West Pharmaceutical Services Announces Improved First Quarter Results
LIONVILLE, Pa., April 19 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced improved results for the first quarter ended March 31, 2001.
Net income for the first quarter was $5.4 million, or $0.38 per share, compared with net income of $5.1 million, or $0.35 per share, in the same period of 2000. This was an 8% increase in earnings per share. Sales for the first quarter were $116.2 million, a 7% increase (10% at constant exchange rates) over the $108.7 million reported in the first quarter of 2000. Sales of the Device Product Development segment were 2% higher (6% at constant exchange rates), largely due to increased demand for pre-filled injection and parenteral component products. In addition, increased activity in contract manufacturing and packaging services resulted in a 31% increase in sales of the Contract Services segment. Revenues also improved in the Drug Delivery segment.
Gross margins for the first quarter increased to 26.4% from 25.9% in the same period of 2000. Operating margin improved to 10.1% from 9.6%, assisted by a near breakeven performance in the Contract Services segment, compared with that segment's significant operating loss in the first quarter of 2000. Margins in the Device Product Development segment were lower, in spite of stronger sales, due to higher raw material costs and, in Europe, higher labor costs. Losses in the Drug Delivery segment narrowed.
William G. Little, Chairman and Chief Executive Officer, commented, "I am pleased to report that there was a marked improvement in sales and earnings when compared with the fourth quarter of 2000, and a positive comparison to results posted in the first quarter of 2000. Many of the market issues that had negatively impacted our contract manufacturing and packaging business diminished during the first quarter of 2001. Demand in the international portion of our Device Product
Development segment was strong. Company-wide efforts aimed to increase efficiency, to enhance the manufacturing infrastructure and to refocus our global sales efforts are beginning to show some results. Given the information that is currently available, we would expect to see year-over-year improvement in earnings in the second quarter of 2001. Finally, let me say that we are continuing our review of strategic alternatives with the assistance of our financial advisor, UBS Warburg. Although I cannot comment on the substance of this review, I believe we have made progress and look forward to announcing the results."
West Pharmaceutical Services applies value-added technologies to the process of bringing new drug therapies and healthcare products to global markets. West's technologies include the design and manufacture of packaging components for pharmaceutical, healthcare and consumer products; research and development of drug delivery systems; contract laboratory services; clinical services; and other services that support the manufacturing, filling, and packaging of pharmaceutical and healthcare products. For more information, visit the West Pharmaceutical Services website at http://www.westpharma.com.
Certain statements contained in this Press Release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "estimate," "expect," "intend," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including but not limited to (1) sales demand, (2) the timing and success of customers' projects, (3) competitive pressures, (4) the strength or weakness of the U.S. dollars, (5) inflation and (6) the cost of raw materials. The Company does not intend to update these forward-looking statements.
For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission.
West Pharmaceutical Services, Inc. Consolidated Statements of Income (in thousands, except per share data)
Quarter Ended March 31, 2001 March 31, 2000 Net sales $116,200 100% $108,700 100% Cost of goods and services sold 85,500 74 80,500 74 Gross profit 30,700 26 28,200 26 Selling, general and administrative expenses 19,300 17 17,400 16 Other (income) expense, net (300) (1) 400 -- Operating profit 11,700 10 10,400 10 Interest expense 3,700 3 3,000 3 Income before income taxes and minority interests 8,000 7 7,400 7 Provision for income taxes 2,900 3 2,700 3 Minority interests -- -- 100 -- Income from consolidated operations 5,100 4% 4,600 4% Equity in net income of affiliated companies 300 500 Net income $5,400 $5,100 Net income per share: Basic $0.38 $0.35 Assuming dilution $0.38 $0.35 Average common shares outstanding 14,320 14,546 Average shares assuming dilution 14,323 14,562 West Pharmaceutical Services, Inc. Operating Segment Information (in thousands)
Three Months Ended March 31, 2001 2000 Net Sales: Device product development $95,300 $93,100 Contract services 20,100 15,300 Drug delivery research and development 800 400 Corporate and unallocated items -- (100) Consolidated Total $116,200 $108,700 Three Months Ended March 31, 2001 2000 Operating Profit (Loss): Device product development $18,700 $19,800 Contract services (400) (3,600) Drug delivery research and development (1,800) (2,300) Corporate and unallocated items (4,800) (3,500) Consolidated Total $11,700 $10,400
SOURCE West Pharmaceutical Services, Inc.
CONTACT: Stephen M. Heumann, Vice President and Treasurer of West Pharmaceutical Services, Inc., 610-594-3346; or Investors - Theresa Vogt or Lanie Fladell, or Press - Dan Budwick, both of Morgen-Walke Associates, 212-850-5600, for West Pharmaceutical Services, Inc./