West Announces First-Quarter 2023 Results and Declares Third-Quarter 2023 Dividend

The Biologics market unit had a double-digit percentage decline in organic sales, due to an expected decline of COVID-19 related HVP sales compared to the same period last year. The Generics and Pharma market units both had double-digit organic sales growth.

Contract-Manufactured Products Segment 
Net sales increased by 12.5% to $133.5 million.  Organic sales growth was 14.4% with currency translation negatively impacting sales growth by 190 basis points. Segment performance was led by growth in sales of components associated with injection-related devices.

Financial Highlights 
Operating cash flow was $138.1 million, a decrease of 8.7%.  Capital expenditures in the quarter were $82.1 million.  Free cash flow (operating cash flow minus capital expenditures) was $56.0 million, a decrease of 34.4%.

During the quarter, the Company repurchased 183,360 shares for $60.1 million at an average share price of $327.90 under its share repurchase program.

Full-Year 2023 Financial Guidance

• The Company is updating full-year 2023 net sales guidance to be a new range of $2.965 billion to $2.990 billion, compared to a prior range of $2.935 billion to $2.960 billion.
• Organic net sales growth guidance is unchanged and is expected to be approximately 3% to 4%.
• Net sales guidance assumes COVID-19 related sales of approximately $60 million, compared to prior guidance of $85 million.
• Net sales guidance includes an estimated full-year 2023 tailwind of $15 million based on current foreign currency exchange rates, compared to prior guidance of 2023 headwind of $30 million.
• Net sales guidance also includes a reduction of $8 million resulting from an expected divestiture of a European facility that produced standard Proprietary Product components.
• Full-year 2023 adjusted-diluted EPS is expected to be in a range of $7.50 to $7.65, compared to prior guidance range of $7.25 to $7.40.
• Full-year adjusted-diluted EPS guidance range includes an estimated tailwind of approximately $0.02 based on current foreign currency exchange rates, compared to prior guidance of a headwind of $0.11.
• The updated guidance also includes EPS of $0.15 associated with first-quarter 2023 tax benefits from stock-based compensation.
• For the remaining quarters of the year, our EPS guidance range assumes a tax rate of 22% 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 2023 would provide a positive adjustment to our full-year adjusted-diluted EPS guidance.
• Full-year 2023 capital spending guidance is unchanged and is expected to be $350 million. This includes incremental capital spending to support capacity expansions at existing HVP facilities.

First-Quarter 2023 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 www.westpharma.com

To participate and ask questions during the conference call, you must register in advance at https://register.vevent.com/register/BIaaff23c7aa3a4a7688c5b172cf804930. 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 "updating," "will," "reaffirming," "remains," "expect," "to be," "prepare," "is expected," "assumes," "includes," "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: 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; and 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 December 31, 2022, and other filings with the United States Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q and current reports on Form 8-K.

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 
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 U.S. Dollar at the applicable foreign currency 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 March 31,
	2023		2022
Net sales	$716.6	100 %	720.0	100 %
Cost of goods and services sold	445.3	62	435.4	60
Gross profit	271.3	38	284.6	40
Research and development	17.1	2	14.6	2
Selling, general and administrative expenses	86.0	12	83.4	12
Other expense (income)	12.9	2	(3.1)	-
Operating profit	155.3	22	189.7	26
Interest (income) expense, net	(2.6)	-	1.9	-
Income before income taxes and equity in net income of affiliated companies	157.9	22	187.8	26
Income tax expense	23.6	3	21.2	3
Equity in net income of affiliated companies	(5.7)	(1)	(7.2)	(1)
Net income	$140.0	20 %	$173.8	24 %
Net income per share:
Basic	$1.88		$2.34
Diluted	$1.85		$2.29
Average common shares outstanding	74.5		74.4
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