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 28, 2022
| 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 28, 2022, West Pharmaceutical Services, Inc. (the “Company”) issued a press release announcing its first-quarter 2022 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 28, 2022. | |
| 99.2 | West Pharmaceutical Services, Inc. Presentation, dated April 28, 2022. | |
| 104 | The cover page from the Company’s Current Report on Form 8-K, dated April 28, 2022, 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 28, 2022 |
EXHIBIT INDEX
| Exhibit No. | Description |
|---|---|
| 99.1 | West Pharmaceutical Services, Inc. Press Release, dated April 28, 2022. |
| 99.2 | West Pharmaceutical Services, Inc. Presentation, dated April 28, 2022. |
| 104 | The cover page from the Company’s Current Report on Form 8-K, dated April 28, 2022, formatted in Inline XBRL. |
4
Document
Exhibit 99.1
West Announces First-Quarter 2022 Results and Declares Third-Quarter 2022 Dividend
- Conference Call Scheduled for 9 a.m. EDT Today -
Exton, PA, April 28, 2022 – West Pharmaceutical Services, Inc. (NYSE: WST) today announced its financial results for the first-quarter 2022 and updated full-year 2022 financial guidance.
First-Quarter 2022 Summary (comparisons to prior-year period)
•Net sales of $720.0 million grew 7.4%; organic sales growth was 11.0%.
•Reported-diluted EPS of $2.29 increased 15.1%.
•Adjusted-diluted EPS of $2.30 increased 12.2%.
•The Company is reaffirming full-year 2022 financial guidance of net sales in a range of $3.050 billion to $3.075 billion. The Company is raising full-year 2022 financial guidance of adjusted-diluted EPS to a new range of $9.30 to $9.45, compared to a prior range of $9.20 to $9.35.
•The Company also announced that its Board of Directors has approved a third-quarter 2022 dividend of $0.18 per share. The dividend will be paid on August 3, 2022, to shareholders of record as of July 20, 2022.
“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 a solid first-quarter 2022 and remain on track to increase capacity throughout the year to satisfy the growing demand for our high-value products (HVP),” said Eric M. Green, President and Chief Executive Officer. “Our team members across the globe continue to demonstrate their passion to improve patient lives as they remain focused on executing our strategic initiatives despite macroeconomic challenges. Even with these challenges, and headwinds related to changes in foreign currency exchange rates, we remain well positioned for continued net sales growth and margin expansion. We are reaffirming our full-year 2022 net sales guidance, raising our full-year organic sales growth guidance, and raising our full-year 2022 adjusted-diluted EPS guidance.”
Proprietary Products Segment
Net sales grew by 10.6% to $601.3 million. Organic sales growth was 14.4% with currency translation negatively impacting sales growth by 380 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 NovaPure® and Westar® components.
The Biologics market unit had double-digit organic sales growth. The Pharma and Generics market units had high-single digit and mid-single digit organic sales growth, respectively.
Contract-Manufactured Products Segment
Net sales declined by 6.6% to $118.7 million. Organic sales decline was 3.8% with currency translation negatively impacted sales growth by 280 basis points. Segment performance was impacted by a decline of sales of components for diagnostic devices.
Financial Highlights
Operating cash flow was $151.2 million, an increase of 70.5%. Capital expenditures in the quarter were $65.8 million. Free cash flow (operating cash flow minus capital expenditures) was $85.4 million, an increase of 151.2%.
During the quarter, the Company repurchased 390,000 shares for $147.1 million at an average share price of $377.23 under its share repurchase program.
Full-Year 2022 Financial Guidance
•The Company is reaffirming full-year 2022 net sales guidance to be in a range of $3.050 billion to $3.075 billion.
◦Organic sales growth is expected to be in a range of 11% to 12%, compared to prior guidance of approximately 10%.
◦Net sales guidance, based on current foreign exchange rates, includes an estimated full-year 2022 headwind of $115 million, compared to prior guidance of a $70 million headwind.
•The Company is raising full-year 2022 adjusted-diluted EPS to be in a range of $9.30 to $9.45, compared to a prior range of $9.20 to $9.35.
