third-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 5587559.
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, November 4, 2021,
by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and
entering conference ID 5587559.
Forward-Looking Statements
Certain forward-looking statements appear in this release and
include such words as "raising," "continues," "increasing,"
"planned," "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
September
30,
|
Nine Months
Ended
September
30,
|
|
2021
|
2020
|
2021
|
2020
|
Net sales
|
$706.5
|
100%
|
$548.0
|
100%
|
$2,100.8
|
100%
|
$1,566.7
|
100%
|
Cost of goods and
services sold
|
418.3
|
59
|
353.4
|
65
|
1,225.6
|
58
|
1,010.0
|
65
|
Gross
profit
|
288.2
|
41
|
194.6
|
35
|
875.2
|
42
|
556.7
|
35
|
Research and
development
|
13.1
|
2
|
12.5
|
2
|
39.1
|
2
|
34.0
|
2
|
Selling, general and
administrative expenses
|
91.9
|
13
|
76.2
|
14
|
264.8
|
13
|
225.7
|
14
|
Other expense
(income), net
|
1.8
|
-
|
6.7
|
1
|
3.0
|
-
|
6.2
|
-
|
Operating
profit
|
181.4
|
26
|
99.2
|
18
|
568.3
|
27
|
290.8
|
19
|
Interest expense,
net
|
1.4
|
-
|
1.9
|
-
|
4.9
|
-
|
4.9
|
-
|
Other nonoperating
(income) expense
|
(1.1)
|
-
|
(0.4)
|
-
|
(3.6)
|
-
|
(0.3)
|
-
|
Income before income
taxes
|
181.1
|
26
|
97.7
|
18
|
567.0
|
27
|
286.2
|
18
|
Income tax
expense
|
12.0
|
2
|
21.1
|
4
|
73.0
|
4
|
52.1
|
3
|
Equity in net income
of affiliated companies
|
(6.5)
|
(1)
|
(5.7)
|
(1)
|
(20.1)
|
(1)
|
(13.7)
|
(1)
|
Net income
|
$175.6
|
25%
|
$82.3
|
15%
|
$514.1
|
24%
|
$247.8
|
16%
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$2.37
|
|
$1.11
|
|
$6.95
|
|
$3.35
|
|
Diluted
|
$2.31
|
|
$1.09
|
|
$6.78
|
|
$3.28
|
|
|
|
|
|
|
|
|
|
|
Average common shares
outstanding
|
74.1
|
|
73.9
|
|
74.0
|
|
73.9
|
|
Average shares
assuming dilution
|
76.0
|
|
75.8
|
|
75.8
|
|
75.6
|
|
WEST
PHARMACEUTICAL SERVICES
|
REPORTING SEGMENT
INFORMATION
|
(UNAUDITED)
|
(in
millions)
|
|
|
Three Months
Ended
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
Net
Sales:
|
2021
|
2020
|
2021
|
2020
|
Proprietary
Products
|
$577.0
|
$421.5
|
$1,708.0
|
$1,194.5
|
Contract-Manufactured
Products
|
129.7
|
126.6
|
393.2
|
372.5
|
Eliminations
|
(0.2)
|
(0.1)
|
(0.4)
|
(0.3)
|
Consolidated
Total
|
$706.5
|
$548.0
|
$2,100.8
|
$1,566.7
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
Proprietary
Products
|
$267.3
|
$171.9
|
$811.5
|
$492.8
|
Contract-Manufactured
Products
|
20.9
|
22.7
|
63.7
|
63.9
|
Gross
Profit
|
$288.2
|
$194.6
|
$875.2
|
$556.7
|
Gross Profit
Margin
|
40.8%
|
35.5%
|
41.7%
|
35.5%
|
|
|
|
|
|
Operating Profit
(Loss):
|
|
|
|
|
Proprietary
Products
|
$195.5
|
$107.5
|
$594.3
|
$312.9
|
Contract-Manufactured
Products
|
16.8
|
18.8
|
51.9
|
52.1
|
Stock-based
compensation expense
|
(11.4)
|
(10.0)
|
(27.5)
|
(27.6)
|
General corporate
costs
|
(18.1)
|
(12.4)
|
(45.5)
|
(39.5)
|
Adjusted Operating
Profit
|
$182.8
|
$103.9
|
$573.2
|
$297.9
|
Adjusted Operating
Profit Margin
|
25.9%
|
19.0%
|
27.3%
|
19.0%
|
Other unallocated
items
|
(1.4)
|
(4.7)
|
(4.9)
|
(7.1)
|
Reported Operating
Profit
|
$181.4
|
$99.2
|
$568.3
|
$290.8
|
Reported Operating
Profit Margin
|
25.7%
|
18.1%
|
27.1%
|
18.6%
|
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
September 30, 2021
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$181.4
|
$12.0
|
$175.6
|
$2.31
|
Unallocated
Items:
|
|
|
|
|
Restructuring and
related charges (1)
|
0.3
|
0.1
|
0.2
|
-
|
Amortization of
Acquisition-related Intangible Assets (2)
|
0.2
|
-
|
0.7
|
0.01
|
Cost investment
activity (3)
|
0.9
|
0.2
|
0.7
|
0.01
|
Royalty acceleration
(4)
|
-
|
20.4
|
(20.4)
|
(0.27)
|
Adjusted (Non-U.S.
