West Announces First-Quarter 2020 Results

West Pharmaceutical Services, Inc.

EXTON, PA — West Pharmaceutical Services, Inc. (NYSE: WST) announced its financial results for the first-quarter 2020 and updated full-year 2020 financial guidance.

First-Quarter 2020 Summary (comparisons to prior-year period)

  • Net sales of $491.5 million grew 10.8%; organic sales growth was 12.7%.
  • Reported-diluted EPS of $0.99 increased 36%.
  • Adjusted-diluted EPS of $1.01 increased 36%.
  • The Company is maintaining full-year 2020 net sales guidance and is updating full-year 2020 adjusted-diluted EPS guidance to a new range of $3.52 to $3.62, compared to a prior range of $3.45 to $3.55.

“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.

“During these unprecedented times, our priorities are focused on the well-being and safety of our team members as well as ensuring the supply of critical, high-quality components and solutions to our customers,” said Eric M. Green, President and Chief Executive Officer.

“I am extremely pleased that we delivered a strong performance in the first quarter given the challenging environment that the COVID-19 pandemic has had on our customers, our suppliers and our team members.

“In particular, we continued to deliver strong sales growth in high-value products, as demand trends from our worldwide customer base were similar to trends we saw last year.  Additionally, our teams are partnering with a broad range of customers working to support efforts to develop solutions that address the global COVID-19 pandemic such as diagnostics, anti-viral therapeutics and vaccines.”

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Mr. Green continued, “I am proud with the way our team across the globe is responding during these challenging times.  They exemplify our One West philosophy in the way they are supporting our customers, patients and the local communities where our team members live and work.”

Proprietary Products Segment
Net sales grew by 9.7% to $373.5 million.  Organic sales growth was 11.8% with currency translation decreasing sales growth by 250 basis points.  High-value products (components and devices) represented 63% of segment sales and generated double-digit organic sales growth.

The segment saw good demand for Westar®, Daikyo®, NovaPure® and FluroTec® components as well as for devices such as Daikyo Crystal Zenith® syringes and cartridges and the Company’s self-injection platforms.

The Biologics market unit had strong double-digit organic sales growth.  The Generics market unit had high-single digit organic sales growth, and the Pharma market unit had mid-single digit organic sales growth.

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Contract-Manufactured Products Segment
Net sales grew by 14.5% to $118.1 million.  Organic sales growth was 15.9% with currency translation decreasing sales growth by 140 basis points.  Segment performance was led by sales of components for diagnostic devices as well as drug-injection delivery devices.

Financial Highlights
Operating cash flow was $57.1 million, an increase of 20%.  Capital expenditures in the quarter were $32.1 million.  Free cash flow (operating cash flow minus capital expenditures) was $25.0 million, an increase of 33%.

During the quarter, the Company repurchased 761,500 shares for $115.5 million at an average share price of $151.65 under its share repurchase program.

The Compay reports capital and financial resources, including overall liquidity, remain strong.  West believes that cash on hand and cash generated from operations, together with availability under the Company’s Credit Facility, will be adequate to address their foreseeable liquidity needs based on the current expectations of their business operations, capital expenditures and scheduled payments of debt obligations.

Full-Year 2020 Financial Guidance

  • Full-year 2020 net sales guidance continues to be in a range of $1.95 billion to $1.97 billion.
    • Organic sales growth is expected to be approximately 8%, compared to a prior guidance range of 7% to 8%.
    • Net sales guidance includes an estimated full-year headwind of $26 million for the full-year 2020 based on current foreign exchange rates, compared to prior guidance of $15 million.
  • Full-year 2020 adjusted-diluted EPS is expected to be in a range of $3.52 to $3.62, compared to prior guidance range of $3.45 to $3.55.
    • Full-year adjusted-diluted EPS guidance includes an estimated headwind of approximately $0.07 based on current foreign currency exchange rates, compared to prior guidance of approximately $0.04.
    • The revised guidance includes a $0.07 EPS impact from first-quarter tax benefits from stock-based compensation.
    • For the remainder of the year, the Company’s EPS guidance range assumes a tax rate of 24% 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 2020 would provide a positive adjustment to their full-year EPS guidance.
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