8-K
WEST PHARMACEUTICAL SERVICES INC (WST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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 23, 2020
| 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. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 23, 2020, West Pharmaceutical Services, Inc. (the “Company”) issued a press release announcing its first-quarter 2020 financial results. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
The information set forth in “Item 2.02 Results of Operations and Financial Condition,” including the exhibit referred to therein, is incorporated herein by reference.
A copy of the Company’s presentation materials used during the call will be available through the Investors link at the Company’s website, http://www.westpharma.com, and is also attached hereto as Exhibit 99.2 and incorporated herein by reference.
The information in this report (including the exhibits attached hereto) is being furnished pursuant to Item 2.02 and Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor will it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific referencing in such filing.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibit No. | Description |
|---|---|---|
| 99.1 | West Pharmaceutical Services, Inc. Press Release, dated April 23, 2020. | |
| 99.2 | West Pharmaceutical Services, Inc. Presentation, dated April 23, 2020. | |
| 104 | The cover page from the Company’s Current Report on Form 8-K, dated April 23, 2020, 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 23, 2020 |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | West Pharmaceutical Services, Inc. Press Release, datedAprilexh991q12020earningsre.htm23, 2020. |
| 99.2 | West Pharmaceutical Services, Inc. Presentation, datedAprilwstq12020presentation.htm23, 2020. |
| 104 | The cover page from the Company’s Current Report on Form 8-K, dated April 23, 2020, formatted in Inline XBRL. |
4
Document
Exhibit 99.1
West Announces First-Quarter 2020 Results
- Conference Call Scheduled for 9 a.m. EDT Today -
Exton, PA, April 23, 2020 – West Pharmaceutical Services, Inc. (NYSE: WST) today announced its financial results for the first-quarter 2020 and updated full-year 2020 financial guidance.
First-Quarter 2020 Summary (comparisons to prior-year period)
•Net sales of $491.5 million grew 10.8%; organic sales growth was 12.7%.
•Reported-diluted EPS of $0.99 increased 36%.
•Adjusted-diluted EPS of $1.01 increased 36%.
•The Company is maintaining full-year 2020 net sales guidance and is updating full-year 2020 adjusted-diluted EPS guidance to a new range of $3.52 to $3.62, compared to a prior range of $3.45 to $3.55.
“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.
“During these unprecedented times, our priorities are focused on the well-being and safety of our team members as well as ensuring the supply of critical, high-quality components and solutions to our customers,” said Eric M. Green, President and Chief Executive Officer. “I am extremely pleased that we delivered a strong performance in the first quarter given the challenging environment that the COVID-19 pandemic has had on our customers, our suppliers and our team members. In particular, we continued to deliver strong sales growth in high-value products, as demand trends from our worldwide customer base were similar to trends we saw last year. Additionally, our teams are partnering with a broad range of customers working to support efforts to develop solutions that address the global COVID-19 pandemic such as diagnostics, anti-viral therapeutics and vaccines.”
Mr. Green continued, “I am proud with the way our team across the globe is responding during these challenging times. They exemplify our One West philosophy in the way they are supporting our customers, patients and the local communities where our team members live and work.”
Proprietary Products Segment
Net sales grew by 9.7% to $373.5 million. Organic sales growth was 11.8% with currency translation decreasing sales growth by 250 basis points. High-value products (components and devices) represented 63% of segment sales and generated double-digit organic sales growth. The segment saw good demand for Westar^®^, Daikyo^®^, NovaPure^®^ and FluroTec^®^ components as well
as for devices such as Daikyo Crystal Zenith^®^ syringes and cartridges and our self-injection platforms.
The Biologics market unit had strong double-digit organic sales growth. The Generics market unit had high-single digit organic sales growth, and the Pharma market unit had mid-single digit organic sales growth.
Contract-Manufactured Products Segment
Net sales grew by 14.5% to $118.1 million. Organic sales growth was 15.9% with currency translation decreasing sales growth by 140 basis points. Segment performance was led by sales of components for diagnostic devices as well as drug-injection delivery devices.
