8-K/A
WEST PHARMACEUTICAL SERVICES INC (WST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – April 29, 2021
| WEST PHARMACEUTICAL SERVICES, INC. |
|---|
(Exact name of registrant as specified in its charter)
| Pennsylvania | 1-8036 | 23-1210010 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 530 Herman O. West Drive, Exton, PA | 19341-0645 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 610-594-2900
| Not Applicable |
|---|
| (Former name or address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.25 per share | WST | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note:
This Form 8-K/A is being filed solely to correct a clerical error in the table entitled Reconciliation of Net Sales to Organic Net Sales in the Company’s press release and presentation, each dated April 29, 2021 which is on page 8 of Exhibit 99.1 and page 19 of Exhibit 99.2. The corrected table is filed with this Form 8-K/A and contains the corrected total for the effect of changes in currency translation rates.
The Company has not made any other changes to the information furnished with the original 8-K.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibit No. | Description |
|---|---|---|
| 99.1 | West Pharmaceutical Services, Inc. Corrected Press Release, dated April 29, 2021. | |
| 99.2 | West Pharmaceutical Services, Inc. Corrected Presentation, dated April 29, 2021. | |
| 104 | The cover page from the Company’s Current Report on Form 8-K/A, dated April 29, 2021, formatted in Inline XBRL. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WEST PHARMACEUTICAL SERVICES, INC. | |
|---|---|
| /s/ Bernard J. Birkett | |
| Bernard J. Birkett | |
| Senior Vice President and Chief Financial Officer | |
| April 29, 2021 |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | West Pharmaceutical Services, Inc. Corrected Press Release, dated April 29, 2021. |
| 99.2 | West Pharmaceutical Services, Inc. Corrected Presentation, dated April 29, 2021. |
| 104 | The cover page from the Company’s Current Report on Form 8-K/A, dated April 29, 2021, formatted in Inline XBRL. |
4
Document
Exhibit 99.1
West Announces First-Quarter 2021 Results
- Conference Call Scheduled for 9 a.m. EDT Today -
Exton, PA, April 29, 2021 – West Pharmaceutical Services, Inc. (NYSE: WST) today announced its financial results for the first-quarter 2021 and updated full-year 2021 financial guidance.
First-Quarter 2021 Summary (comparisons to prior-year period)
•Net sales of $670.7 million grew 36.5%; organic sales growth was 31.1%.
•Reported-diluted EPS of $1.99 increased 101%.
•Adjusted-diluted EPS of $2.05 increased 103%.
•The Company is raising full-year 2021 net sales guidance to a new range of $2.630 billion to $2.655 billion, compared to a prior range of $2.500 billion to $2.525 billion. The Company is raising full-year 2021 adjusted-diluted EPS guidance to a new range of $6.95 to $7.10, compared to a prior range of $6.00 to $6.15.
“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.
“We delivered another solid performance in the first quarter with strong organic sales growth from 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. “I am proud of the relentless focus and consistent execution of our global team members to deliver critical components and solutions during these times. With a strong start to the year, we are raising our full-year financial guidance. West will continue to play an integral role with our customers as they develop and bring new medicines to the market for a brighter future.”
Proprietary Products Segment
Net sales grew by 45.6% to $543.7 million. Organic sales growth was 39.6% with currency translation increasing sales growth by 600 basis points. High-value products (components and devices) represented more than 70% of segment sales and generated double-digit organic sales growth, led by customer demand for FluroTec®, Westar®, Daikyo® and NovaPure® components as well as for devices such as Daikyo Crystal Zenith® syringes and cartridges.
All three market units had double-digit organic sales growth, led by strong performance in the Biologics market unit.
Contract-Manufactured Products Segment
Net sales grew by 7.6% to $127.1 million. Organic sales growth was 4.0% with currency translation increasing sales growth by 360 basis points. Segment performance was led by sales of components for drug-injection delivery devices as well as diagnostic devices.
