West Announces Fourth-Quarter and Full-Year 2023 Results
- Conference Call Scheduled for
Fourth-Quarter and Full-Year 2023 Summary (comparisons to prior-year period)
- Fourth-quarter 2023 net sales of
$732.0 million grew 3.3%; organic net sales growth was 1.4%. Full-year 2023 net sales of$2.950 billion grew 2.2%; organic net sales growth was 1.6%. - Fourth-quarter 2023 reported-diluted EPS of
$1.83 grew 34.6%. Full-year 2023 reported-diluted EPS of$7.88 grew 1.9%. - Fourth-quarter 2023 adjusted-diluted EPS of
$1.83 grew 3.4%. Full-year 2023 adjusted-diluted EPS of$8.08 decreased 5.8%. - The Company is introducing full-year 2024 financial guidance of net sales in a range of
$3.000 billion to$3.025 billion and adjusted-diluted EPS in a range of$7.50 to$7.75 .
"Adjusted-diluted EPS" and "organic net sales growth" are Non-
"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," said
Proprietary Products Segment
In the fourth-quarter 2023, net sales grew by 1.5% to
The Pharma market unit had low-single digit organic net sales growth, and the Biologics and Generic market units had organic sales declines of low-single and mid-single digits, respectively. As expected, sales related to COVID-19 continued to decline from the same period last year. Excluding this COVID-19 impact, the Proprietary Products segment organic sales would have shown high-single digit growth, led by double-digit growth in Biologics.
In the full-year 2023, net sales declined by 0.4% to
Contract-Manufactured Products Segment
In the fourth-quarter 2023, net sales grew by 11.6% to
In the full-year 2023, net sales grew by 15.0% to
Full-Year 2023 Financial Highlights
Operating cash flow was
During the year ended
Introducing Full-Year 2024 Financial Guidance
- Full-year 2024 net sales are expected to be in a range of
$3.000 billion to$3.025 billion .- Organic net sales growth is expected to be approximately 2% to 3%.
- Net sales guidance includes an estimated full-year 2024 headwind of
$8 million based on current foreign currency exchange rates.
- Full-year 2024 adjusted-diluted EPS is expected to be in a range of
$7.50 to$7.75 .- Full-year adjusted-diluted EPS guidance range includes an estimated headwind of approximately
$0.02 based on current foreign currency exchange rates. - This adjusted-diluted EPS guidance range assumes a full-year 2024 tax rate of approximately 22.5%, which does not include potential tax benefits from stock-based compensation. As in prior years, we are not including potential 2024 tax benefits from stock-based compensation, as they are out of the Company's control. Any tax benefits associated with stock-based compensation that we receive in 2024 would provide a positive adjustment to our full-year EPS guidance.
- Full-year adjusted-diluted EPS guidance range includes an estimated headwind of approximately
- Full-year 2024 capital spending is expected to be
$350 million . This includes incremental capital spending to support capacity expansions at existing HVP and Contract Manufacturing facilities.
Fourth-Quarter 2023 Conference Call
The live audio-only webcast will be made available via the Company's Investor Relations website here or by clicking here.
To participate in the conference call by asking questions to Management, please register in advance by clicking here. 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.
A replay of the conference call and webcast will be available on the Company's website for 30 days.