◦Full-year adjusted-diluted EPS guidance range, based on current foreign currency exchange rates, includes an estimated headwind of $0.38, compared to prior guidance of a $0.21 headwind.
◦The revised guidance includes a $0.12 EPS positive impact from first-quarter tax benefits from stock-based compensation.
◦For the remaining quarters 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 2022 would provide a positive adjustment to our full-year adjusted-diluted EPS guidance.
◦Full-year 2022 capital spending is expected to be $380 million. This includes incremental capital spending to support capacity expansions at existing HVP facilities.
First-Quarter 2022 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 6690124.
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 5, 2022, by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and entering conference ID 6690124.
| Investor Contact: | Media Contact: |
|---|---|
| Quintin Lai | Michele Polinsky |
| Vice President, Investor Relations | Vice President, Global Communications |
| (610) 594-3318 | (610) 594-3054 |
| Quintin.Lai@westpharma.com | Michele.Polinsky@westpharma.com |
Forward-Looking Statements
Certain forward-looking statements appear in this release and include such words as “raising,” “increase,” “growing,” “continue,” “remain,” “reaffirming,” “expected,” “to be,” “includes,” “estimated,” “assumes,” “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, 2021.
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><br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net sales | $ | 720.0 | 100% | $ | 670.7 | 100% |
| Cost of goods and services sold | 435.4 | 60 | 398.8 | 59 | ||
| Gross profit | 284.6 | 40 | 271.9 | 41 | ||
| Research and development | 14.6 | 2 | 12.2 | 2 | ||
| Selling, general and administrative expenses | 83.4 | 12 | 80.2 | 12 | ||
| Other (income) expense | (3.1) | — | 3.9 | 1 | ||
| Operating profit | 189.7 | 26 | 175.6 | 26 | ||
| Interest expense, net | 1.9 | — | 1.8 | — | ||
| Other nonoperating (income) expense | — | — | (1.1) | — | ||
| Income before income taxes | 187.8 | 26 | 174.9 | 26 | ||
| Income tax expense | 21.2 | 3 | 28.7 | 4 | ||
| Equity in net income of affiliated companies | (7.2) | (1) | (5.0) | (1) | ||
| Net income | $ | 173.8 | 24% | $ | 151.2 | 23% |
| Net income per share: | ||||||
| Basic | $ | 2.34 | $ | 2.04 | ||
| Diluted | $ | 2.29 | $ | 1.99 | ||
| Average common shares outstanding | 74.4 | 73.9 | ||||
| Average shares assuming dilution | 76.0 | 75.8 |
WEST PHARMACEUTICAL SERVICES
REPORTING SEGMENT INFORMATION
(UNAUDITED)
(in millions)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| Net Sales: | 2022 | 2021 | ||||
| Proprietary Products | $ | 601.3 | $ | 543.7 | ||
| Contract-Manufactured Products | 118.7 | 127.1 | ||||
| Eliminations | — | (0.1) | ||||
| Consolidated Total | $ | 720.0 | $ | 670.7 | ||
| Gross Profit: | ||||||
| Proprietary Products | $ | 260.7 | $ | 251.9 | ||
| Contract-Manufactured Products | 23.9 | 20.0 | ||||
| Gross Profit | $ | 284.6 | $ | 271.9 | ||
| Gross Profit Margin | 39.5 | % | 40.5 | % | ||
| Operating Profit (Loss): | ||||||
| Proprietary Products | $ | 193.4 | $ | 182.6 | ||
| Contract-Manufactured Products | 19.1 | 16.4 | ||||
| Stock-based compensation expense | (5.5) | (5.9) | ||||
| General corporate costs | (17.1) | (13.9) | ||||
| Adjusted Operating Profit | $ | 189.9 | $ | 179.2 | ||
| Adjusted Operating Profit Margin | 26.4 | % | 26.7 | % | ||
| Other unallocated items | (0.2) | (3.6) | ||||
| Reported Operating Profit | $ | 189.7 | $ | 175.6 | ||
| Reported Operating Profit Margin | 26.3 | % | 26.2 | % |
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, 2022 | Operating profit | Income tax expense | Net income | Diluted EPS | ||||
|---|---|---|---|---|---|---|---|---|
| Reported (U.S. GAAP) | $ | 189.7 | $ | 21.2 | $ | 173.8 | $ | 2.29 |
| Unallocated items: | ||||||||
| Pension settlement (1) | — | 0.1 | 0.5 | — | ||||
| Amortization of acquisition-related intangible assets (2) | 0.2 | — | 0.7 | 0.01 | ||||
| Adjusted (Non-U.S. GAAP) | $ | 189.9 | $ | 21.3 | $ | 175.0 | $ | 2.30 |
| 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 |
| Unallocated items: | ||||||||
| Restructuring and related charges | 1.2 | 0.2 | 1.0 | 0.01 | ||||
| Pension settlement (1) | — | 0.2 | 0.5 | 0.01 | ||||
| Amortization of acquisition-related intangible assets (2) | 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 |
(1)The Company recorded a pension settlement charge 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.
