EXTON, PA — West Pharmaceutical Services, Inc. (NYSE: WST) publicized its Q1 2024 financial results, revealing a 3.0% sales slump compared to last year. Both net sales, totaling $695.4 million, and organic net sales witnessed the 3% dip. The reported-diluted earnings per share (EPS) went down by a significant 16.2%, arriving at $1.55. The adjusted-diluted EPS suffered a steeper fall by 21.2% and stands at $1.56.
Despite the decline in sales and EPS, West Pharmaceutical is maintaining its original full-year forecast. The company expects net sales to total between $3.000 billion and $3.025 billion in 2024.
Yet the company offered a sliver of optimism as it upgrades its 2024 full-year guidance for the adjusted-diluted EPS. The earlier range of $7.50 to $7.75 has been revised upwards to $7.63 to $7.88.
The company is also set to distribute a third-quarter 2024 dividend of $0.20 per share, which will be paid on August 7, 2024, to shareholders recorded as of July 31, 2024.
The company’s CEO, Eric M. Green, stated that despite a rocky start, they expect stronger sales growth in the latter half of 2024. To support these future sales, the company is continually investing in new manufacturing facilities in both the Contract Manufacturing and the Proprietary Products segments.
There was, however, a sales decrease in the Proprietary Products segment by 4.0%, amounting to $559.5 million, despite the positive impact of currency translation by 50 basis points. The decline was attributed to a decrease in the sales of FluroTec®, Westar®, and standard components, which overshadowed the growth of NovaPure®.
Contract-Manufactured Products, on the other hand, enjoyed a modest sales increase of 1.8%, totaling $135.9 million.
Financially, many aspects fell short. Operating cash flow decreased by 14.4% to $118.2 million, with capital expenditures amounting to $90.6 million. Furthermore, there was a dramatic drop in free cash flow (operating cash flow minus capital expenditures) by 50.7% to reach $27.6 million.
The company repurchased 729,679 shares at an average price of $365.87 under its share repurchase program, costing the company $267.0 million during the quarter.
Looking ahead to the full fiscal year 2024, West Pharmaceutical expects a 2% to 3% organic net sales growth but predicts some headwinds due to foreign currency exchange rates, estimated to impact the net sales by approximately $8.0 million. The revised full-year adjusted-diluted EPS guidance factors in a $0.15 EPS from Q1 2024 tax benefits from stock-based compensation. However, for the remaining parts of 2024, the tax rate is expected to be 22.5%, excluding potential tax benefits from stock-based compensation.
In terms of capital spending, the company stays on course with its original forecast of $350 million. These financial updates underscore the company’s resilience and commitment to strategic growth amidst economic uncertainties.
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