EXTON, PA — West Pharmaceutical Services, Inc. (NYSE: WST) recently announced its financial results for the fourth-quarter and full-year 2022 and introduced full-year 2023 financial guidance.
Fourth-Quarter and Full-Year 2022 Summary (comparisons to prior-year period)
- Fourth-quarter 2022 net sales of $708.7 million declined 3.0%; organic net sales growth was 2.6%. Full-year 2022 net sales of $2.887 billion grew 2.0%; organic net sales growth was 7.7%.
- Fourth-quarter 2022 reported-diluted EPS of $1.36 decreased 29.5%. Full-year 2022 reported-diluted EPS of $7.73 decreased 10.8%.
- Fourth-quarter 2022 adjusted-diluted EPS of $1.77 decreased 13.2%. Full-year 2022 adjusted-diluted EPS of $8.58 was flat compared to last year.
- The Company is introducing full-year 2023 financial guidance of net sales in a range of $2.935 billion to $2.960 billion and adjusted-diluted EPS in a range of $7.25 to $7.40.
- The Board of Directors approved a share repurchase program under which the Company may repurchase up to $1.0 billion in shares of common stock. This program does not have a specified expiration date. The Company’s previously-authorized share repurchase program expired on December 31, 2022.
“Adjusted-diluted EPS” and “organic net sales growth” are Non-U.S. GAAP measurements. See the discussion under the heading “Non-U.S. GAAP Financial Measures” in Company’s original release.
“I am pleased to report that we had a solid finish to 2022 and that we enter 2023 with a strong order book and continued demand for our core business,” said Eric M. Green, President, Chief Executive Officer and Chair of the Board of Directors. “I am extremely proud of the many accomplishments by our global team members, as our Company has supplied critical components, solutions and systems to our base and COVID-19 related customers. Though pandemic-related product demand is declining, we continue to see overall demand growth, especially from our biologic customers. We are managing our cost structure to address an ongoing inflationary environment and remain committed to a capital spending program that expands our high-value product (HVP) manufacturing capacity to stay ahead of our accelerating customer demand from recent launches and anticipated drug programs in the coming years.”
Proprietary Products Segment
In the fourth-quarter 2022, net sales declined by 4.0% to $584.8 million. Organic net sales growth was 1.8%, with currency translation decreasing net sales growth by 580 basis points. HVP components and devices represented approximately 72% of segment net sales and had flat net organic sales growth compared to the prior year.
The Generics market unit had double-digit organic net sales growth, and the Pharma market unit had high-single digit organic net sales growth. The Biologics market unit had organic net sales decline of mid-single digit primarily due to a reduction in sales related to COVID-19 vaccines. In the quarter, Proprietary Product organic net sales performance was led by double-digit sales growth of Envision®, Crystal Zenith®, and film-coated component categories, which were offset by a decline in NovaPure® sales related to COVID-19 vaccines.
In the full-year 2022, net sales grew 3.9% to $2.407 billion. Organic net sales growth was 9.8%, with currency translation decreasing net sales growth by 590 basis points. HVP components and devices represented approximately 73% of segment net sales and generated double-digit organic net sales growth.
Contract-Manufactured Products Segment
In the fourth-quarter 2022, net sales grew by 2.0% to $123.9 million. Organic net sales grew by 7.0%, with currency translation decreasing net sales growth by 500 basis points. Segment performance was led by growth in medical device products.
In the full-year 2022, net sales declined by 6.7% to $480.4 million. Organic net sales declined by 2.0%, with currency translation decreasing net sales growth by 470 basis points.
Full-Year 2022 Financial Highlights
Operating cash flow was $724.0 million, an increase of 24.0 %. Capital expenditures were $284.6 million, compared with $253.4 million in 2021. Free cash flow (operating cash flow minus capital expenditures) was $439.4 million, an increase of 32.9%.
During the year ended December 31, 2022, we purchased 563,334 shares of our common stock under the now completed program at a cost of $202.8 million, or an average price of $360.03 per share. The Board of Directors has approved a new share repurchase program under which the Company may repurchase up to $1.0 billion in shares of common stock. Repurchases may be made at management’s discretion from time to time on the open market or through privately-negotiated transactions. This program does not have a specified expiration date. The number of shares to be repurchased will depend on a variety of factors, including economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations.
Introducing Full-Year 2023 Financial Guidance
- Full-year 2023 net sales are expected to be in a range of $2.935 billion to $2.960 billion.
- Organic net sales growth is expected to be approximately 3% to 4%.
- Net sales guidance assumes COVID-19 related sales of approximately $85 million, compared to $388 million in 2022.
- Net sales guidance includes an estimated full-year 2023 headwind of $30 million based on current foreign currency exchange rates.
- Full-year 2023 adjusted-diluted EPS is expected to be in a range of $7.25 to $7.40.
- Full-year adjusted-diluted EPS guidance range includes an estimated headwind of approximately $0.11 based on current foreign currency exchange rates.
- This adjusted-diluted EPS guidance range assumes a full-year 2023 tax rate of approximately 23%, which does not include potential tax benefits from stock-based compensation. As in prior years, we are not including potential 2023 tax benefits from stock-based compensation, as they are out of the Company’s control. Any tax benefits associated with stock-based compensation that we receive in 2023 would provide a positive adjustment to our full-year EPS guidance.
- Full-year 2023 capital spending is expected to be $350 million. This includes incremental capital spending to support capacity expansions at existing HVP facilities.
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