(2)During the three months ended March 31, 2022 and 2021, the Company recorded $0.2 million of amortization expense within operating profit associated with an intangible asset acquired during the second quarter of 2020. During the three months ended March 31, 2022 and 2021, the Company recorded $0.5 million of amortization expense 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 (3)
| Three months ended March 31, 2022 | Proprietary | CM | Eliminations | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Reported net sales (U.S. GAAP) | $ | 601.3 | $ | 118.7 | $ | — | $ | 720.0 |
| Effect of changes in currency translation rates | 20.6 | 3.6 | — | 24.2 | ||||
| Organic net sales (Non-U.S. GAAP) (3) | $ | 621.9 | $ | 122.3 | $ | — | $ | 744.2 |
(3)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
| 2021 Actual | 2022 Guidance | % Change | |
|---|---|---|---|
| Reported-diluted EPS (U.S. GAAP) | $8.67 | $9.26 to $9.41 | 6.8% to 8.5% |
| Pension settlement | 0.02 | ||
| Cost investment activity | 0.06 | ||
| Restructuring and related charges | 0.02 | ||
| Amortization of acquisition-related intangible assets | 0.04 | 0.04 | |
| Asset impairment | 0.04 | ||
| Royalty acceleration | (0.25) | ||
| Tax law changes | (0.02) | ||
| Adjusted-diluted EPS (Non-U.S. GAAP) (4) | $8.58 | $9.30 to $9.45 | 8.4% to 10.1% |
Notes:
See “Full-year 2022 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding adjusted-diluted EPS.
(4)We have opted not to forecast 2022 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 2022, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.12. Any future tax benefits associated with stock-based compensation that we receive in 2022 would provide a positive adjustment to our full-year EPS guidance. In 2021, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.41.
WEST PHARMACEUTICAL SERVICES
CASH FLOW ITEMS
(UNAUDITED)
(in millions)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Depreciation and amortization | $ | 29.6 | $ | 29.1 |
| Operating cash flow | $ | 151.2 | $ | 88.7 |
| Capital expenditures | $ | 65.8 | $ | 54.7 |
WEST PHARMACEUTICAL SERVICES
FINANCIAL CONDITION
(UNAUDITED)
(in millions)
| As of<br><br>March 31, 2022 | As of<br><br>December 31, 2021 | |||
|---|---|---|---|---|
| Cash and cash equivalents | $ | 667.7 | $ | 762.6 |
| Accounts receivable, net | $ | 498.7 | $ | 489.0 |
| Inventories | $ | 416.5 | $ | 378.4 |
| Accounts payable | $ | 248.2 | $ | 232.2 |
| Debt | $ | 252.5 | $ | 253.0 |
| Equity | $ | 2,326.2 | $ | 2,335.4 |
| Working capital | $ | 1,105.7 | $ | 1,147.9 |
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.