Financial Highlights
Operating cash flow was $88.7 million, an increase of 55.3%. Capital expenditures in the quarter were $54.7 million. Free cash flow (operating cash flow minus capital expenditures) was $34.0 million, an increase of 36%.
During the quarter, 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 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 $2.630 billion to $2.655 billion, compared to a prior guidance range of $2.500 billion to $2.525 billion.
◦Organic sales growth is expected to be in a range of 19% to 20%, compared to a prior range of 13% to 14%.
◦Net sales guidance includes an estimated full-year 2021 benefit of $75 million based on current foreign exchange rates.
•Full-year 2021 adjusted-diluted EPS is expected to be in a range of $6.95 to $7.10, compared to a prior range of $6.00 to $6.15.
◦Full-year adjusted-diluted EPS guidance range includes an estimated benefit of approximately $0.23 based on current foreign currency exchange rates.
◦The revised guidance includes a $0.15 EPS positive impact from first-quarter 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-quarter 2021 would provide a positive adjustment to our full-year EPS guidance.
First-Quarter 2021 Conference Call
The Company will host a conference call to discuss the results and business expectations at 9:00 a.m. Eastern Time today. To participate on the call please dial 877-930-8295 (U.S.) or 253-336-8738 (International). The conference ID is 4285757.
A live broadcast of the conference call will be available at the Company’s website, www.westpharma.com, in the “Investors” section. 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.
An online archive of the broadcast will be available at the website three hours after the live call and will be available through Thursday, May 6, 2021, by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and entering conference ID 4285757.
| Investor Contact: | Media Contact: |
|---|---|
| Quintin Lai | Michele Pelkowski |
| Vice President, Investor Relations | Vice President, Global Communications |
| (610) 594-3318 | (610) 594-3054 |
| Quintin.Lai@westpharma.com | Michele.Pelkowski@westpharma.com |
Forward-Looking Statements
Certain forward-looking statements appear in this release and include such words as “raising,” “believe,” “continue,” “remain,” “foreseeable,” “expected,” “to be,” “includes,” “estimated,” “assumes,” “potential,” “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: the duration and severity of the global COVID-19 pandemic, including 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, including any re-prioritization of product needs due to COVID-19; other potential impacts from COVID-19, including interruptions or weaknesses in our supply chain, illness in our workforce and access to transport for our products; average profitability, or mix, of the products we sell; dependence on third-party suppliers and partners; increased raw material costs; fluctuations in currency exchange; and the ability to meet development milestones with key customers. 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, 2020.
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
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 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.
WEST PHARMACEUTICAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in millions, except per share data)
| Three Months Ended<br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Net sales | $ | 670.7 | 100% | $ | 491.5 | 100% |
| Cost of goods and services sold | 398.8 | 59 | 324.5 | 66 | ||
| Gross profit | 271.9 | 41 | 167.0 | 34 | ||
| Research and development | 12.2 | 2 | 10.7 | 2 | ||
| Selling, general and administrative expenses | 80.2 | 12 | 71.8 | 14 | ||
| Other expense (income) | 3.9 | 1 | (3.5) | — | ||
| Operating profit | 175.6 | 26 | 88.0 | 18 | ||
| Interest expense, net | 1.8 | — | 1.2 | — | ||
| Other nonoperating (income) expense | (1.1) | — | 0.3 | — | ||