Forward-Looking Statements
This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include such words as "will," "expect," "estimates," "estimated," "underscore," "are," "expected," "is," "includes," "assumes," "does not," "include," "would," "provide," "potential" 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: 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; interruptions or weaknesses in our supply chain, illness in our workforce and access to transport for our products; disruptions or limitations in the Company's manufacturing capacity; average profitability, or mix, of the products we sell; dependence on third-party suppliers and partners; increased raw material, energy and labor costs; fluctuations in currency exchange; the ability to meet development milestones with key customers; and the consequences of other geopolitical events, including natural disasters, acts of war, and global health crises. 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
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-
This release contains certain non-GAAP financial measures, including organic net sales and adjusted-diluted EPS. 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
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CONSOLIDATED STATEMENTS OF INCOME |
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(UNAUDITED) |
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(in millions, except per share data) |
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Three Months Ended
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Twelve Months Ended |
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2023 |
2022 |
2023 |
2022 |
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Net sales |
|
100 % |
|
100 % |
|
100 % |
|
100 % |
Cost of goods and services sold |
453.8 |
62 |
446.6 |
63 |
1,820.6 |
62 |
1,750.7 |
61 |
Gross profit |
278.2 |
38 |
262.1 |
37 |
1,129.2 |
38 |
1,136.2 |
39 |
Research and development |
18.4 |
3 |
15.9 |
2 |
68.4 |
2 |
58.5 |
2 |
Selling, general and administrative expenses |
90.0 |
12 |
85.7 |
12 |
353.4 |
12 |
316.9 |
11 |
Other expense (income), net |
8.9 |
1 |
30.8 |
5 |
31.4 |
1 |
26.8 |
1 |
Operating profit |
160.9 |
22 |
129.7 |
18 |
676.0 |
23 |
734.0 |
25 |
Interest (income) expense, net |
(8.2) |
(1) |
(1.2) |
- |
(19.0) |
(1) |
2.8 |
- |
Other nonoperating expense (income) |
0.9 |
- |
2.2 |
- |
(3.0) |
- |
51.3 |
2 |
Income before income taxes and equity in net income of affiliated companies |
168.2 |
23 |
128.7 |
18 |
698.0 |
24 |
679.9 |
23 |
Income tax expense |
34.5 |
5 |
28.9 |
4 |
122.3 |
4 |
114.7 |
4 |
Equity in net income of affiliated companies |
(3.3) |
(1) |
(3.2) |
(1) |
(17.7) |
- |
(20.7) |
(1) |
Net income |
|
19 % |
|
15 % |
|
20 % |
|
20 % |
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Net income per share: |
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Basic |
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Diluted |
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Average common shares outstanding |
74.1 |
|
74.4 |
|
74.3 |
|
74.4 |
|
Average shares assuming dilution |
75.0 |
|
75.6 |
|
75.3 |
|
75.8 |
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REPORTING SEGMENT INFORMATION |
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(UNAUDITED) |
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(in millions) |
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Three Months Ended |
Twelve Months Ended |
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|
2023 |
2022 |
2023 |
2022 |
Proprietary Products |
|
|
|
|
Contract-Manufactured Products |
138.3 |
123.9 |
552.5 |
480.4 |
Eliminations |
- |
- |
- |
(0.3) |
Consolidated Total |
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Gross Profit: |
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|
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Proprietary Products |
|
|
|
|
Contract-Manufactured Products |
24.7 |
19.1 |
96.0 |
82.9 |
Unallocated items |
0.1 |
- |
(0.8) |
- |
Gross Profit |
|
|
|
|
Gross Profit Margin |
38.0 % |
37.0 % |
38.3 % |
39.4 % |
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Operating Profit (Loss): |
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|
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|
Proprietary Products |
|
|
|
|
Contract-Manufactured Products |
18.8 |
12.4 |
72.1 |
60.4 |
Stock-based compensation expense |
(1.4) |
(6.7) |
(23.3) |
(23.7) |
General corporate costs |
(20.1) |
(44.5) |
(82.9) |
(87.1) |
Reported Operating Profit |
|
|
|
|
Reported Operating Profit Margin |
22.0 % |
18.3 % |
22.9 % |
25.4 % |
Unallocated items |
(1.0) |
29.0 |
14.6 |
28.0 |
Adjusted Operating Profit |
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|
|
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Adjusted Operating Profit Margin
|
21.8 % |
22.4 % |
23.4 % |
26.4 % |
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RECONCILIATION OF NON- |
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Please refer to "Non- |
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(in millions, except per share data) |
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Reconciliation of Reported and Adjusted Operating Profit, Net Income and Diluted EPS |
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Three months ended |
Operating |
Income |
Net |
Diluted |
Reported ( |
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|
|
|
Cost investment activity (2) |
1.0 |
- |
1.0 |
0.01 |
Restructuring and other charges (3) |
(2.1) |
(0.6) |
(1.5) |
(0.02) |
Amortization of acquisition-related intangible assets (4) |
0.1 |
- |
0.7 |
0.01 |
Adjusted (Non- |
|
|
|
|
Twelve months ended |
Operating |
Income |
Net |
Diluted |
Reported ( |
|
|
|
|
Loss on disposal of plant (1) |
11.6 |
(0.7) |
12.3 |
0.16 |
Cost investment activity (2) |
4.3 |
- |
4.3 |
0.06 |
Restructuring and other charges (3) |
(2.0) |
(0.9) |
(1.1) |
(0.02) |
Amortization of acquisition-related intangible assets (4) |
0.7 |
0.1 |
2.8 |
0.04 |
Legal settlement (5) |
- |
(0.9) |
(2.9) |
(0.04) |