Financial Highlights
Operating cash flow was $57.1 million, an increase of 20%. Capital expenditures in the quarter were $32.1 million. Free cash flow (operating cash flow minus capital expenditures) was $25.0 million, an increase of 33%.
During the quarter, the Company repurchased 761,500 shares for $115.5 million at an average share price of $151.65 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 2020 Financial Guidance
•Full-year 2020 net sales guidance continues to be in a range of $1.95 billion to $1.97 billion.
◦Organic sales growth is expected to be approximately 8%, compared to a prior guidance range of 7% to 8%.
◦Net sales guidance includes an estimated full-year headwind of $26 million for the full-year 2020 based on current foreign exchange rates, compared to prior guidance of $15 million.
•Full-year 2020 adjusted-diluted EPS is expected to be in a range of $3.52 to $3.62, compared to prior guidance range of $3.45 to $3.55.
◦Full-year adjusted-diluted EPS guidance includes an estimated headwind of approximately $0.07 based on current foreign currency exchange rates, compared to prior guidance of approximately $0.04.
◦The revised guidance includes a $0.07 EPS 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 24% 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 2020 would provide a positive adjustment to our full-year EPS guidance.
First-Quarter 2020 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 1865786.
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, April 30, 2020, by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and entering conference ID 1865786.
| Investor Contact: | Media Contact: |
|---|---|
| Quintin Lai | Michele Pelkowski |
| Vice President, Investor Relations | Sr. Director, 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 “maintaining,” “updating,” “ensuring,” “remain,” “to be,” “expected,” “includes,” “assumes,” “provide,” “believe,” “continues,” “will be,” 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 Item 1A, entitled “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
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, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Net sales | $ | 491.5 | 100% | $ | 443.5 | 100% |
| Cost of goods and services sold | 324.5 | 66 | 296.7 | 67 | ||
| Gross profit | 167.0 | 34 | 146.8 | 33 | ||
| Research and development | 10.7 | 2 | 9.8 | 2 | ||
| Selling, general and administrative expenses | 71.8 | 14 | 68.6 | 15 | ||
| Other income | (3.5) | — | (2.3) | — | ||
| Operating profit | 88.0 | 18 | 70.7 | 16 | ||
| Interest expense, net | 1.2 | — | 1.4 | — | ||
| Other nonoperating expense (income) | 0.3 | — | (0.6) | — | ||
| Income before income taxes | 86.5 | 18 | 69.9 | 16 | ||
| Income tax expense | 15.0 | 3 | 16.1 | 4 | ||
| Equity in net income of affiliated companies | (2.8) | — | (1.6) | — | ||
| Net income | $ | 74.3 | 15% | $ | 55.4 | 12% |
| Net income per share: | ||||||
| Basic | $ | 1.01 | $ | 0.75 | ||
| Diluted | $ | 0.99 | $ | 0.73 | ||
| Average common shares outstanding | 73.9 | 74.1 | ||||
| Average shares assuming dilution | 75.5 | 75.3 |
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION
(UNAUDITED)
(in millions)
| Three Months Ended<br>March 31, | ||||||
|---|---|---|---|---|---|---|
| Net Sales: | 2020 | 2019 | ||||
| Proprietary Products | $ | 373.5 | $ | 340.4 | ||
| Contract-Manufactured Products | 118.1 | 103.1 | ||||
| Eliminations | (0.1) | — | ||||
| Consolidated Total | $ | 491.5 | $ | 443.5 | ||
| Gross Profit: | ||||||
| Proprietary Products | $ | 150.1 | $ | 132.3 | ||
| Contract-Manufactured Products | 16.9 | 14.5 | ||||
| Gross Profit | $ | 167.0 | $ | 146.8 | ||
| Gross Profit Margin | 34.0 | % | 33.1 | % | ||
| Operating Profit (Loss): | ||||||
| Proprietary Products | $ | 93.2 | $ | 77.0 | ||
| Contract-Manufactured Products | 12.8 | 10.5 | ||||
| Stock-based compensation expense | (5.4) | (6.2) | ||||
