EXTON, Pa., April 25, 2019 /PRNewswire/ -- West
Pharmaceutical Services, Inc. (NYSE: WST) today announced its
financial results for the first-quarter 2019 and updated full-year
2019 financial guidance.
First-Quarter 2019 Summary (comparisons to prior-year
period)
- Net sales of $443.5 million grew
7%, organic sales growth was 11%
- Reported-diluted EPS of $0.73
increased 26%
- Adjusted-diluted EPS of $0.74
increased 19%
- Repurchased 800,000 shares of common stock for $83.1 million
- Company reaffirms full-year 2019 net sales guidance and raises
full-year 2019 adjusted-diluted EPS guidance to a new range between
$2.80 and $2.90, compared to a prior range between
$2.77 and $2.89.
"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 organization executed on multiple fronts to deliver a
strong start to the year, with good growth performance across all
segments and market units," said Eric M.
Green, President and Chief Executive Officer. "With
double-digit organic sales growth in high-value products, coupled
with continued execution on Global Operations strategic
initiatives, we expanded adjusted operating profit margin by 250
basis points."
Proprietary Products Segment
Net sales grew by 4.3% to $340.4
million. Organic sales growth was 9.4% with currency
translation decreasing sales by 5.1%. High-value products
(HVP) represented 60% of segment sales and had double-digit organic
sales growth.
Our Biologics market unit had double-digit organic sales growth,
led by HVP components such as NovaPure® and
Westar® RU. Our Generics market unit had
high-single digit organic sales growth, seeing a substantial
increase in sales related to self-injection delivery device
development agreements. Our Pharma market unit had low-single
digit growth, impacted by a decline in Vial2Bag® sales
due to our previously discussed voluntary recall.
Contract-Manufactured Products Segment
Net sales grew by 15.3% to $103.1
million. Organic sales growth was 18.9% with currency
translation decreasing sales by 3.6%. Segment performance was
led by strong sales of healthcare-related injection and diagnostic
devices.
Financial Highlights
Operating cash flow was $47.6
million, an increase of 5.8%. Capital expenditures in
the quarter were $28.8 million.
Free cash flow (operating cash flow minus capital expenditures) was
$18.8 million, an increase of
10.6%.
During the quarter, the Company repurchased 800,000 shares for
$83.1 million at an average share
price of $103.89, which completed the
2019 share repurchase program authorized by the Company's Board of
Directors.
The Company recorded $0.6 million
of restructuring and related charges in the first-quarter 2019 from
Global Operations actions that are streamlining our manufacturing
network. This plan is expected to be completed by the end of
2019 and to require $7.0 million of
restructuring and related charges in 2019. Implemented in the
first-quarter of 2018, the Company expects cumulative expenses over
the plan period to be approximately $15.0
million. Once fully completed, the Company anticipates
that the plan will provide annualized savings of approximately
$14.0 million.
Full-Year 2019 Financial Guidance
- Continuing to expect net sales to be in a range between
$1.795 billion and $1.820 billion
-
- Reaffirming organic sales growth range of 6% to 8%
- Net sales guidance includes a headwind of $34 million to $37
million for the full-year 2019 based on current foreign
exchange rates, compared to prior guidance of a full-year negative
impact of $30 million
- Raising adjusted-diluted EPS to a new range between
$2.80 and $2.90, compared to prior guidance range between
$2.77 and $2.89
-
- Includes an estimated headwind of approximately $0.07 to $0.08
based on current foreign currency exchange rates, compared to prior
guidance of a full-year negative impact of $0.06
First-Quarter 2019 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 7794502.
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, May 2, 2019, by
dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and
entering conference ID 7794502.
