West Pharmaceutical Services, Inc. Announces Third Quarter, Nine Month Results
LIONVILLE, Pa., Oct. 17 /PRNewswire/ -- West Pharmaceutical Services, Inc. (NYSE: WST) today announced financial results for the third quarter and nine months ended September 30, 2001.
Net income for the third quarter was $5.9 million, or $0.41 per diluted share, compared to $4.6 million, or $0.32 per share, in the same quarter last year. Net income for the 2001 third quarter includes a $1.7 million, or $0.12 per share, gain on the sale of real estate. Net income from last year's third quarter included a $1.6 million, or $0.11 per share, one-time tax benefit. Excluding these one-time items, income from continuing operations was $4.2 million, or $0.29 per share, in the 2001 quarter, compared to $0.21 per share in the prior year, an increase of 38%.
Revenue for the quarter was $112.9 million, an increase of 7% over third quarter 2000 sales of $105.3 million, with growth in each business segment. The Device Product Development and Contract Services segments contributed most of the revenue growth, while increased licensing revenue in the Drug Delivery segment contributed a $1.5 million increase in revenue, up from $0.3 million in the 2000 quarter. Gross margin improved by a combined 1%, to 25%, for the quarter. In addition to the Drug Delivery licensing revenue, margin improved in Device Product Development domestic operations, where sales increases yielded cost efficiencies, and in Contract Services, where the program of cost reductions and focused sales for contract manufacturing and packaging continue to produce favorable results. Modest margin declines in Device Product Development European operations were due to the costs associated with the Company's capacity expansion and upgrade program.
Revenue and margin improvements more than offset an increase in selling, general and administrative costs, which were $19.4 million for the quarter, compared with $16.5 million in the comparable 2000 period. This substantial increase is due to declines in recognized pension income and, because of the improved results, increased obligations under the Company's incentive compensation plans for 2001. Operating profit increased by 11% over the 2000 third quarter, excluding the $1.7 million real estate gain in 2001. Net income also benefited from a decrease in the expected annual effective tax rate.
For the nine months ended September 30, 2001 sales increased by approximately 6%, to $346.3 million from $327.6 million and would have increased 8% at constant exchange rates. Net income for the nine-month period declined 2%, to $14.4 million from $14.7 million the comparable 2000 period. Results for the period include a $0.20 per-share restructuring charge, taken in the second quarter, and the $0.12 per-share gain on sale of real estate in this quarter. In the 2000 period, earnings included an $0.11 per share one-time tax benefit. Excluding these items, net income per share for the nine-month period increased 19%, to $1.08 per share from $0.91 per share in 2000.
Commenting on the third quarter, Chairman and CEO William G. Little said that, "We are encouraged by improvements across West's business segments, which reflect a return to a more stable market for our products and services, and by the 21% growth in our order backlog compared to last year. We are particularly pleased with the progress of our research and new business development programs." He continued, "In Device Product Development, in addition to the growing demand for our Westar(R) ready-to-use and ready-to-sterilize products, we recently introduced Clip'n'Ject(TM), a reconstitution system for lyophilized drugs for injection." Little added that, "Revenues in contract packaging and manufacturing have improved as a result of our focused selling efforts." He concluded his remarks on the quarter, by adding, "In Drug Delivery, we executed an important license of West's Chysis(TM) technology for use in a nasal flu vaccine by Solvay Pharmaceuticals and we commenced the first clinical trial of West's Targit(R) oral delivery system."
Based on the year-to-date results and prospects for the continued improvements in the Company's operations, Little stated that, "The Company anticipates results from operations in the fourth quarter to be in the range of $0.39 to $0.42 per share."
The Company will host a conference call which will be broadcast live over the internet on Wednesday, October 17, 2001 at 9:00 a.m. eastern time. The broadcast will be hosted on the Company's website, http://www.westpharma.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast. An online archive of the broadcast will be available within two hours of the live call.
An audio replay of the call will be available until October 24, 2001, and can be accessed on the Company's website or by dialing 1-800-642-1687 (pass code 2054163).