| Income before income taxes | 174.9 | 26 | 86.5 | 18 | ||
| Income tax expense | 28.7 | 4 | 15.0 | 3 | ||
| Equity in net income of affiliated companies | (5.0) | (1) | (2.8) | — | ||
| Net income | $ | 151.2 | 23% | $ | 74.3 | 15% |
| Net income per share: | ||||||
| Basic | $ | 2.04 | $ | 1.01 | ||
| Diluted | $ | 1.99 | $ | 0.99 | ||
| Average common shares outstanding | 73.9 | 73.9 | ||||
| Average shares assuming dilution | 75.8 | 75.5 |
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION
(UNAUDITED)
(in millions)
| Three Months Ended<br>March 31, | ||||||
|---|---|---|---|---|---|---|
| Net Sales: | 2021 | 2020 | ||||
| Proprietary Products | $ | 543.7 | $ | 373.5 | ||
| Contract-Manufactured Products | 127.1 | 118.1 | ||||
| Eliminations | (0.1) | (0.1) | ||||
| Consolidated Total | $ | 670.7 | $ | 491.5 | ||
| Gross Profit: | ||||||
| Proprietary Products | $ | 251.9 | $ | 150.1 | ||
| Contract-Manufactured Products | 20.0 | $ | 16.9 | |||
| Gross Profit | $ | 271.9 | $ | 167.0 | ||
| Gross Profit Margin | 40.5 | % | 34.0 | % | ||
| Operating Profit (Loss): | ||||||
| Proprietary Products | $ | 182.6 | $ | 93.2 | ||
| Contract-Manufactured Products | 16.4 | 12.8 | ||||
| Stock-based compensation expense | (5.9) | (5.4) | ||||
| General corporate costs | (13.9) | (12.6) | ||||
| Adjusted Operating Profit | $ | 179.2 | $ | 88.0 | ||
| Adjusted Operating Profit Margin | 26.7 | % | 17.9 | % | ||
| Other unallocated items | (3.6) | — | ||||
| Reported Operating Profit | $ | 175.6 | $ | 88.0 | ||
| Reported Operating Profit Margin | 26.2 | % | 17.9 | % |
WEST PHARMACEUTICAL SERVICES
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Please refer to “Non-U.S. GAAP Financial Measures” for more information
(in millions, except per share data)
Reconciliation of Reported and Adjusted Operating Profit, Net Income and Diluted EPS
| Three months ended March 31, 2021 | Operating<br>profit | Income<br>tax<br>expense | Net<br>income | Diluted<br>EPS | ||||
|---|---|---|---|---|---|---|---|---|
| Reported (U.S. GAAP) | $ | 175.6 | $ | 28.7 | $ | 151.2 | $ | 1.99 |
| Unallocated items: | ||||||||
| Restructuring and related charges (1) | 1.2 | 0.2 | 1.0 | 0.01 | ||||
| Pension Settlement (2) | — | 0.2 | 0.5 | 0.01 | ||||
| Amortization of Acquisition-related Intangible Assets (3) | 0.2 | — | 0.7 | 0.01 | ||||
| Cost investment impairment | 2.2 | — | 2.2 | 0.03 | ||||
| Adjusted (Non-U.S. GAAP) | $ | 179.2 | $ | 29.1 | $ | 155.6 | $ | 2.05 |
| Three months ended March 31, 2020 | Operating<br>profit | Income<br>tax<br>expense | Net<br>income | Diluted<br>EPS | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reported (U.S. GAAP) | $ | 88.0 | $ | 15.0 | $ | 74.3 | $ | 0.99 |
| Pension Settlement (2) | $ | — | $ | 0.3 | $ | 1.1 | 0.01 | |
| Amortization of Acquisition-related Intangible Assets (3) | — | — | 1.0 | 0.01 | ||||
| Adjusted (Non-U.S. GAAP) | $ | 88.0 | $ | 15.3 | $ | 76.4 | $ | 1.01 |
(1)During the three months ended March 31, 2021, the Company recorded $1.2 million in restructuring and related charges in connection with its 2020 plan to optimize certain organizational structures within the Company.
(2)During the three months ended March 31, 2021 and March 31, 2020, the Company recorded a pension settlement charge of $0.6 million and $1.4 million, respectively, within other nonoperating (income) expense, as it determined that normal-course lump-sum payments for our U.S. qualified defined benefit pension plan exceeded the threshold for settlement accounting.
(3)During the three months ended March 31, 2021, the Company recorded $0.2 million of amortization expense within operating profit associated with an acquisition of an intangible asset during the second quarter of 2020. During the three months ended March 31, 2021 and 2020 the Company recorded $0.5 million and $1.0 million of amortization expense, respectively, in association with an acquisition of increased ownership interest in Daikyo.