GAAP)
|
$182.8
|
$32.7
|
$156.8
|
$2.06
|
|
|
Nine months ended
September 30, 2021
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$568.3
|
$73.0
|
$514.1
|
$6.78
|
Unallocated
Items:
|
|
|
|
|
Restructuring and
related charges (1)
|
2.5
|
0.6
|
1.9
|
0.02
|
Pension Settlement
(5)
|
-
|
0.2
|
0.6
|
0.01
|
Amortization of
Acquisition-related Intangible Assets (2)
|
0.6
|
0.1
|
2.1
|
0.03
|
Cost investment
activity (3)
|
1.8
|
(0.1)
|
1.9
|
0.02
|
Tax law changes
(6)
|
-
|
1.4
|
(1.4)
|
(0.02)
|
Royalty acceleration
(4)
|
-
|
20.4
|
(20.4)
|
(0.27)
|
Adjusted (Non-U.S.
GAAP)
|
$573.2
|
$95.6
|
$498.8
|
$6.57
|
|
|
|
|
|
|
|
Three months ended
September 30, 2020
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$99.2
|
$21.1
|
$82.3
|
$1.09
|
Pension Settlement
(5)
|
-
|
0.3
|
0.8
|
0.01
|
Restructuring and
severance related charges (1)
|
4.5
|
1.1
|
3.4
|
0.04
|
Amortization of
Acquisition-related Intangible Assets (2)
|
0.2
|
-
|
0.7
|
0.01
|
Adjusted (Non-U.S.
GAAP)
|
$103.9
|
$22.5
|
$87.2
|
$1.15
|
|
|
Nine months ended
September 30, 2020
|
Operating
profit
|
Income
tax
expense
|
Net
income
|
Diluted
EPS
|
Reported (U.S.
GAAP)
|
$290.8
|
$52.1
|
$247.8
|
$3.28
|
Pension Settlement
(5)
|
-
|
0.8
|
2.6
|
0.03
|
Restructuring and
severance related charges (1)
|
6.7
|
1.7
|
5.0
|
0.06
|
Amortization of
Acquisition-related Intangible Assets (2)
|
0.4
|
0.1
|
2.9
|
0.04
|
Adjusted (Non-U.S.
GAAP)
|
$297.9
|
$54.7
|
$258.3
|
$3.41
|
|
|
(1)
|
During the three and
nine months ended September 30, 2021, the Company recorded $0.3
million and $2.5 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 nine months ended September 30, 2020, the Company
recorded $4.5 million and $6.7 million, respectively, in
restructuring and severance related charges in connection with its
2020 plan to optimize certain organizational structures within the
Company.
|
|
|
(2)
|
During the three and
nine months ended September 30, 2021, the Company recorded $0.2
million and $0.6 million, respectively, of amortization expense
within operating profit associated with an acquisition of an
intangible asset during the second quarter of 2020. During the
three and nine months ended September 30, 2021, the company
recorded $0.5 million and $1.6 million, respectively, of
amortization expense in association with an acquisition of
increased ownership interest in Daikyo. During the three and nine
months ended September 30, 2020, the Company recorded $0.2 million
and $0.4 million, respectively, of amortization expense within
operating profit associated with an acquisition of an intangible
asset during the second quarter of 2020. During the three and nine
months ended September 30, 2020, the company recorded $0.5 million
and $2.5 million, respectively, of amortization expense in
association with an acquisition of increased ownership interest in
Daikyo.
|
|
|
(3)
|
During the three
months ended September 30, 2021, we recorded a net loss of $0.9
million on the sale of one of the Company's cost investments.