westq12022final_clean
1 First-Quarter 2022 First Quarter Overall Net Sales $720.0M | 7.4% Diluted Earnings Per Share: $2.29 | 15.1% Adjusted Diluted Earnings Per Share: $2.30| 12.2% Eric M. Green President and Chief Executive Officer West Pharmaceutical Services, Inc. WST Q1 2022 Earnings “We delivered a solid first-quarter 2022 and remain on track to increase capacity throughout the year to satisfy the growing demand for our high- value products (HVP).” “Our team members across the globe continue to demonstrate their passion to improve patient lives as they remain focused on executing our strategic initiatives despite macroeconomic challenges. Even with these challenges, and headwinds related to changes in foreign currency exchange rates, we remain well positioned for continued net sales growth and margin expansion. We are reaffirming our full-year 2022 net sales guidance, raising our full-year organic sales growth guidance, and raising our full-year 2022 adjusted-diluted EPS guidance.” 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.
West Pharmaceutical Services, Inc. Eric M. Green President & CEO Bernard J. Birkett Senior Vice President & CFO First-Quarter Results 2022 Analyst Conference Call 9 a.m. Eastern Time | April 28, 2022
3 West Analyst Conference Call 9 a.m. Eastern Time April 28, 2022 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 6690124 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 5, 2022 by dialing: These presentation materials are intended to accompany today’s press release announcing the Company’s results for the first quarter 2022 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 6690124 WST Q1 2022 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 Trademarks and 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 CZ® are registered trademarks of Daikyo Seiko, Ltd. Daikyo Crystal Zenith technologies are licensed from Daikyo Seiko, Ltd. Trademarks WST Q1 2022 Earnings
5 Financial Highlights WST Q1 2022 Earnings • First quarter 2022 net sales of $720.0 million grew 7.4%; organic sales growth was 11.0% • First quarter 2022 reported-diluted EPS of $2.29 increased 15.1%; adjusted- diluted EPS of $2.30 increased 12.2%
6 Pneuma Systems partnership to develop fluid flow technologies for drug delivery 2022 PDA Annual Meeting West experts received prestigious 2021 Fred Simon Award and Edward Smith Packaging Award Proud Recipient of Ireland-US Council Global Public Service Award for Waterford site’s service during the pandemic Techin - MedTech COE combining West’s medical expertise with IIT’s incubation model WST Q1 2022 Earnings Demonstrating our Passion to Improve Patient Lives Le Nouvion awarded €17.5 million by French government to expand production capacity for COVID-19 vaccines Sponsorship of Barron’s 2022 Top 100 Most Sustainable Company #49 Execute. Innovate. Grow.
7 First-Quarter 2022 Summary Results ($ millions, except earnings-per-share (EPS) data) Three Months Ended March 31 2022 2021 Reported Net Sales $720.0 $670.7 Gross Profit Margin 39.5% 40.5% Reported Operating Profit $189.7 $175.6 Adjusted Operating Profit (1) $189.9 $179.2 Reported Operating Profit Margin 26.3% 26.2% Adjusted Operating Profit Margin (1) 26.4% 26.7% Reported-Diluted EPS $2.29 $1.99 Adjusted-Diluted EPS (1) $2.30 $2.05 “Adjusted Operating Profit,” “Adjusted Operating Profit Margin” and “Adjusted-Diluted EPS” are Non-U.S. GAAP financial measures. See slides 15-18 and the discussion under the heading “Non-U.S. GAAP Financial Measures” in today’s press release for an explanation and reconciliation of these items. (1) WST Q1 2022 Earnings
8 Overall Organic Sales Growth – 11.0% (Q1 2022) Proprietary Products Q1 2022 organic sales growth of 14.4% led by sales of high-value products, which grew double digits BIOLOGICS GENERICS PHARMA Sales led by high-value products, including NovaPure® and Westar® components Sales led by high-value products, including FluroTec® and Westar® components Sales led by high-value products, including NovaPure® and Daikyo components CONTRACT MANUFACTURING Organic sales decline of 3.8%, led by a decline of sales of components for diagnostic devices Double-Digit Mid-Single Digit (Low-Single Digit)High-Single Digit First-Quarter 2022 Organic Sales Growth WST Q1 2022 Earnings