WEST PHARMACEUTICAL SERVICES
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Please refer to “Non-U.S. GAAP Financial Measures” for more information
(in millions, except per share data)
Reconciliation of Net Sales to Organic Net Sales (4)
| Three months ended March 31, 2021 | Proprietary | CM | Eliminations | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Reported net sales (U.S. GAAP) | $ | 543.7 | $ | 127.1 | $ | (0.1) | $ | 670.7 |
| Effect of changes in currency translation rates | (22.2) | (4.3) | — | (26.5) | ||||
| Organic net sales (Non-U.S. GAAP) (4) | $ | 521.5 | $ | 122.8 | $ | (0.1) | $ | 644.2 |
(4)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 exchange rates in effect during the comparable prior-year period.
WEST PHARMACEUTICAL SERVICES
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Please refer to “Non-U.S. GAAP Financial Measures” for more information
(in millions, except per share data)
Reconciliation of Reported-Diluted EPS Guidance to Adjusted-Diluted EPS Guidance
| 2020 Actual | 2021 Guidance | % Change | |
|---|---|---|---|
| Reported-diluted EPS (U.S. GAAP) | $4.57 | $6.86 to $7.01 | 50.1% to 53.4% |
| Restructuring and related charges | 0.07 | 0.01 | |
| Pension settlement | 0.04 | 0.01 | |
| Amortization of acquisition-related intangible assets | 0.05 | 0.04 | |
| Cost investment impairment | 0.03 | 0.03 | |
| Adjusted-diluted EPS (Non-U.S. GAAP) (5) | $4.76 | $6.95 to $7.10 | 46.0% to 49.2% |
Notes:
See “Full-year 2021 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding adjusted-diluted EPS.
(5)We have opted not to forecast 2021 tax benefits from stock-based compensation in upcoming quarters, as they are out of the Company’s control. Instead, we recognize the benefits as they occur. In the first-quarter 2021, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.15. Any future tax benefits associated with stock-based compensation that we receive in 2021 would provide a positive adjustment to our full-year EPS guidance. In 2020, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.27.
WEST PHARMACEUTICAL SERVICES
CASH FLOW ITEMS
(UNAUDITED)
(in millions)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Depreciation and amortization | $ | 29.1 | $ | 26.0 |
| Operating cash flow | $ | 88.7 | $ | 57.1 |
| Capital expenditures | $ | 54.7 | $ | 32.1 |
WEST PHARMACEUTICAL SERVICES
FINANCIAL CONDITION
(UNAUDITED)
(in millions)
| As of<br><br>March 31, 2021 | As of<br>December 31, 2020 | |||
|---|---|---|---|---|
| Cash and cash equivalents | $ | 483.7 | $ | 615.5 |
| Accounts receivable, net | $ | 465.7 | $ | 385.3 |
| Inventories | $ | 310.2 | $ | 321.3 |
| Accounts payable | $ | 204.3 | $ | 213.1 |
| Debt | $ | 254.6 | $ | 255.2 |
| Equity | $ | 1,829.0 | $ | 1,854.5 |
| Working capital | $ | 844.2 | $ | 870.3 |
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.