Investor
Contact:
|
|
Media
Contact:
|
Quintin
Lai
|
|
Emily
Denney
|
Vice President,
Investor Relations
|
|
Vice President,
Communications
|
(610)
594-3318
|
|
(610)
594-3035
|
Quintin.Lai@westpharma.com
|
|
Emily.Denney@westpharma.com
|
Forward-Looking Statements
Certain forward-looking statements are included in this
release. They use such words as "reaffirms," "raises,"
"expected," "require." "anticipates," "complete," "expects,"
"provide," "continuing," "expect," "reaffirming," "includes,"
"raising," 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: customers' changing inventory
requirements and manufacturing plans; customer decisions to move
forward with our new products and product categories; average
profitability, or mix, of the products we sell; dependence on
third-party suppliers and partners; interruptions or weaknesses in
our supply chain; increased raw material costs; fluctuations in
currency exchange; the ability to meet development milestones with
key customers; our analysis of the root cause of the circumstances
relating to the voluntary recall is still underway and we cannot
predict the time or expense required to address the issues; our
estimates of the impact on our financial results related to the
voluntary recall are preliminary and subject to change as we
conduct further analysis; and the voluntary recall and the related
circumstances could subject us to claims or proceedings which may
adversely impact our net sales and net income, as well as harm our
reputation and customer relationships or distract management from
operating our business. 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 Item 1A,
entitled "Risk Factors," in the Company's Annual Report on Form
10-K for the year ended December 31,
2018.
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 translates 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
(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,
|
|
2019
|
2018
|
Net sales
|
$443.5
|
100%
|
$415.7
|
100%
|
Cost of goods and
services sold
|
296.7
|
67
|
281.3
|
68
|
Gross
profit
|
146.8
|
33
|
134.4
|
32
|
Research and
development
|
9.8
|
2
|
9.6
|
2
|
Selling, general and
administrative expenses
|
68.6
|
15
|
68.3
|
16
|
Other (income)
expense, net
|
(2.3)
|
-
|
3.1
|
1
|
Operating
profit
|
70.7
|
16
|
53.4
|
13
|
Interest expense,
net
|
1.4
|
-
|
1.3
|
-
|
Other nonoperating
income
|
(0.6)
|
-
|
(1.6)
|
-
|
Income before income
taxes
|
69.9
|
16
|
53.7
|
13
|
Income tax
expense
|
16.1
|
4
|
12.5
|
3
|
Equity in net income
of affiliated companies
|
(1.6)
|
-
|
(2.4)
|
-
|
Net income
|
$55.4
|
12%
|
$43.6
|
10%
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
Basic
|
$0.75
|
|
$0.59
|
|
Diluted
|
$0.73
|
|
$0.58
|
|
|
|
|
|
|
Average common shares
outstanding
|
74.1
|
|
73.9
|
|
Average shares
assuming dilution
|
75.3
|
|
75.5
|
|
WEST
PHARMACEUTICAL SERVICES
|
REPORTING SEGMENT
INFORMATION
|
(UNAUDITED)
|
(in
millions)
|
|
|
Three Months
Ended
|
|
March
31,
|
Net
Sales:
|
2019
|
2018
|
Proprietary
Products
|
$340.4
|
$326.2
|
Contract-Manufactured
Products
|
103.1
|
89.5
|
Consolidated
Total
|
$443.5
|
$415.7
|
|
|
|
Gross
Profit:
|
|
|
Proprietary
Products
|
$132.3
|
$121.2
|
Contract-Manufactured
Products
|
14.5
|
13.2
|
Gross
Profit
|
$146.8
|
$134.4
|
Gross Profit
Margin
|
33.1%
|
32.3%
|
|
|
|
Operating Profit
(Loss):
|
|
|
Proprietary
Products
|
$77.0
|
$62.8
|
Contract-Manufactured
Products
|
10.5
|
9.5
|
U.S. pension
expense
|
-
|
(2.4)
|
Stock-based
compensation expense
|
(6.2)
|
(3.4)
|
General corporate
costs
|
(10.0)
|
(9.8)
|
Adjusted Operating
Profit
|
$71.3
|
$56.7
|
Adjusted Operating
Profit Margin
|
16.1%
|
13.6%
|
Restructuring and
related charges
|
(0.6)
|
(3.3)
|
Reported Operating
Profit
|
$70.7
|
$53.4
|
Reported Operating
Profit Margin
|
15.9%
|
12.8%
|
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, 2019
|
Operating
profit
|
Income tax
expense
|
Net
income
|
Diluted
EPS
|
Reported
(GAAP)
|
$70.7
|
$16.1
|
$55.4
|
$0.73
|
Restructuring and
related charges (1)
|
0.6
|
0.2
|
0.4
|
0.01
|
Adjusted
(Non-GAAP)
|
$71.3
|
$16.3
|
$55.8
|
$0.74
|
|
Three months ended
March 31, 2018
|
Operating
profit
|
Income tax
expense
|
Net
income
|
Diluted
EPS
|
Reported
(GAAP)
|
$53.4
|
$12.5
|
$43.6
|
$0.58
|
Restructuring and
related charges (1)
|
3.3
|
0.6
|
2.7
|
0.03
|
Tax law changes
(2)
|
-
|
(0.3)
|
0.3
|
0.01
|
Adjusted
(Non-GAAP)
|
$56.7
|
$12.8
|
$46.6
|
$0.62
|
|
|
(1)
|
During the three
months ended March 31, 2019 and 2018, the Company recorded $0.6
million and $3.3 million, respectively, in restructuring and
related charges. The Company anticipates approximately $7.0 million
of restructuring and related charges in 2019 to complete its
current plan. Once fully completed, the Company expects that the
plan will provide annualized savings of approximately $14.0
million.
