On October 27, 2022 West Pharmaceutical Services, Inc. (NYSE: WST) reported its financial results for the third-quarter 2022 and updated full-year 2022 financial guidance (Press release, West Pharmaceutical Services, OCT 27, 2022, View Source;utm_medium=Email&utm_campaign=Investors_Email&utm_content=27_October_2022&utm_source=West+Pharmaceutical+Services%2C+Inc.&utm_campaign=9da5732e6a-EMAIL_CAMPAIGN_2022_03_31_10_50_COPY_01&utm_medium=email&utm_term=0_4b4b77d239-9da5732e6a-584006100&ct=t(EMAIL_CAMPAIGN_5_12_2022_16_15_COPY_01)#west-announces-third-quarter-2022-results-updates-full-year-2022-guidance-and-declares-fourth-quarter-2022-dividend [SID1234622513]).

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Third-Quarter 2022 Summary (comparisons to prior-year period)

Net sales of $686.9 million declined 2.8%; organic net sales growth was 4.3%.
Reported-diluted EPS of $1.59 declined 31.2%.
Adjusted-diluted EPS of $2.03 declined 1.5%.
Company is updating full-year 2022 net sales guidance to a new range of $2.830 billion to $2.840 billion, compared to a prior range of $2.950 billion to $2.975 billion.
Company is updating full-year 2022 adjusted-diluted EPS guidance to a new range of $8.15 to $8.20, compared to a prior range of $9.00 to $9.15.
The Company also announced that its Board of Directors has approved a fourth-quarter 2022 dividend of $0.19 per share, a 5.6% increase over the $0.18 per share paid in each of the four preceding quarters. This is the thirtieth consecutive annual increase in the Company’s dividend. The dividend will be paid on November 16, 2022, to shareholders of record as of November 9, 2022.
"Adjusted-diluted EPS" and "organic net sales" are Non-U.S. GAAP measurements. See discussion under the heading "Non-U.S. GAAP Financial Measures" in this release.

"While our base, non-COVID-19 demand continues to grow, we have had multiple constraints that impacted our financial results," said Eric M. Green, President, Chief Executive Officer and Chair of the Board. "Delays in expansion projects as well as customer delivery timing and mix-shift related productivity impacts resulted in lower-than-expected overall high-value product (HVP) net sales. We expect to resolve these issues in early 2023."

Mr. Green concluded, "We project our full-year 2023 base business, led by our Biologics market unit, to exceed our financial construct of 7% to 9% annual organic net sales growth. While we expect a further decline in COVID-19-related net sales, our base business growth will more than offset the decline, resulting in overall organic net sales growth in 2023."

Proprietary Products Segment
Net sales declined by 1.7% to $567.0 million. Organic net sales growth was 5.5%, with currency translation decreasing net sales growth by 720 basis points. HVP net sales represented over 70% of segment net sales and generated mid-single digit organic net sales growth, led by customer demand for NovaPure, Westar and Envision components and self-injection devices.

The Biologics and Generics market units had mid-single digit organic net sales growth, and the Pharma market unit had low-single digit organic net sales growth.

Contract-Manufactured Products Segment
Net sales declined by 7.5% to $120.0 million. Organic net sales declined by 1.2% with currency translation decreasing net sales growth by 630 basis points. Segment performance was affected by a decline in components for healthcare diagnostic devices.

Financial Highlights (first nine months of 2022)
Operating cash flow was $493.2 million, an increase of 16.5%. Capital expenditures were $189.7 million, an increase of 7.2% over the same period last year. Free cash flow (operating cash flow minus capital expenditures) was $303.5 million, an increase of 23.2%.

During the first nine months of 2022, the Company repurchased 563,334 shares for $202.9 million at an average share price of $360.03 under its share repurchase program.

Full-Year 2022 Financial Guidance

Full-year 2022 net sales are expected to be in the range of $2.830 billion to $2.840 billion, compared to a prior guidance range of $2.950 billion to $2.975 billion.
Organic net sales growth is expected to be approximately 7%, compared to a prior guidance range of approximately 11%.
The Company expects a full-year decline in COVID-19 related net sales of approximately $85 million, unchanged from prior guidance.
Net sales guidance, based on current foreign currency exchange rates, includes an estimated fourth-quarter 2022 headwind of approximately $60 million.
Full-year 2022 adjusted-diluted EPS is expected to be in the range of $8.15 to $8.20, compared to a prior guidance range of $9.00 to $9.15.
Based on current foreign currency exchange rates, fourth-quarter adjusted-diluted EPS guidance includes a $0.17 headwind.
The revised guidance includes a $0.16 EPS positive impact from the first nine-months 2022 tax benefits from stock-based compensation.
For the fourth-quarter 2022, 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 nine months of 2022 would provide a positive adjustment to our full-year adjusted-diluted EPS guidance.
Full-year 2022 capital spending is expected to be in a range of $300 million to $320 million, compared to prior guidance of $380 million.
Third-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. The live audio-only webcast will be made available via the Company’s Investor Relations website at https://bit.ly/3cgSM9S.

To participate and ask questions during the conference call, you must register in advance at https://bit.ly/3eipdG3. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that will be used to access the call.

Management will refer to a slide presentation during the call, which will be made available on the day of the call. To view the presentation, select "Presentations" in the "Investors" section of the Company’s website.