finalpresentationq12021
1 First-Quarter 2021 Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This presentation and any accompanying management commentary contain “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about product development and operational performance. Each of these statements is based on preliminary information, and actual results could differ from any preliminary estimates. We caution investors that the risk factors listed under “Cautionary Statement” in our press releases, as well as those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by our quarterly reports on Form 10-Q, could cause our actual results to differ materially from those estimated or predicted in the forward-looking statements. You should evaluate any statement in light of these important factors. 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 Certain financial measures included in these presentation materials, or which may be referred to in management’s discussion of the Company’s results and outlook, have not been calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and therefore are referred to as non- U.S. GAAP financial measures. Non-U.S. GAAP financial measures should not be considered in isolation or as an alternative to such measures determined in accordance with U.S. GAAP. Please refer to “Reconciliation of Non-U.S. GAAP Financial Measures” at the end of these materials for more information. OVERALL ORGANIC SALES GROWTH Proprietary Products Q1 2021 organic sales growth of 39.6%, led by sales of high-value products, which grew double digits BIOLOGICS Q1 31.1% PHARMA CONTRACT MANUFACTURING GENERICS First Quarter Overall Net Sales $670.7M | 36.5% MSD DD DD DD Abbreviations: LSD – low-single digit; MSD – mid-single digit; HSD – high-single digit; DD – double digit Diluted Earnings Per Share: $1.99 | 101% Adjusted Diluted Earnings Per Share: $2.05| 103% Eric M. Green President and Chief Executive Officer West Pharmaceutical Services, Inc. WST Q1 2021 Earnings “We delivered another solid performance in the first-quarter with strong organic sales growth coming from both our base business as well as increased demand for our products associated with COVID-19 vaccines. I am proud of the relentless focus and consistent execution of our global team members to deliver critical components and solutions during these times. With a strong start to the year, we are raising our full-year financial guidance. West will continue to play an integral role with our customers as they develop and bring new medicines to the market for a brighter future.”
West Pharmaceutical Services, Inc. Eric M. Green President & CEO First-Quarter Results 2021 Analyst Conference Call 9 a.m. Eastern Time | April 29, 2021 Bernard J. Birkett Senior Vice President & CFO
3 West Analyst Conference Call 9 a.m. Eastern Time April 29, 2021 A webcast of today’s call can be accessed in the “Investors” section of the Company’s website: www.westpharma.com To participate on the call, please dial: 877-930-8295 (U.S.) 253-336-8738 (International) The conference ID is 4285757 An online archive of the broadcast will be available at the website three hours after the live call and will be available through Thursday, May 6, 2021 by dialing: These presentation materials are intended to accompany today’s press release announcing the Company’s results for the first quarter 2021 and management’s discussion of those results during today’s conference call. 855-859-2056 (U.S.) 404-537-3406 (International) The conference ID is 4285757 WST Q1 2021 Earnings
4 Safe Harbor Statement This presentation and any accompanying management commentary contain “forward- looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about product development and operational performance. Each of these statements is based on preliminary information, and actual results could differ from any preliminary estimates. We caution investors that the risk factors listed under “Cautionary Statement” in our press releases, as well as those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by our quarterly reports on Form 10-Q, could cause our actual results to differ materially from those estimated or predicted in the forward-looking statements. You should evaluate any statement in light of these important factors. 