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West Pharmaceutical Services Inc. (WST)
Q4 2012 Earnings Call
February 21, 2013 9:00 am ET
Donald Morel – Chairman, Chief Executive Officer
William Federici – Vice President, Chief Financial Officer
Arnie Ursaner – CJS Securities
Dave Windley – Jefferies
Ross Taylor – CL King
Previous Statements by WST
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And now I’d like to turn today’s meeting over to Mr. John Woolford from Westwicke Partners. Sir, you may begin.
Thank you, Operator. Good morning everyone and welcome to West’s fourth quarter and full year 2012 results conference call. We issued our financial results this morning and the release has been posted in the Investor section on the Company’s website located at www.westpharma.com. If you have not received a copy of this announcement, please call Westwicke Partners at 443-213-0500 and a copy will be sent to you immediately.
Posted on the Company’s website a slide presentation that management will refer to in their remarks today. The presentation is in PDF format. Should you require a link to a free download of that software that will enable users to view the presentation, it is also available on the website.
I remind you that statements made by management on this call and in the presentation will contain forward-looking statements within the meaning of U.S. federal securities law and that are based on management’s beliefs and assumptions, current expectations, estimates and forecasts. Statements that are not historical facts, including statements that are preceded by, followed by, or that include words such as estimate, expect, intend, believe, plan, anticipate, and other words and terms of similar meaning are forward-looking statements. West’s estimated or anticipated future results, product performance or other non-historical facts are forward-looking and reflect our current perspective on existing trends and information.
Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These statements are subject to known or unknown risks or uncertainties and therefore actual results could differ materially from past results and those expressed or implied in any forward-looking statement. You should bear this in mind as you consider forward-looking statements.
For a non-exclusive list of factors which could cause actual results to differ from expectations, please refer to today’s press release. Investors are also advised to consult any further disclosures the company makes on related subjects in the company’s 10-K, 10-Q, and 8-K reports. Except as required by applicable securities laws, the company undertakes no obligation to publicly update forward-looking statements whether as a result of new information, future events, or otherwise.
In addition, during today’s call management may make reference to non-GAAP financial measures including adjusting operating profit and adjusted diluted EPS. These measures and their component parts have no standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to and should not be viewed as a substitute for U.S. GAAP operating income and diluted EPS. Reconciliations of the non-GAAP financial measures to the most comparable financial results prepared in conformity to GAAP are provided in materials accompanying this morning’s earnings release.
At this time, I would like to turn the call over to Don Morel, West’s Chairman and CEO. Don?
Thank you, John, and good morning everyone. Welcome to West’s 2012 year-end conference call. Joining me today are Bill Federici, West’s Chief Financial Officer, and Mike Anderson, our Treasurer and primary investor relations contact. This morning, Bill and I will be giving an overview of our fourth quarter and full-year 2012 performance and our outlook for 2013. Throughout our remarks, we will refer to a PowerPoint slide deck that can be accessed via our website under Investors. If you cannot access the file, the information in the slides is covered in both this morning’s release and our commentary.
Financial highlights for our fourth quarter are summarized on Slide No. 3. Continued strong demand in both operating segments resulted in sales of $321.5 million for the quarter, an increase of 10.6% over the prior year, excluding the impact of currency. Both packaging systems and delivery systems posted double-digit sales gains, again excluding the effects of currency. Sales in packaging were lifted by ongoing demand for our high value product lines while delivery systems benefited from growth in both our proprietary products and contract manufacturing operations. For the quarter, our consolidated gross margin improved to 30.3%, an increase of 1.4 percentage points. Adjusted operating profit improved 10.7% when compared with the prior year and adjusted earnings per share were $0.61.
Additional segment details are provided on Slide No. 4. Pharmaceutical packaging sales were again driven by volume growth, higher selling prices in key product lines, and the continued positive sales mix bolstered by higher sales of proprietary products such as Westar, FluroTec, Envision, and ready-to-use stoppers and seals. Delivery system sales grew as a result of strong demand for contract manufacturing services with existing healthcare customers, stronger CZ sales in the quarter, and proprietary devices for reconstitution and safety.