West Announces Second-Quarter 2021 Results

West Pharmaceutical Services, Inc. (NYSE: WST)

EXTON, PA West Pharmaceutical Services, Inc. (NYSE: WST) recently announced its financial results for the second-quarter 2021 and updated full-year 2021 financial guidance.

Second-Quarter 2021 Summary (comparisons to prior-year period)

  • Net sales of $723.6 million grew 37.3%; organic sales growth was 30.6%.
  • Reported-diluted EPS of $2.47 increased 104%.
  • Adjusted-diluted EPS of $2.46 increased 97%.
  • Company is raising full-year 2021 net sales guidance to a new range of $2.760 billion to $2.785 billion, compared to a prior range of $2.630 billion to $2.655 billion.
  • Company is raising full-year 2021 adjusted-diluted EPS guidance to a new range of $8.05 to $8.20, compared to a prior range of $6.95 to $7.10.

“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 strong second quarter performance was driven by continued momentum in organic sales growth in both our base business as well as increased demand for our products associated with COVID-19 vaccines,” said Eric M. Green, President and Chief Executive Officer.

“Guided by our mission, our dedicated team members remain focused on meeting the increased demand for our high-value product (HVP) components.  Our market-led strategy coupled with our scientific leadership and regulatory insights in primary packaging and delivery of injectable drugs have resonated with our customers, resulting in a high participation rate on newly approved molecular entities, especially large molecule therapies.

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“Over the past year and half, we have accelerated capital spending and expanded global HVP manufacturing capacity.  Based on growing future demand from our customers, we are announcing another tranche of capital spending to expand HVP capacity that we expect will be ready for production in 2022.  Given the strong first half of the year, we are raising our full-year financial guidance.”

Proprietary Products Segment

Net sales grew by 47.0% to $587.3 million.  Organic sales growth was 39.3%, with currency translation increasing sales growth by 770 basis points. HVP sales represented over 70% of segment sales and generated double-digit organic sales growth, led by customer demand for Westar®, NovaPure®, FluroTec®, Daikyo® and Envision® components.

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

Contract-Manufactured Products Segment

Net sales grew by 6.7% to $136.4 million.  Organic sales growth was 3.2% with currency translation increasing sales growth by 350 basis points.  Segment performance was led by sales of healthcare-related injection and diagnostic devices.

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Financial Highlights (first six months of 2021)

Operating cash flow was $233.1 million, an increase of 13.6%.  Capital expenditures were $111.6 million, an increase of 61% over the same period last year.  Free cash flow (operating cash flow minus capital expenditures) was $121.5 million, a decrease of 10.7%.

During the first-half 2021, the Company repurchased 479,000 shares for $137.1 million at an average share price of $286.23 under its share repurchase program.

Our capital and financial resources, including overall liquidity, remain strong.  We believe that cash on hand and cash generated from operations, together with availability under our $300.0 million multi-currency revolving credit facility, will be adequate to address our foreseeable liquidity needs based on our current expectations of our business operations, capital expenditures and scheduled payments of debt obligations.

Full-Year 2021 Financial Guidance

  • Full-year 2021 net sales are expected to be in a range of $2.760 billion to $2.785 billion, compared to a prior guidance range of $2.630 billion to $2.655 billion.
    • Organic sales growth is expected to be in a range of 24% to 25%, compared to a prior range of 19% to 20%.
    • Net sales guidance includes an estimated full-year 2021 benefit of $80 million based on current foreign exchange rates, compared to a prior estimated benefit of $75 million.
  • Full-year 2021 adjusted-diluted EPS is expected to be in a range of $8.05 to $8.20, compared to a prior range of $6.95 to $7.10.
    • Full-year adjusted-diluted EPS guidance range includes an estimated benefit of approximately $0.27 based on current foreign currency exchange rates, compared to a prior estimated benefit of $0.23.
    • The revised guidance includes a $0.24 EPS positive impact from first-half 2021 tax benefits from stock-based compensation.
    • For the remainder of the year, our EPS guidance range assumes a tax rate of 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-half 2021 would provide a positive adjustment to our full-year EPS guidance.
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