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. Certain financial measures included in these presentation materials, or which may be referred to in management’s discussion of the Company’s results and outlook, have not been calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), and therefore are referred to as non-U.S. GAAP financial measures. Non-U.S. GAAP financial measures should not be considered in isolation or as an alternative to such measures determined in accordance with U.S. GAAP. Please refer to “Reconciliation of Non-U.S. GAAP Financial Measures” at the end of these materials for more information. Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 Non-U.S. GAAP Financial Measures Registered trademarks used in this report are the property of West Pharmaceutical Services, Inc. or its subsidiaries, in the United States and other jurisdictions, unless noted otherwise. Daikyo Crystal Zenith® and Daikyo® are registered trademarks of Daikyo Seiko, Ltd. Trademarks WST Q1 2021 Earnings
5 Financial Results • First quarter 2021 net sales of $670.7 million grew 36.5%; organic sales growth was 31.1% • First quarter 2021 reported-diluted EPS of $1.99 increased 101%; adjusted- diluted EPS of $2.05 increased 103% WST Q1 2021 Earnings
6 Q1 Drivers of Growth in our High- Value Product Portfolio STERILIZED WASHED COATED ADMINISTERED CAMERA INSPECTED QUALITY BY DESIGN CONTAINMENT SELF INJECTION WST Q1 2021 Earnings
7 The Power of West’s Global Manufacturing Network Investments made allow West to truly leverage our global footprint for expanding capacity and risk mitigation. WST Q1 2021 Earnings
8 Six Pillars: $3.1 MILLION in corporate and foundation giving in 2020 in absolute water consumption from 2019 to 2020 50% of West’s C-suite comprised of women, people of color and international diversity in Energy from 2019 to 2020 in waste recycled and global waste diversion at sites in 2020 West is Driving Sustainable Business Practices • Compliance & Ethics • Philanthropy • Health & Safety • Diversity & Talent • Environmental Sustainability • Quality WST Q1 2021 Earnings Progress ReductionImprovement United Nations Global Compact ESG Reporting Standards • Global Reporting Index Standards (GRI) -2020 • Task Force on Climate-Related Financial Disclosures (TFCD)* -2021 • Sustainability Accounting Standards Board ESG (SASB)*-2021 * Published as supplement to 2020 CR report
9 First-Quarter 2021 Summary Results ($ millions, except earnings-per-share (EPS) data) Three Months Ended March 31 2021 2020 Reported Net Sales $670.7 $491.5 Gross Profit Margin 40.5% 34.0% Reported Operating Profit $175.6 $88.0 Adjusted Operating Profit (1) $179.2 $88.0 Reported Operating Profit Margin 26.2% 17.9% Adjusted Operating Profit Margin (1) 26.7% 17.9% Reported-Diluted EPS $1.99 $0.99 Adjusted-Diluted EPS (1) $2.05 $1.01 “Adjusted Operating Profit,” “Adjusted Operating Profit Margin” and “Adjusted-Diluted EPS” are Non-U.S. GAAP financial measures. See slides 17-20 and the discussion under the heading “Non-U.S. GAAP Financial Measures” in today’s press release for an explanation and reconciliation of these items. (1) WST Q1 2021 Earnings
10 Overall Organic Sales Growth – 31.1% (Q1 2021) Proprietary Products Q1 2021 organic sales growth of 39.6% led by sales of high-value products, which grew double digits BIOLOGICS GENERICS PHARMA Sales led by high-value products, including Flurotec®, Daikyo®, NovaPure® and Westar® components, Daikyo Crystal Zenith® Sales led by high-value products, including Flurotec® components Sales led by high-value products, including Flurotec®, and Westar® components CONTRACT MANUFACTURING Organic sales growth of 4.0%, led by sales of diagnostic and healthcare-related injection devices Double-Digit Double-Digit Mid-Single DigitDouble-Digit First-Quarter 2021 Organic Sales Growth WST Q1 2021 Earnings
11 Change in Consolidated Net Sales First-quarter 2020 to 2021 ($ millions) WST Q1 2021 Earnings
12 Gross Profit Update ($ millions) Three Months Ended March 31, 2021 2020 Proprietary Products Gross Profit $251.9 $150.1 Proprietary Products Gross Profit Margin 46.3% 40.2% Contract-Manufactured Products Gross Profit $20.0 $16.9 Contract-Manufactured Products Gross Profit Margin 15.7% 14.3% Consolidated Gross Profit $271.9 $167.0 Consolidated Gross Profit Margin 40.5% 34.0% WST Q1 2021 Earnings
