Full Press Release Details
- Conference Call Scheduled for 9 a.m. EDT Today -
EXTON, Pa. , July 28, 2022 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST ) today announced its financial results for the second-quarter 2022 and updated full-year 2022 financial guidance.
Second-Quarter 2022 Summary (comparisons to prior-year period)
"We delivered excellent second-quarter results with Proprietary Products organic net sales growth in the high-teens, led by demand for our high-value products ( HVPs )," said Eric M . Green, President, Chief Executive Officer and Chair of the Board. "Our base business continues to be strong, reflecting our team's successful execution of strategic initiatives and dedication to improving patient lives. In the quarter, COVID-19 related net sales slightly declined. While we expect further declines in COVID-19 related demand over the next two quarters, we also anticipate a more robust base business. We remain on track to expand our global HVP manufacturing capacity to support increased demand across our Biologics, Generics and Pharma market units."
Proprietary Products Segment Net sales grew by 11.3% to $653.7 million . Organic net sales growth was 18.3%, with currency translation decreasing sales growth by 700 basis points. HVP sales represented over 70% of segment sales and generated double-digit organic sales growth, led by customer demand for NovaPure ® , Envision ® and Daikyo Crystal Zenith ® components and for self-injection devices.
The Biologics and Generics market units had double-digit organic sales growth, and the Pharma market unit had mid-single digit organic sales growth.
Contract-Manufactured Products Segment Net sales declined by 13.6% to $117.8 million . Organic net sales declined by 8.9% with currency translation decreasing sales growth by 470 basis points. Segment sales declined primarily due to a decrease in sales of components for diagnostic devices.
Financial Highlights (first six months of 2022) Operating cash flow was $324.3 million , an increase of 39.1%. Capital expenditures were $131.9 million , an increase of 18.2% over the same period last year. Free cash flow (operating cash flow minus capital expenditures) was $192.4 million , an increase of 58.4%.
During the first-half 2022, the Company repurchased 476,667 shares for $175.7 million at an average share price of $368.54 under its share repurchase program.
Full-Year 2022 Financial Guidance
Second-Quarter 2022 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 https://bit.ly/3cgSM9S .
To participate and ask questions during the conference call, you must register in advance at https://bit.ly/3z4iU0g . 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
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, | ||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||
| Net sales | $771.3 | 100 % | $723.6 | 100 % | $1,491.3 | 100 % | $1,394.3 | 100 % | |
| Cost of goods and services sold | 449.8 | 58 | 408.5 | 56 | 885.2 | 59 | 807.3 | 58 | |
| Gross profit | 321.5 | 42 | 315.1 | 44 | 606.1 | 41 | 587.0 | 42 | |
| Research and development | 14.4 | 2 | 13.8 | 2 | 29.0 | 2 | 26.0 | 2 | |
| Selling, general and administrative expenses | 81.5 | 11 | 92.7 | 13 | 164.9 | 11 | 172.9 | 12 | |
| Other (income) expense, net | (2.8) | - | (2.7) | - | (5.9) | - | 1.2 | - | |
| Operating profit | 228.4 | 29 | 211.3 | 29 | 418.1 | 28 | 386.9 | 28 | |
| Interest expense, net | 1.4 | - | 1.7 | - | 3.3 | - | 3.5 | - | |
| Other nonoperating (income) expense | (0.2) | - | (1.4) | - | (0.2) | - | (2.5) | - | |
| Income before income taxes | 227.2 | 29 | 211.0 | 29 | 415.0 | 28 | 385.9 | 28 | |
| Income tax expense | 44.2 | 6 | 32.3 | 4 | 65.4 | 5 | 61.0 | 5 | |
| Equity in net income of affiliated companies | (5.5) | (1) | (8.6) | (1) | (12.7) | (1) | (13.6) | (1) | |
| Net income | $188.5 | 24 % | $187.3 | 26 % | $362.3 | 24 % | $338.5 | 24 % | |
| Net income per share: | |||||||||
| Basic | $2.53 | $2.53 | $4.87 | $4.58 | |||||
| Diluted | $2.48 | $2.47 | $4.77 | $4.47 | |||||
| Average common shares outstanding | 74.4 | 74.0 | 74.4 | 74.0 | |||||
| Average shares assuming dilution | 75.8 | 75.7 | 75.9 | 75.8 |
| WEST PHARMACEUTICAL SERVICES | ||||
| REPORTING SEGMENT INFORMATION | ||||
| (UNAUDITED) | ||||
| (in millions) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| Net Sales : | 2022 | 2021 | 2022 | 2021 |
| Proprietary Products | $653.7 | $587.3 | $1,255.0 | $1,131.0 |
| Contract-Manufactured Products | 117.8 | 136.4 | 236.5 | 263.5 |
| Eliminations | (0.2) | (0.1) | (0.2) | (0.2) |
| Consolidated Total | $771.3 | $723.6 | $1,491.3 | $1,394.3 |
| Gross Profit: | ||||
| Proprietary Products | $302.3 | $292.3 | $563.0 | $544.2 |
| Contract-Manufactured Products | 19.2 | 22.8 | 43.1 | 42.8 |
| Gross Profit | $321.5 | $315.1 | $606.1 | $587.0 |
| Gross Profit Margin | 41.7 % | 43.5 % | 40.6 % | 42.1 % |
| Operating Profit (Loss): | ||||
| Proprietary Products | $233.9 | $216.2 | $427.3 | $398.8 |
| Contract-Manufactured Products | 14.2 | 18.7 | 33.3 | 35.1 |
