West Announces Third-Quarter 2023 Results, Updates Full-Year 2023 Guidance and Declares Fourth-Quarter 2023 Dividend

- Conference Call Scheduled for 9 a.m. EDT Today -

EXTON, Pa., Oct. 26, 2023 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced its financial results for the third-quarter 2023, updated full-year 2023 financial guidance and declared a fourth-quarter 2023 dividend.

Third-Quarter 2023 Summary (comparisons to prior-year period)

• Net sales of $747.4 million grew 8.8%; organic net sales growth was 5.7%.
• Reported-diluted EPS of $2.14 increased 34.6%.
• Adjusted-diluted EPS of $2.16 increased 6.4%.
• Company is updating full-year 2023 net sales guidance to a new range of $2.950 billion to $2.960 billion, compared to a prior range of $2.970 billion to $2.995 billion.
• Company is updating full-year 2023 adjusted-diluted EPS guidance to a new range of $7.95 to $8.00, compared to a prior range of $7.65 to $7.80.
• The Company also announced that its Board of Directors has approved a fourth-quarter 2023 dividend of $0.20 per share, a 5.3% increase over the $0.19 per share paid in each of the four preceding quarters.  This is the thirty-first consecutive annual increase in the Company's dividend.  The dividend will be paid on November 15, 2023, to shareholders of record as of November 8, 2023.

"Adjusted-diluted EPS" and "organic net sales" are Non-U.S. GAAP measurements.  See discussion under the heading "Non-U.S. GAAP Financial Measures" in this release. 

"We had a solid quarter of organic net sales growth, driven by our Proprietary Products' high-value product (HVP) and strong Contract Manufacturing components," said Eric M. Green, President, Chief Executive Officer and Chair of the Board.  "We are observing a slowdown in restocking trends by large Pharma and Generic customers, which is reflected in our revised guidance.  As we look to the fourth-quarter 2023, we anticipate double-digit base, non-COVID-19-related organic sales growth, fueled by strong HVP component demand with certain customers and therapeutic categories."

Proprietary Products Segment
Net sales grew by 6.3% to $602.5 million.  Organic net sales growth (excluding changes in currency translation and the impact of a recent divestiture) was 3.2%, with currency translation increasing net sales growth by 250 basis points.  HVP net sales represented over 75% of segment net sales and generated mid-single digit organic net sales growth, led by customer demand for HVP components such as FluroTec®, Daikyo® and Envision® as well as HVP devices such as self-injection systems and administration systems.

The Generics market unit had high-single digit organic net sales growth, and the Biologics and Pharma market units had low-single digit organic net sales growth.  As expected, sales related to COVID-19 continued to decline from the same period last year.  Excluding this COVID-19 impact, the Proprietary Products segment organic sales would have grown double-digits, led by Biologics and Generics market units.

Contract-Manufactured Products Segment
Net sales grew by 20.8% to $144.9 million.  Organic net sales growth was 17.4% with currency translation increasing net sales growth by 340 basis points.  Segment performance was led by growth in sales of components for drug-injection devices and for healthcare diagnostic devices.

Financial Highlights (first nine months of 2023)
Operating cash flow was $537.4 million, an increase of 9.0%.  Capital expenditures were $253.3 million, an increase of 33.5% over the same period last year.  Free cash flow (operating cash flow minus capital expenditures) was $284.1 million, a decline of 6.4%.

During the first nine months of 2023, the Company repurchased 753,399 shares for $261.3 million at an average share price of $346.86 under its share repurchase program.

Full-Year 2023 Updated Financial Guidance

• The Company is updating full-year 2023 net sales guidance to be a new range of $2.950 billion to $2.960 billion, compared to a prior range of $2.970 billion to $2.995 billion.
  • Organic net sales growth guidance is a range of 2% to 3%, compared to prior guidance of a range of 3% to 4%.
  • Net sales guidance assumes COVID-19 related sales of approximately $68 million, compared to prior guidance of $60 million.
  • Net sales guidance includes an estimated full-year 2023 tailwind of $20 million based on current foreign currency exchange rates, unchanged from prior guidance.
  • Net sales guidance also includes a reduction of $8 million resulting from a divestiture of a European facility that produced standard Proprietary Product components, unchanged from prior guidance.
• Full-year 2023 adjusted-diluted EPS is expected to be in a range of $7.95 to $8.00, compared to prior guidance range of $7.65 to $7.80.
  • Full-year adjusted-diluted EPS guidance range includes a tailwind of approximately $0.07 based on current foreign currency exchange rates, compared to prior guidance of a tailwind of $0.05.
  • The updated guidance also includes EPS of $0.41 associated with first nine-months 2023 tax benefits from stock-based compensation.
  • For the fourth-quarter 2023, our EPS guidance range assumes a tax rate of 22% 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 nine months of 2023 would provide a positive adjustment to our full-year adjusted-diluted EPS guidance.
• Full-year 2023 capital spending guidance is unchanged and is expected to be $350 million. This includes incremental capital spending to support capacity expansions at existing HVP facilities.

Third-Quarter 2023 Conference Call 
The live audio-only webcast will be made available via the Company's Investor Relations website here or by clicking here.

To participate in the conference call by asking questions to Management, please register in advance by clicking here. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that will be used to access the call.

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. 

A replay of the conference call and webcast will be available on the Company's website for 30 days.

Forward-Looking Statements

This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements may include such words as "unchanged," "approved," "will," "be," "expect," "are," "note," "has been," "reflected," "unchanged," "expected," "to be," "assumes," "includes," "does," "would," "provide," 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: prevailing economic conditions and general uncertainties relating thereto that may be unknown and unforeseeable; customers' changing inventory requirements and manufacturing plans and customer decisions to move forward with our new products and product categories; interruptions or weaknesses in our supply chain, illness in our workforce and access to transport for our products; disruptions or limitations in the Company's manufacturing capacity; average profitability, or mix, of the products we sell; dependence on third-party suppliers and partners; increased raw material, energy and labor costs; fluctuations in currency exchange; the ability to meet development milestones with key customers; and the consequences of other geopolitical events, including natural disasters, acts of war, and global health crises.  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 Part I Item 1A, entitled "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and other filings with the United States Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q and current reports on Form 8-K.

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
This release contains certain non-GAAP financial measures, including organic net sales and adjusted-diluted EPS.  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 translate the current-period reported sales of subsidiaries whose functional currency is other than the U.S. Dollar at the applicable foreign currency 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 ("U.S. 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.

Trademark Notices

Trademarks and registered trademarks are the property of West Pharmaceutical Services, Inc., in the United States and other jurisdictions, unless noted otherwise.

Daikyo^®, Daikyo Crystal Zenith^® and Daikyo CZ^® are registered trademarks of Daikyo Seiko, Ltd. Daikyo Crystal Zenith technologies are licensed from Daikyo Seiko, Ltd.

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SOURCE West Pharmaceutical Services, Inc.