13 Cash Flow and Balance Sheet Metrics ($ millions) Cash Flow Items YTD Q1 2021 YTD Q1 2020 Depreciation and Amortization $29.1 $26.0 Operating Cash Flow $88.7 $57.1 Capital Expenditures $54.7 $32.1 Financial Condition March 31, 2021 December 31, 2020 Cash and Cash Equivalents $483.7 $615.5 Debt $254.6 $255.2 Equity $1,829.0 $1,854.5 Working Capital $844.2 $870.3 WST Q1 2021 Earnings
14 2021 Full-Year Guidance 2021 Full-Year Guidance Consolidated Net Sales $2.630 - $2.655 billion Adjusted-Diluted EPS $6.95 - $7.10 WST Q1 2021 Earnings
15 We enable our customers’ ability to support patient health and fuel a brighter future with product innovation. Execute. Innovate. Grow. WST Q1 2021 Earnings Strong Base Business Global Operational Effectiveness
16 Eric M. Green President and Chief Executive Officer Bernard J. Birkett Senior Vice President and Chief Financial Officer Quintin Lai VP, Corporate Development, Strategy & Investor Relations Q & A WST Q1 2021 Earnings
17 Notes to Non-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 financial measures to the comparable U.S. GAAP financial measures is included in the accompanying tables. 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 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, the impact from acquisitions and/or divestitures, and the effects of unallocated items are not in conformity with U.S. GAAP and should not be used as a substitute for the comparable U.S. GAAP financial measures. WST Q1 2021 Earnings
18 Notes to Non-U.S. GAAP Financial Measures RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) See “Notes to Non-U.S. GAAP Financial Measures”, “Safe Harbor Statement” (Slide 4) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Reported and Adjusted Operating Profit, Net Income and Diluted EPS ($ millions, except EPS data) Three months ended March 31, 2021 Operating profit Income tax expense Net income Diluted EPS Reported (U.S. GAAP) $175.6 $28.7 $151.2 $1.99 Restructuring and related charges 1.2 0.2 1.0 0.01 Pension Settlement - 0.2 0.5 0.01 Amortization of Acquisition-related Intangible Assets 0.2 - 0.7 0.01 Cost investment impairment 2.2 - 2.2 0.03 Adjusted (Non-U.S. GAAP) $179.2 $29.1 $155.6 $2.05 WST Q1 2021 Earnings Three months ended March 31, 2020 Operating profit Income tax expense Net income Diluted EPS Reported (U.S. GAAP) $88.0 $15.0 $74.3 $0.99 Pension Settlement - 0.3 1.1 0.01 Amortization of Acquisition-related Intangible Assets - - 1.0 0.01 Adjusted (Non-U.S. GAAP) $88.0 $15.3 $76.4 $1.01
19 Notes to Non-U.S. GAAP Financial Measures RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) See “Notes to Non-U.S. GAAP Financial Measures”, “Safe Harbor Statement” (Slide 4) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Net Sales to Organic Net Sales (1) ($ millions) 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 exchange rates in effect during the comparable prior-year period. (1) Three months ended March 31, 2021 Proprietary CM Eliminations Total Reported net sales (U.S. GAAP) $543.7 $127.1 $(0.1) $670.7 Effect of changes in currency translation rates (22.2) (4.3) - (26.5) Organic net sales (Non-U.S. GAAP) (1) $521.5 $122.8 $(0.1) $644.2 WST Q1 2021 Earnings
20 Notes to Non-U.S. GAAP Financial Measures RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) See “Notes to Non-U.S. GAAP Financial Measures”, “Safe Harbor Statement” (Slide 4) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Reported-Diluted EPS Guidance to Adjusted-Diluted EPS Guidance 2020 Actual 2021 Guidance % Change Reported-diluted EPS (U.S. GAAP) $4.57 $6.86 to $7.01 50.1% to 53.4% Restructuring and related charges 0.07 0.01 Pension Settlement 0.04 0.01 Amortization of acquisition-related intangible assets 0.05 0.04 Cost investment impairment 0.03 0.03 Adjusted-diluted EPS (Non-U.S. GAAP) (1) $4.76 $6.95 to $7.10 46.0% to 49.2% (1) See “Full-year 2021 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding adjusted-diluted EPS. We have opted not to forecast 2021 tax benefits from stock-based compensation in upcoming quarters, as they are out of the Company’s control. Instead, we recognize the benefits as they occur. In the First-Quarter 2021, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.15. Any future tax benefits associated with stock-based compensation that we receive in 2021 would provide a positive adjustment to our full-year EPS guidance. In 2020, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.27. WST Q1 2021 Earnings