On July 25, 2019 West Pharmaceutical Services, Inc. (NYSE: WST) reported its financial results for the second-quarter 2019 and updated full-year 2019 financial guidance (Press release, West Pharmaceutical Services, JUL 25, 2019, View Source [SID1234537746]).
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Second-Quarter 2019 Summary (comparisons to prior-year period)
Net sales of $469.7 million grew 4.9%, organic sales growth was 8.1%; sales from a recent acquisition contributed an additional 20 basis points of growth.
Reported-diluted EPS of $0.88 increased 17%.
Adjusted-diluted EPS of $0.89 increased 27%.
Company is raising full-year 2019 net sales guidance to a new range of between $1.810 billion and $1.825 billion.
Company is raising full-year 2019 adjusted-diluted EPS guidance to a new range of between $3.00 and $3.10.
The Company is also announcing the Board of Directors has approved a fourth-quarter 2019 dividend of $0.16 per share, a 6.7% increase over the $0.15 per share declared for each of the four preceding quarters. This is the twenty-seventh consecutive annual increase in the Company’s dividend. The fourth-quarter dividend will be paid on November 6, 2019, to shareholders of record as of October 23, 2019.
"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.
"I am pleased with the second-quarter results led by strong Proprietary Products performance, especially in our Biologics market unit," said Eric M. Green, President and Chief Executive Officer. "Double-digit organic sales growth in our high-value product portfolio fueled both overall organic sales growth as well as increases in gross and operating profit margin. We are raising our outlook for the full-year 2019 given the underlying strength in our end markets as demonstrated by our growing book of committed orders."
Proprietary Products Segment
Net sales grew by 4.1% to $360.3 million. Organic sales growth was 7.5%, with currency translation decreasing sales by 3.7% and incremental sales from a recent acquisition contributing 30 basis points of Proprietary Products growth. High-value products (HVP) represented 62% of segment sales and generated double-digit organic sales growth.
Our Biologics market unit had double-digit organic sales growth, led by customer purchases of Westar and NovaPure components as well as Crystal Zenith and SmartDose technology. Our Generics market unit posted high-single digit organic sales growth, led by sales of Westar and film-coated components. Our Pharma market unit saw a low-single digit organic decline due to the impact of a previously-reported voluntary recall of our Vial2Bag product.
Contract-Manufactured Products Segment
Net sales grew by 7.7% to $109.4 million. Organic sales growth was 10.2% with currency translation decreasing sales by 2.5%. Segment performance was led by strong sales of healthcare-related injection and diagnostic devices.
Financial Highlights (first six months of 2019)
Operating cash flow was $152.7 million, an increase of 20%. Capital expenditures were $57.1 million. Free cash flow (operating cash flow minus capital expenditures) was $95.6 million, an increase of 21%.
The Company recorded $2.0 million of restructuring and related charges through the first six months of 2019 from actions we have taken that are intended to streamline our manufacturing network. This plan is expected to be completed by the end of 2019 and result in $7.0 million of restructuring and related charges in 2019. Implemented in first-quarter 2018, the Company expects cumulative expenses over the plan period to be approximately $16.0 million. Once fully completed, the Company anticipates that the plan will provide annualized savings of approximately $14.0 million.
Full-Year 2019 Financial Guidance
The Company is raising full-year 2019 net sales guidance to a new range of between $1.810 billion and $1.825 billion, compared to the prior guidance range of between $1.795 billion and $1.820 billion.
Organic sales growth guidance is now expected to be at the higher end of the previously communicated range of 6% to 8%.
Net sales guidance includes a headwind of $42 million for the full-year 2019 based on current foreign exchange rates, compared to prior guidance of a full-year negative impact of between $34 million and $37 million.
The Company is raising adjusted-diluted EPS to a new range of between $3.00 and $3.10, compared to the prior guidance range of between $2.80 and $2.90.
Includes an estimated headwind of approximately $0.10 based on current foreign currency exchange rates, compared to prior guidance of a headwind of $0.08.
Second-Quarter 2019 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 6143018.
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, August 1, 2019, by dialing 855-859-2056 (U.S.) or 404-537-3406 (International) and entering conference ID 6143018.