Adjusted (Non- |
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Three months ended |
Operating |
Income |
Net |
Diluted |
Reported ( |
|
|
|
|
Cost investment activity (2) |
3.5 |
- |
3.5 |
0.05 |
Restructuring and other charges (3) |
25.4 |
2.4 |
23.0 |
0.30 |
Amortization of acquisition-related intangible assets (4) |
0.1 |
- |
0.7 |
0.01 |
Pension settlement (6) |
- |
0.3 |
0.9 |
0.02 |
Tax law changes (8) |
- |
(2.5) |
2.5 |
0.03 |
Adjusted (Non- |
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Twelve months ended |
Operating |
Income
tax |
Net |
Diluted |
Reported ( |
|
|
|
|
Cost investment activity (2) |
3.5 |
- |
3.5 |
0.05 |
Restructuring and other charges (3) |
23.8 |
2.0 |
21.8 |
0.29 |
Amortization of acquisition-related intangible assets (4) |
0.7 |
0.1 |
2.8 |
0.04 |
Pension settlement (6) |
- |
20.6 |
31.6 |
0.42 |
Royalty acceleration (7) |
- |
1.3 |
(1.3) |
(0.02) |
Tax law changes (8) |
- |
(5.7) |
5.7 |
0.07 |
Adjusted (Non- |
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(1) |
During the twelve months ended |
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(2) |
During the three and twelve months ended |
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(3) |
During the three and twelve months ended |
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(4) |
During the three and twelve months ended |
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(5) |
During the twelve months ended |
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(6) |
During the three and twelve months ended |
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(7) |
During the twelve months ended |
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(8) |
During the three and twelve months ended |
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RECONCILIATION OF NON- |
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Please refer to "Non- |
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(in millions, except per share data) |
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Reconciliation of |
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Three months ended |
Proprietary |
CM |
Eliminations |
Total |
Reported net sales ( |
|
|
- |
|
Effect of changes in currency translation rates |
(15.7) |
(2.8) |
- |
(18.5) |
Organic net sales (Non- |
|
|
- |
|
|
|
|
|
|
Twelve months ended |
Proprietary |
CM |
Eliminations |
Total |
Reported net sales ( |
|
|
- |
|
Effect of changes in currency translation rates |
(22.1) |
(5.8) |
- |
(27.9) |
Organic net sales (Non- |
|
|
- |
|
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Three months ended |
Proprietary |
CM |
Eliminations |
Total |
Reported net sales ( |
|
|
- |
|
Effect of divestitures and/or acquisitions |
(4.9) |
- |
- |
(4.9) |
Net sales excluding divestiture (Non- |
|
|
- |
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Twelve months ended |
Proprietary |
CM |
Eliminations |
Total |
Reported net sales ( |
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|
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Effect of divestitures and/or acquisitions |
(11.5) |
- |
- |
(11.5) |
Net sales excluding divestiture (Non- |
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(9) |
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 |
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(10) |
Net sales excluding divestitures represents the 2022 comparative sales figure used in our organic sales growth calculation to eliminate the impact of our 2023 divestiture. |
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CASH FLOW ITEMS |
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(UNAUDITED) |
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(in millions) |
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|
Twelve Months Ended |
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2023 |
2022 |
Depreciation and amortization |
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Operating cash flow |
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Capital expenditures |
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Free cash flow |
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FINANCIAL CONDITION |
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(UNAUDITED) |
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(in millions) |
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As of
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As of
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Cash and cash equivalents |
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Accounts receivable, net |
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Inventories |
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Accounts payable |
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Debt |
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Equity |
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Working capital |
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RECONCILIATION OF REPORTED-DILUTED EPS GUIDANCE TO ADJUSTED -DILUTED EPS GUIDANCE |
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(UNAUDITED) |
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2023 Actual |
2024 Guidance |
% Change |
Reported-diluted EPS ( |
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|
(5.3%) to (2.2%) |
Loss on disposal of plant |
0.16 |
- |
|
Cost investment activity |
0.06 |
- |
|
Restructuring and other charges |
(0.02) |
- |
|
Amortization of acquisition-related intangible assets |
0.04 |
0.04 |
|
Legal settlement |
(0.04) |
- |
|
Adjusted-diluted EPS (Non- |
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(7.2%) to (4.1%) |
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(11) |
See "Full-year 2024 Financial Guidance" and "Non- |
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We have opted not to forecast 2024 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 2023, tax benefits associated with stock-based compensation increased adjusted-diluted EPS by |
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