| Stock-based compensation expense | (5.5) | (10.3) | (11.0) | (16.2) |
| General corporate costs | (15.6) | (13.4) | (32.7) | (27.3) |
| Adjusted Operating Profit | $227.0 | $211.2 | $416.9 | $390.4 |
| Adjusted Operating Profit Margin | 29.4 % | 29.2 % | 28.0 % | 28.0 % |
| Other unallocated items | 1.4 | 0.1 | 1.2 | (3.5) |
| Reported Operating Profit | $228.4 | $211.3 | $418.1 | $386.9 |
| Reported Operating Profit Margin | 29.6 % | 29.2 % | 28.0 % | 27.7 % |
| 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, 2022 | Operating profit | Income tax expense | Net income | Diluted EPS |
| Reported (U.S. GAAP) | $228.4 | $44.2 | $188.5 | $2.48 |
| Unallocated items: | ||||
| Restructuring and severance related charges (1) | (1.6) | (0.4) | (1.2) | (0.01) |
| Pension settlement (2) | - | 0.2 | 0.4 | 0.01 |
| Amortization of acquisition-related intangible assets (3) | 0.2 | - | 0.7 | 0.01 |
| Royalty acceleration (4) | - | 1.3 | (1.3) | (0.02) |
| Adjusted (Non-U.S. GAAP) | $227.0 | $45.3 | $187.1 | $2.47 |
| Six months ended June 30, 2022 | Operating profit | Income tax expense | Net income | Diluted EPS |
| Reported (U.S. GAAP) | $418.1 | $65.4 | $362.3 | $4.77 |
| Unallocated items: | ||||
| Restructuring and severance related charges (1) | (1.6) | (0.4) | (1.2) | (0.01) |
| Pension settlement (2) | - | 0.3 | 0.9 | 0.01 |
| Amortization of acquisition-related intangible assets (3) | 0.4 | - | 1.4 | 0.02 |
| Royalty acceleration (4) | - | 1.3 | (1.3) | (0.02) |
| Adjusted (Non-U.S. GAAP) | $416.9 | $66.6 | $362.1 | $4.77 |
| 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 | (1.3) | (0.3) | (1.0) | (0.01) |
| Tax law changes | - | 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 relatedcharges (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 | 0.9 | (0.3) | 1.2 | 0.01 |
| Tax law changes | - | 1.4 | (1.4) | (0.02) |
| Adjusted (Non-U.S. GAAP) | $390.4 | $62.9 | $342.0 | $4.51 |
| (1) | During the three and six months ended June 30, 2022, the Company recorded a benefit of $1.6 million in restructuring and related costs in connection with its 2020 plan related to revised severance estimates. During the three and six months ended June 30, 2021, the Company recorded $1.0 million and $2.2 million of restructuring and related costs. |
| (2) | The Company recorded a pension settlement charge 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, 2022, 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, 2022, 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, 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. |
| (4) | During the three and six months ended June 30, 2022, the Company increased its expected tax benefit related to the prepayment of future royalties from one of its subsidiaries by $1.3 million. |
| 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 (5) | ||||
| Three months ended June 30, 2022 | Proprietary | CM | Eliminations | Total |
| Reported net sales (U.S. GAAP) | $653.7 | $117.8 | $(0.2) | $771.3 |
| Effect of changes in currency translation rates | 41.0 | 6.4 | - | 47.4 |
| Organic net sales (Non-U.S. GAAP) (5) | $694.7 | $124.2 | $(0.2) | $818.7 |
| Six months ended June 30, 2022 | Proprietary | CM | Eliminations | Total |
| Reported net sales (U.S. GAAP) | $1,255.0 | $236.5 | $(0.2) | $1,491.3 |
| Effect of changes in currency translation rates | 61.6 | 10.0 | - | 71.6 |
| Organic net sales (Non-U.S. GAAP) (5) | $1,316.6 | $246.5 | $(0.2) | $1,562.9 |
| 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 | |||
| 2021 Actual | 2022 Guidance | % Change | |
| Reported-diluted EPS (U.S. GAAP) | $8.67 | $8.98 to $9.13 | 3.6% to 5.3% |
| Pension settlement | 0.02 | 0.01 | |
| Cost investment activity | 0.06 | ||
| Restructuring and severance related charges | 0.02 | (0.01) | |
| Amortization of acquisition-related intangible assets | 0.04 | 0.04 | |
| Asset impairment | 0.04 | ||
| Royalty acceleration | (0.25) | (0.02) | |
| Tax law changes | (0.02) | ||
| Adjusted-diluted EPS (Non-U.S. GAAP) (6) | $8.58 | $9.00 to $9.15 | 4.9% to 6.6% |
| Notes: |
| See "Full-year 2022 Financial Guidance" and "Non-U.S. GAAP Financial Measures" in today's press release for additional information regarding adjusted-diluted EPS. |
| WEST PHARMACEUTICAL SERVICES | ||
| CASH FLOW ITEMS | ||
| (UNAUDITED) | ||
| (in millions) | ||
| Six Months Ended June 30, | ||
| 2022 | 2021 | |
| Depreciation and amortization | $59.7 | $57.9 |
| Operating cash flow | $324.3 | $233.1 |
| Capital expenditures | $131.9 | $111.6 |
| Free cash flow | $192.4 | $121.5 |
| WEST PHARMACEUTICAL SERVICES | ||
| FINANCIAL CONDITION | ||
| (UNAUDITED) | ||
| (in millions) | ||
| As of June 30, 2022 | As of December 31, 2021 | |
| Cash and cash equivalents | $718.5 | $762.6 |
| Accounts receivable, net | $528.4 | $489.0 |
| Inventories | $411.6 | $378.4 |
| Accounts payable | $220.0 | $232.2 |
| Debt | $252.0 | $253.0 |
| Equity | $2,424.4 | $2,335.4 |
| Working capital | $1,206.0 | $1,147.9 |
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.
SOURCE West Pharmaceutical Services, Inc.