West Pharmaceutical Services (WST) Shares Slide 15%

West Pharmaceutical Services, Inc. (NYSE: WST) has reported its financial results for the fourth quarter and full year of 2023, along with the introduction of its financial guidance for the full year of 2024. The company announced that its net sales for the fourth quarter of 2023 were $732.0 million, reflecting a growth of 3.3% compared to the prior-year period, with organic net sales growing by 1.4%. Full-year 2023 net sales reached $2.950 billion, marking a growth of 2.2%, with organic net sales growth at 1.6%. Reported-diluted earnings per share (EPS) for the fourth quarter of 2023 stood at $1.83, representing a growth of 34.6%. For the full year of 2023, reported-diluted EPS was $7.88, reflecting a growth of 1.9%. Adjusted-diluted EPS for the fourth quarter of 2023 was $1.83, growing by 3.4%, while full-year 2023 adjusted-diluted EPS was $8.08, declining by 5.8%. The company also introduced its full-year 2024 financial guidance, projecting net sales in the range of $3.000 billion to $3.025 billion and adjusted-diluted EPS in the range of $7.50 to $7.75.

Eric M. Green, President, Chief Executive Officer, and Chair of the Board of Directors, commented on the company's performance and outlook, stating, "We had strong 2023 base organic sales growth, excluding the headwinds from lower pandemic-related sales, led by high-value product (HVP) components and devices and contract manufacturing. Our continued investments in both HVP as well as contract manufacturing capacity to support customer demand will fuel our long-range financial construct of future organic sales growth and operating profit margin expansion."

He further added, "In 2024, we expect moderated organic sales growth as we manage timing of inventory management, especially with our largest customers. We expect headwinds to be more pronounced during the first quarter and less impactful in subsequent quarters. I am pleased that our February order book for the second half of the year is outpacing typical pre-pandemic levels, coupled with customer optimism of certain breakout drug categories and timing of additional HVP device capacity, all of which underscore our expectation of a stronger second half organic sales growth."

The company reported that its proprietary products segment saw net sales grow by 1.5% to $593.7 million in the fourth quarter of 2023, with organic net sales declining by 0.3%. The contract-manufactured products segment also demonstrated growth, with net sales increasing by 11.6% to $138.3 million. For the full year of 2023, operating cash flow was reported at $776.5 million, reflecting an increase of 7.3%, while capital expenditures amounted to $362.0 million.

West Pharmaceutical Services, Inc. expects full-year 2024 net sales to be in the range of $3.000 billion to $3.025 billion, with organic net sales growth projected to be approximately 2% to 3%. The company also provided guidance on its adjusted-diluted EPS, capital spending, and estimated headwinds based on current foreign currency exchange rates for the full year of 2024.

The live audio-only webcast of the fourth-quarter 2023 conference call will be available via the company's investor relations website, and a replay of the conference call and webcast will be accessible on the company's website for 30 days.

The company's shares have experienced a negative movement, declining by 14.8%, and are currently trading at a price of $347.8.

The company's full 8-K submission is available here.

2018 2019 2020 2021 2022 2023
Revenue (M) $1,717 $1,840 $2,147 $2,832 $2,887 $2,926
Gross Margins 32% 33% 36% 42% 39% 38%
Net Margins 12% 13% 16% 23% 20% 19%
Net Income (M) $207 $242 $346 $662 $586 $559
Net Interest Expense (M) $8 $8 $8 $8 $8 $10
Depreciation & Amort. (M) $102 $100 $105 $117 $117 $129
Diluted Shares (M) 75 75 76 76 76 75
Earnings Per Share $2.74 $3.21 $4.57 $8.67 $7.73 $7.42
EPS Growth n/a 17.15% 42.37% 89.72% -10.84% -4.01%
Avg. Price $99.96 $125.28 $223.08 $366.65 $355.61 $408.19
P/E Ratio 35.7 38.31 47.67 41.24 45.19 54.35
Free Cash Flow (M) $184 $241 $298 $331 $439 $420
EV / EBITDA 21.21 22.98 31.5 30.72 30.24 38.2
Total Debt (M) $196 $260 $258 $297 $211 $207
Net Debt / EBITDA -0.41 -0.45 -0.7 -0.54 -0.8 -0.89
Current Ratio 3.15 3.1 2.73 2.93 3.7 3.7
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