| General corporate costs | (12.6) | (10.0) | ||||
| Adjusted Operating Profit | $ | 88.0 | $ | 71.3 | ||
| Adjusted Operating Profit Margin | 17.9 | % | 16.1 | % | ||
| Other unallocated items | — | (0.6) | ||||
| Reported Operating Profit | $ | 88.0 | $ | 70.7 | ||
| Reported Operating Profit Margin | 17.9 | % | 15.9 | % |
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, 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 ^(1)^ | — | 0.3 | 1.1 | 0.01 | ||||
| Amortization of Acquisition-related Intangible Assets ^(2)^ | — | — | 1.0 | 0.01 | ||||
| Adjusted (Non-U.S. GAAP) | $ | 88.0 | $ | 15.3 | $ | 76.4 | $ | 1.01 |
| Three months ended March 31, 2019 | Operating<br>profit | Income<br>tax<br>expense | Net<br>income | Diluted<br>EPS | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reported (U.S. GAAP) | $ | 70.7 | $ | 16.1 | $ | 55.4 | $ | 0.73 |
| Restructuring and related charges ^(3)^ | 0.6 | 0.2 | 0.4 | 0.01 | ||||
| Adjusted (Non-U.S. GAAP) | $ | 71.3 | $ | 16.3 | $ | 55.8 | $ | 0.74 |
(1)During the three months ended March 31, 2020, the Company recorded a pension settlement charge of $1.4 million within other nonoperating expense (income), as it determined that normal-course lump-sum payments for our U.S. qualified defined benefit pension plan exceeded the threshold for settlement accounting.
(2)During the three months ended March 31, 2020, the Company recorded $1.0 million of amortization expense associated with an acquisition of increased ownership interest in Daikyo.
(3)During the three months ended March 31, 2019, the Company recorded $0.6 million in restructuring and related charges.
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, 2020 | Proprietary | CM | Eliminations | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Reported net sales (U.S. GAAP) | $ | 373.5 | $ | 118.1 | $ | (0.1) | $ | 491.5 |
| Effect of acquisitions and/or divestitures | (1.2) | — | — | (1.2) | ||||
| Effect of changes in currency translation rates | 8.3 | 1.4 | — | 9.7 | ||||
| Organic net sales (Non-U.S. GAAP) ^(4)^ | $ | 380.6 | $ | 119.5 | $ | (0.1) | $ | 500.0 |
(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
| 2019 Actual | 2020 Guidance | % Change | |
|---|---|---|---|
| Reported-diluted EPS (U.S. GAAP) | $3.21 | $3.47 to $3.57 | 8.1% to 11.2% |
| Restructuring and related charges | 0.04 | — | — |
| Gain on restructuring-related sales of assets | (0.02) | — | — |
| Pension settlement | 0.04 | 0.01 | — |
| Amortization of acquisition-related intangible assets | — | 0.04 | — |
| Argentina devaluation | 0.01 | — | — |
| Tax recovery | (0.04) | — | — |
| Adjusted-diluted EPS (Non-U.S. GAAP) ^(5)^ | $3.24 | $3.52 to $3.62 | 8.6% to 11.7% |
Notes:
See “Full-year 2020 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding adjusted-diluted EPS.
(5)In 2019, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.14. We have opted not to forecast 2020 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 2020, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.07. Any future tax benefits associated with stock-based compensation that we receive in 2020 would provide a positive adjustment to our full-year EPS guidance.
WEST PHARMACEUTICAL SERVICES
CASH FLOW ITEMS
(UNAUDITED)
(in millions)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Depreciation and amortization | $ | 26.0 | $ | 25.5 |
| Operating cash flow | $ | 57.1 | $ | 47.6 |
| Capital expenditures | $ | 32.1 | $ | 28.8 |
WEST PHARMACEUTICAL SERVICES
FINANCIAL CONDITION
(UNAUDITED)
(in millions)
| As of<br>March 31, 2020 | As of<br>December 31, 2019 | |||
|---|---|---|---|---|
| Cash and cash equivalents | $ | 335.3 | $ | 439.1 |
| Accounts receivable, net | $ | 333.0 | $ | 319.3 |
| Inventories | $ | 251.0 | $ | 235.7 |
| Accounts payable | $ | 157.9 | $ | 156.8 |
| Debt | $ | 256.7 | $ | 257.3 |
| Equity | $ | 1,490.2 | $ | 1,573.2 |
| Working capital | $ | 633.1 | $ | 717.1 |
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.