West Pharmaceutical Services supports global pharmaceutical and healthcare markets with products and services that enhance the effectiveness of drug delivery and product dispensing. West Pharmaceutical Services' technologies include drug formulation research and development, clinical research and laboratory services and the design, development and manufacture of components and systems for dispensing and delivering pharmaceutical, healthcare and consumer products. For more information, visit West Pharmaceutical Services at http://www.westdrugdelivery.com and http://www.westpharma.com.
Statements concerning forecasted results, financial or otherwise, which are contained in the above material, constitute "forward looking statements" that involve risks and uncertainties. The Company's actual results may differ materially from those expressed in any forward looking statement and are dependent on a number of factors including, but not limited to, sales demand, timing of customers' projects, competitive pressures, the strength or weakness of the U.S. dollar, inflation, the cost of raw materials, successful continuance of cost-improvement programs and statutory tax rates.
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. OPERATING SEGMENT INFORMATION (in thousands)
Three Months Ended Nine Months Ended September 30 September 30 Net Sales: 2001 2000 2001 2000 Device product development $91,700 $87,600 $281,500 $276,100 Contract services 19,400 17,400 59,800 50,800 Drug delivery research and development 1,800 300 5,000 1,000 Corporate and unallocated items -- -- -- (300) Consolidated Total $112,900 $105,300 $346,300 $327,600 Three Months Ended Nine Months Ended September 30 September 30 Operating Profit (Loss): 2001 2000 2001 2000 Device product development $15,800 $16,000 $52,300 $56,200 Contract services 300 (2,000) 600 (9,400) Drug delivery research and development (1,400) (2,600) (4,000) (7,300) Corporate and unallocated items * (3,800) (3,100) (18,200) (9,600) Consolidated Total $10,900 $8,300 $30,700 $29,900
Corporate and unallocated items include a third quarter 2001 restructuring adjustment of ($1.7) million resulting from a gain on the sale of a facility. For the nine months ended September 2001 corporate and unallocated items include net restructuring charges totaling $2.8 million.
WEST PHARMACEUTICAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)
Quarter Ended Sept. 30, 2001 Sept. 30, 2000 Net sales $112,900 100% $105,300 100 Cost of goods and services sold 84,900 75 80,700 76 Gross profit 28,000 25 24,600 24 Selling, general and administrative expenses 19,400 17 16,500 16 Restructuring (gain) charge (1,700) (1) -- -- Other (income) expense, net (600) (1) (200) -- Operating profit 10,900 10 8,300 8 Interest expense 3,300 3 3,200 3 Income before income taxes and minority interests 7,600 7 5,100 5 Provision for income taxes 1,700 2 500 1 Minority interests -- -- -- -- Income from consolidated operations 5,900 5% 4,600 4 Equity in net income of affiliated companies -- -- Net income $5,900 $4,600 Net income per share: Basic $.41 $0.32 Assuming dilution $.41 $0.32 Average common shares outstanding 14,343 14,337 Average shares outstanding assuming dilution 14,353 14,337 WEST PHARMACEUTICAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)
Nine Months Ended Sept. 30, 2001 Sept. 30, 2000 Net sales $346,300 100 $327,600 100% Cost of goods and services sold 256,000 74 246,600 75 Gross profit 90,300 26 81,000 25 Selling, general and administrative expenses 57,700 16 50,900 16 Restructuring (gain) charge 2,800 1 -- -- Other (income) expense, net (900) -- 200 -- Operating profit 30,700 9 29,900 9 Interest expense 10,400 3 9,600 3 Income before income taxes and minority interests 20,300 6 20,300 6 Provision for income taxes 6,300 2 6,200 2 Minority interests 100 -- 200 -- Income from consolidated operations 13,900 4 13,900 4% Equity in net income of affiliated companies 500 800 Net income $14,400 $14,700 Net income per share: Basic $1.00 $1.02 Assuming dilution $1.00 $1.02 Average common shares outstanding 14,333 14,437 Average shares outstanding assuming dilution 14,346 14,439
SOURCE West Pharmaceutical Services, Inc.
CONTACT: Michael A. Anderson, Vice President and Treasurer of West Pharmaceutical Services, Inc., +1-610-594-3345; or Investors - Theresa Vogt or Lanie Fladell, both of Morgen-Walke Associates, +1-212-850-5600; or Media - Jim Weinrebe of Schwartz Communications, +1-781-684-0770, firstname.lastname@example.org, for West Pharmaceutical Services/