During the nine months ended September 30, 2021, we recorded a net
loss in our cost investment activity of $1.8 million, inclusive of
an impairment charge of $2.2 million for one of the Company's cost
investments recognized in the first quarter. For the three and nine
months ended September 30, 2020, there was no activity related to
our cost investments.
|
|
|
(4)
|
During the three and
nine months ended September 30, 2021, the Company prepaid future
royalties from one of its subsidiaries, which resulted in a $20.4
million net tax benefit.
|
|
|
(5)
|
During the nine
months ended September 30, 2021, the Company recorded a pension
settlement charge of $0.7 million, within other nonoperating
(income) expense, as it determined that normal-course lump-sum
payments for each of our U.S. qualified defined benefit pension
plan exceeded the threshold for settlement accounting.
|
|
|
|
During the three and
nine months ended September 30, 2020, the Company recorded a
pension settlement charge of $1.1 million and $3.4 million,
respectively, within other nonoperating (income) expense, as it
determined that normal-course lump-sum payments for each of our
U.S. qualified and non-qualified defined benefit pension plan
exceeded the threshold for settlement accounting.
|
|
|
(6)
|
During the nine
months ended September 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 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
Net Sales to Organic Net Sales (7)
|
|
Three months ended
September 30, 2021
|
Proprietary
|
CM
|
Eliminations
|
Total
|
Reported net sales
(U.S. GAAP)
|
$577.0
|
$129.7
|
$(0.2)
|
$706.5
|
Effect of changes in
currency translation rates
|
(5.0)
|
(0.5)
|
-
|
(5.5)
|
Organic net sales
(non-U.S. GAAP) (7)
|
$572.0
|
$129.2
|
$(0.2)
|
$701.0
|
|
|
Nine months ended
September 30, 2021
|
Proprietary
|
CM
|
Eliminations
|
Total
|
Reported net sales
(U.S. GAAP)
|
$1,708.0
|
$393.2
|
$(0.4)
|
$2,100.8
|
Effect of changes in
currency translation rates
|
(57.9)
|
(9.3)
|
-
|
(67.2)
|
Organic net sales
(non-U.S. GAAP) (7)
|
$1,650.1
|
$383.9
|
$(0.4)
|
$2,033.6
|
|
|
(7)
|
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
|
$8.60 to
$8.70
|
88.2% to
90.4%
|
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
|
0.02
|
-
|
Tax law
change
|
-
|
(0.02)
|
-
|
Royalty
acceleration
|
-
|
(0.27)
|
-
|
Adjusted-diluted EPS
(Non-U.S. GAAP) (8)
|
$4.76
|
$8.40 to
$8.50
|
76.5% to
78.6%
|
|
|
|
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.
|
|
|
|
|
(8)
|
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 nine months of 2021, tax benefits associated with stock-based
compensation increased adjusted-diluted EPS by $0.35. 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)
|
|
|
Nine months Ended
September 30,
|
|
2021
|
2020
|
Depreciation and
amortization
|
$87.9
|
$80.6
|
Operating cash
flow
|
$423.2
|
$323.8
|
Capital
expenditures
|
$176.9
|
$116.7
|
WEST
PHARMACEUTICAL SERVICES
|
FINANCIAL
CONDITION
|
(UNAUDITED)
|
(in
millions)
|
|
|
As
of September 30,
2021
|
As
of December 31, 2020
|
Cash and cash
equivalents
|
$688.0
|
$615.5
|
Accounts receivable,
net
|
$476.4
|
$385.3
|
Inventories
|
$353.8
|
$321.3
|
Accounts
payable
|
$207.7
|
$213.1
|
Debt
|
$254.1
|
$255.2
|
Equity
|
$2,202.3
|
$1,854.5
|
Working
capital
|
$1,039.7
|
$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.