9 Change in Consolidated Net Sales First-quarter 2021 to 2022 ($ millions) WST Q1 2022 Earnings
10 Gross Profit Update ($ millions) Three Months Ended March 31, 2022 2021 Proprietary Products Gross Profit $260.7 $251.9 Proprietary Products Gross Profit Margin 43.4% 46.3% Contract-Manufactured Products Gross Profit $23.9 $20.0 Contract-Manufactured Products Gross Profit Margin 20.1% 15.7% Consolidated Gross Profit $284.6 $271.9 Consolidated Gross Profit Margin 39.5% 40.5% WST Q1 2022 Earnings
11 Cash Flow and Balance Sheet Metrics ($ millions) Cash Flow Items YTD Q1 2022 YTD Q1 2021 Depreciation and Amortization $29.6 $29.1 Operating Cash Flow $151.2 $88.7 Capital Expenditures $65.8 $54.7 Financial Condition March 31, 2022 December 31, 2021 Cash and Cash Equivalents $667.7 $762.6 Debt $252.5 $253.0 Equity $2,326.2 $2,335.4 Working Capital $1,105.7 $1,147.9 WST Q1 2022 Earnings
12 2022 Full-Year Guidance 2022 Full-Year Guidance Consolidated Net Sales $3.050 - $3.075 billion Adjusted-Diluted EPS $9.30 - $9.45 WST Q1 2022 Earnings
13 Execute. Innovate. Grow. Delivering Unique Value Global Operational Effectiveness Accelerating Investments for the Future Innovating for a Healthier World Our purpose to improve patient lives propels us each and every day. WST Q1 2022 Earnings
14 Eric M. Green President and Chief Executive Officer Bernard J. Birkett Senior Vice President and Chief Financial Officer Quintin Lai Vice President, Corporate Strategy & Investor Relations Q & A WST Q1 2022 Earnings
15 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 2022 Earnings
16 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, 2022 Operating profit Income tax expense Net income Diluted EPS Reported (U.S. GAAP) $189.7 $21.2 $173.8 $2.29 Pension settlement - 0.1 0.5 - Amortization of acquisition-related intangible assets 0.2 - 0.7 0.01 Adjusted (Non-U.S. GAAP) $189.9 $21.3 $175.0 $2.30 WST Q1 2022 Earnings 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 $2.05
17 Notes to Non-U.S. GAAP Financial Measures RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) See “Notes to Non-U.S. GAAP Financial Measures”, “Safe Harbor Statement” (Slide 4) and today’s press release for an explanation and reconciliation of these items. Reconciliation of Net Sales to Organic Net Sales (1) ($ 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, 2022 Proprietary CM Eliminations Total Reported net sales (U.S. GAAP) $601.3 $118.7 $ - $720.0 Effect of changes in currency translation rates 20.6 3.6 - 24.2 Organic net sales (Non-U.S. GAAP) (1) $621.9 $122.3 $ - $744.2 WST Q1 2022 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-Diluted EPS Guidance to Adjusted-Diluted EPS Guidance 2021 Actual 2022 Guidance % Change Reported-diluted EPS (U.S. GAAP) $8.67 $9.26 to $9.41 6.8% to 8.5% Pension settlement 0.02 - Cost investment activity 0.06 - Restructuring and related charges 0.02 - Amortization of acquisition-related intangible assets 0.04 0.04 Asset impairment 0.04 - Royalty acceleration (0.25) - Tax law changes (0.02) - Adjusted-diluted EPS (Non-U.S. GAAP) (1) $8.58 $9.30 to $9.45 8.4% to 10.1% (1) See “Full-year 2022 Financial Guidance” and “Non-U.S. GAAP Financial Measures” in today’s press release for additional information regarding reported and adjusted-diluted EPS. We have opted not to forecast 2022 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 2022, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.12. Any future tax benefits associated with stock-based compensation that we receive in 2022 would provide a positive adjustment to our full-year EPS guidance. In 2021, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by $0.41. WST Q1 2022 Earnings