wstq12020presentation
West Pharmaceutical Services, Inc. First-Quarter 2020 Analyst Conference Call 9 a.m. Eastern Time, April 23, 2020 Eric M. Green Bernard J. Birkett Speakers President and Senior Vice President and Chief Executive Officer Chief Financial Officer A webcast of today’s call can be accessed in the “Investors” section of the Company’s website: www.westpharma.com 877-930-8295 (U.S.) To participate on the call, please dial: 253-336-8738 (International) The conference ID is 1865786 An online archive of the broadcast will be available at 855-859-2056 (U.S.) the website three hours after the live call and will be 404-537-3406 (International) available through Thursday, April 30, 2020, by dialing: The conference ID is 1865786 These presentation materials are intended to accompany today’s press release announcing the Company’s results for the first quarter 2020 and management’s discussion of those results during today’s conference call. 1 WST Q1 2020 Earnings
Safe Harbor Statement 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. Trademarks 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® is a registered trademark of Daikyo Seiko, Ltd. 2 WST Q1 2020 Earnings
Unwavering Commitment to Our Mission Our Mission To contain and deliver injectable therapies that improve patient lives. 3 WST Q1 2020 Earnings
Our Focus in Uncertain Times 4 WST Q1 2020 Earnings
2020 First-Quarter Results • Q1 2020 net sales of $491.5 million grew 10.8%; organic sales growth was 12.7% • Q1 2020 reported-diluted EPS of $0.99 increased 36%; adjusted-diluted EPS of $1.01 increased 36% • Company maintaining full-year 2020 net sales guidance and updating full-year 2020 adjusted-diluted EPS guidance to a new range of $3.52 to $3.62 (1) (1) Please refer to “Notes to Non-U.S. GAAP Financial Measures” on slides 13-16 and the discussion under the heading “Non-U.S. GAAP Financial Measures” in today’s press release, for additional information regarding adjusted-diluted EPS. 5 WST Q1 2020 Earnings
Q1 2020 Organic Sales Growth Q1 2020 Overall Organic Proprietary Products Q1 2020 organic sales growth of 11.8%, led by 12.7% Sales Growth sales of high-value products, which grew double digits Sales led by high-value products, including Daikyo Crystal Zenith® Biologics DD syringes and cartridges, Daikyo® and NovaPure® components and self-injection platforms Generics HSD Sales led by sales of Daikyo®, Westar® and FluroTec® components Sales led by high-value products and services including Westar®, Pharma MSD NovaPure® and FluroTec® components Contract Organic sales growth of 15.9%, led by sales of diagnostic and DD Manufacturing healthcare-related injection devices Abbreviations: LSD – low-single digit; MSD – mid-single digit; HSD – high-single digit; DD – double digit 6 WST Q1 2020 Earnings
First-Quarter 2020 Summary Results ($ millions, except earnings-per-share (EPS) data) Three Months Ended March 31 2020 2019 Reported Net Sales $491.5 $443.5 Gross Profit Margin 34.0% 33.1% Reported Operating Profit $88.0 $70.7 Adjusted Operating Profit (1) $88.0 $71.3 Reported Operating Profit Margin 17.9% 15.9% Adjusted Operating Profit Margin (1) 17.9% 16.1% Reported-Diluted EPS $0.99 $0.73 Adjusted-Diluted EPS(1) $1.01 $0.74 (1) “Adjusted Operating Profit”, “Adjusted Operating Profit Margin” and “Adjusted-Diluted EPS” are a Non-U.S. GAAP financial measures. See slides 13-16 and the discussion under the heading “Non-U.S. GAAP Financial Measures” in today’s press release for an explanation and reconciliation of these items. 7 WST Q1 2020 Earnings
Change in Consolidated Net Sales First-quarter 2019 to 2020 ($ millions) 8 WST Q1 2020 Earnings
Gross Profit Update ($ millions) Three Months Ended March 31, 2020 2019 Proprietary Products Gross Profit $150.1 $132.2 Proprietary Products Gross Profit Margin 40.2% 38.9% Contract-Manufactured Products Gross Profit $16.9 $14.5 Contract-Manufactured Products Gross Profit Margin 14.3% 14.0% Consolidated Gross Profit $167.0 $146.8 Consolidated Gross Profit Margin 34.0% 33.1% 9 WST Q1 2020 Earnings