|
|
|
(2)
|
During the three
months ended March 31, 2018, the Company recorded a net tax charge
of $0.3 million for the estimated impact of the Tax Cuts and Jobs
Act.
|
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)
|
|
Three months ended
March 31, 2019
|
Proprietary
|
CM
|
Eliminations
|
Total
|
Reported net sales
(GAAP)
|
$340.4
|
$103.1
|
$ -
|
$443.5
|
Effect of
acquisitions and/or divestitures
|
-
|
-
|
-
|
-
|
Effect of changes in
currency translation rates
|
16.3
|
3.3
|
-
|
19.6
|
Organic net sales
(Non-GAAP) (3)
|
$356.7
|
$106.4
|
$ -
|
$463.1
|
|
|
(3)
|
Organic net sales
exclude the impact from acquisitions and/or divestitures and
translates 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-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
|
|
|
2018
Actual
|
2019
Guidance
|
% Change
|
Reported-diluted EPS
(GAAP)
|
$2.74
|
$2.73 to
$2.83
|
(0.4%) to
3.3%
|
Restructuring and
related charges
|
0.08
|
0.07
|
|
Argentina
devaluation
|
0.02
|
-
|
|
Tax law
changes
|
(0.03)
|
-
|
|
Adjusted-diluted EPS
(Non-GAAP) (4)
|
$2.81
|
$2.80 to
$2.90
|
(0.4%) to
3.2%
|
|
Notes:
|
|
|
See "Full-Year 2019
Financial Guidance" and "Non-U.S. GAAP Financial Measures" in
today's press release for additional information regarding
adjusted-diluted EPS.
|
|
|
|
(4)
|
In 2018, tax benefits
associated with stock-based compensation increased adjusted-diluted
EPS by $0.19. We have opted not to forecast 2019 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 2019, tax benefits
associated with stock-based compensation increased adjusted-diluted
EPS by $0.02. Any future tax benefits associated with
stock-based compensation that we receive in 2019 would provide a
positive adjustment to our full-year EPS guidance.
|
WEST
PHARMACEUTICAL SERVICES
|
CASH FLOW
ITEMS
|
(UNAUDITED)
|
(in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
2018
|
Depreciation and
amortization
|
$25.5
|
$26.4
|
Operating cash
flow
|
$47.6
|
$45.0
|
Capital
expenditures
|
$28.8
|
$28.0
|
WEST
PHARMACEUTICAL SERVICES
|
FINANCIAL
CONDITION
|
(UNAUDITED)
|
(in
millions)
|
|
|
As of
March 31, 2019
|
As of
December 31, 2018
|
Cash and cash
equivalents
|
$265.5
|
$337.4
|
Accounts receivable,
net
|
$318.2
|
$288.2
|
Inventories
|
$226.1
|
$214.5
|
Accounts
payable
|
$137.7
|
$130.4
|
Debt
|
$195.5
|
$196.1
|
Equity
|
$1,372.9
|
$1,396.3
|
Working
capital
|
$562.9
|
$610.7
|
Trademark Notices
Trademarks and registered trademarks are the property of West
Pharmaceutical Services, Inc., in the
United States and other jurisdictions, unless noted
otherwise.
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SOURCE West Pharmaceutical Services, Inc.