Cash Flow and Balance Sheet Metrics ($ millions) Cash Flow Items Financial Condition YTD YTD March 31, December 31, Q1 2020 Q1 2019 2020 2019 Depreciation and Amortization $26.0 $25.5 Cash and Cash Equivalents $335.3 $439.1 Operating Cash Flow $57.1 $47.6 Debt $256.7 $257.3 Capital Expenditures $32.1 $28.8 Equity $1,490.2 $1,573.2 Working Capital $633.1 $717.1 10 WST Q1 2020 Earnings
2020 Full-Year Guidance 2020 Full-Year Guidance (1,2) Consolidated Net Sales $1.95 - $1.97 billion Adjusted-Diluted EPS $3.52 - $3.62 (1) Please refer to “Notes to Non-U.S. GAAP Financial Measures” on slides 13-16 and the discussion under the heading “Non-U.S. GAAP Financial Measures” in today’s press release, for additional information regarding adjusted-diluted EPS. (2) The adjusted-diluted EPS guidance range does not include potential tax benefits from stock-based compensation beyond those incurred in the first-quarter 2020. Any additional tax benefits associated with stock-based compensation received in 2020 would provide a positive adjustment to this guidance range. 11 WST Q1 2020 Earnings
Our Commitment and Look Forward 12 WST Q1 2020 Earnings
Notes to Non-U.S. GAAP Financial Measures For additional details, please see today’s press release & Safe Harbor Statement ▪ 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 translates 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. ▪ 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. 13 WST Q1 2020 Earnings
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” (Slides 13-16), “Cautionary Statement” (Slide 2) 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) Operating Income tax Net Diluted Three months ended March 31, 2020 profit expense income 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 Operating Income tax Net Diluted Three months ended March 31, 2019 profit expense income EPS Reported (U.S. GAAP) $70.7 $16.1 $55.4 $0.73 Restructuring and related charges 0.6 0.2 0.4 0.01 Adjusted (Non-U.S. GAAP) $71.3 $16.3 $55.8 $0.74 14 WST Q1 2020 Earnings
Notes to Non-U.S. GAAP Financial Measures RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) See “Notes to Non-U.S. GAAP Financial Measures” (Slides 13-16), “Cautionary Statement” (Slide 2) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Net Sales to Organic Net Sales (1) ($ millions) Three months ended March 31, 2020 Proprietary CM Eliminations Total Reported net sales (U.S. GAAP) $373.5 $118.1 $(0.1) $491.5 Effect of acquisitions and/or divestitures (1.2) - - (1.2) Effect of changes in currency translation rates 8.3 1.4 - 9.7 Organic net sales (Non-U.S. GAAP) (1) $380.6 $119.5 $(0.1) $500.0 (1) 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. 15 WST Q1 2020 Earnings
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” (Slides 13-16), “Cautionary Statement” (Slide 2) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Reported-Diluted EPS Guidance to Adjusted-Diluted EPS Guidance 2019 Actual 2020 Guidance % Change Reported-diluted EPS (U.S. GAAP) $3.21 $3.47 to $3.57 8.1% to 11.2% Restructuring and related charges 0.04 - - Gain on restructuring-related sales of assets (0.02) - - Pension settlement 0.04 0.01 Amortization of acquisition-related intangible assets - 0.04 Argentina devaluation 0.01 - - Tax recovery (0.04) - - Adjusted-diluted EPS (Non-U.S. GAAP) (1) $3.24 $3.52 to $3.62 8.6% to 11.7% (1) See “Full-year 2020 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding adjusted-diluted EPS. In 2019, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.14. We have opted not to forecast 2019 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 2020, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.07. Any future tax benefits associated with stock-based compensation that we receive in 2020 would provide a positive adjustment to our full-year EPS guidance. 16 WST Q1 2020 Earnings