West Pharmaceutical Services, Inc. June 2016

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Transcription:

West Pharmaceutical Services, Inc. June 2016

Safe harbor statement Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This slide presentation and any accompanying management commentary contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about product development and operational performance. Each of these statements is based on preliminary information, and actual results could differ from any preliminary estimates. We caution investors that the risk factors listed under Cautionary Statement in our press releases, as well as those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by our quarterly reports on Form 10-Q, could cause our actual results to differ materially from those estimated or predicted in the forward-looking statements. You should evaluate any statement in light of these important factors. 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 Certain financial measures included in these presentation materials, or which may be referred to in management s discussion of the Company s results and outlook, have not been calculated in accordance with U.S. generally accepted accounting principles ( U.S. GAAP ), and therefore are referred to as non- GAAP financial measures. Non-GAAP financial measures should not be considered in isolation or as an alternative to such measures determined in accordance with GAAP. Please refer to Reconciliation of Non-GAAP Measures at the end of these materials for more information. Trademarks Registered trademarks used in this report are the property of West Pharmaceutical Services, Inc. or its subsidiaries, in the United States and other jurisdictions, unless noted otherwise. Daikyo Crystal Zenith is a registered trademark of Daikyo Seiko, Ltd. Verux Brand and the logo are trademarks of West Pharmaceutical Services Singapore Pte. Ltd. in Singapore and other jurisdictions. 2

Our mission Become the world leader in integrated containment and delivery of injectable medicines By your side Pharmaceutical, biotechnology, generic and medical device companies trust West and our ability to deliver consistent high quality and technologically advanced containment and delivery solutions. We share their commitment to improving health for patients worldwide. 3

Injectable market $284 Billion of Annual Drug Sales 30 Billion Units $7-8 Billion Containment & Delivery Product Sales Source: IMS and Company estimates 4

An integral part of the healthcare industry Top 35 Injectable biologics rely on West and Daikyo components Top 75 Supplier to the top 75 pharmaceutical & biotech injectable companies ~ 40 Billion Components manufactured annually 5

Components manufactured 40 Billion ANNUALLY 110 Million PER DAY 5 Million PER HOUR 76,000 PER MINUTE Every Dose Every Time 100% Commitment 6

West business at a glance 2015 Net Sales by Geography 2015 Net Sales by Category 2016E Sales (*) by Market Group 7% 21% 33% 20% 30% 40% 2015 Sales $1.4 billion 53% 7% 2015 Sales $1.4 billion 20% 2016E Sales $1.49-$1.51 billion 39% 30% Americas Europe, Middle East, Africa Asia Pacific PROPRIETARY PRODUCTS High-Value Components Standard Packaging Delivery Devices PROPRIETARY PRODUCTS Pharma Generics Biologics Contract Manufacturing Contract Manufacturing (*) Company expectations and approximate percentages 7

The customers we serve 20% 20% 2016 Expected Organic Sales Growth 6-8% 30% More than 2,000 customers About 2,400 injectable products are in the development pipeline 30% Pharma Generics Biologics Contract Manufacturing Global customer base Top 125 customers make up 95% of sales Source: Company expectations and approximate percentages 8

West s role in delivering medicines to patients Proprietary Products Stoppers Seals Caps Syringe Components Daikyo CZ Vials & Syringes Reconstitution Systems Self-Injection Devices $ 1.1B ~8,000 product SKU s $ 0.3B Contract Manufacturing Engineering Injection Molding Project Management Tooling 9

Long-term strategy Become the world leader in integrated containment and delivery of injectable medicines Market Led and Customer Experience Operational Excellence Product and Service Differentiation Drive Shareholder Value 10

Addressing unique needs Quality A High Bar Set By Our Customers GENERICS Speed to market Efficient manufacturing PHARMA Total cost of ownership Life cycle management BIOLOGICS Packaging solutions for sensitive molecules Self-injection technologies CONTRACT- MANUFACTURED PRODUCTS Quality manufacturing Design for manufacturing Patient Focus 11

West solutions: Integrated containment & delivery Increasing value to West COATED CAMERA INSPECTED CONTAINMENT QUALITY BY DESIGN SELF INJECTION ADMINISTERED STERILIZED CONTRACT MANUFACTURING MULTI-COMPONENT ASSEMBLY WASHED CONTRACT MANUFACTURING INJECTION MOLDING Increasing levels of customer intimacy 12

Product net sales & margin growth 2011-2015 compound annual net sales growth rates (excludes currency) 5-Year CAGR 20% 15% 10% 5% Contract Manufacturing Standard Packaging Circles reflect relative size of 2015 net sales Proprietary Devices High-Value Components 0% 0% 0% 30% 60% 2015 Category Gross Margin % 2015 GM 32.6% 5-Yr Sales CAGR 6.7% > High-Value components have driven growth > Proprietary devices present significant growth opportunity > Steady Contract Manufacturing and standard packaging businesses 13

Deep technical expertise ~2,500 >850 >65 12 Employees have worked 10+ years Issued patents and pending patent applications Projects in development Number of R&D Innovation Sites 14

Innovation & Technology Current Developments Container Systems NovaPure 1-3 ml Verux launch Flip-Off Seal RS/RU Crystal Zenith platform launches Delivery Systems SmartDose development Innovation Center in Israel Patient-centric approach 15

West solutions: Next generation delivery Customization Dosages ranging from 1 ml 10 ml Preloaded & pre-sterilized Patient-centric approach Customer process simplification 16

First quarter 2016 summary results ($ millions, except earnings per-share (EPS) data) Three Months Ended March 31, 2016 2015 Reported Net Sales $362.1 $335.9 Net Sales at Constant Currency (1) $371.2 $335.9 Gross Profit Margin 34.0% 32.7% Reported Operating Profit $30.0 $47.8 Adjusted Operating Profit (1) $55.6 $47.8 Diluted EPS $0.30 $0.45 Adjusted Diluted EPS (1) $0.53 $0.45 10.5% constant-currency sales growth Excluding adverse currency impact of approximately $0.02, Adjusted Diluted EPS grew 24% (1) Please refer to Reconciliation of Non-GAAP Measures at the end of these materials for more information. 17

Q1 2016 Highlights Proprietary Products, 80% of total sales 20% of total BIOLOGICS Double-digit organic sales growth GENERICS Double-digit organic sales growth PHARMA Mid-single digit organic sales growth CONTRACT- MANUFACTURED PRODUCTS Low-single digit organic sales growth High-Value Product Offerings +22% organic sales growth 18

2016 Full-year guidance ($ millions, except EPS - Non-GAAP) (1) (2) Estimated 2016 Revenue Estimated Gross Profit % Proprietary Products $1,180 - $1,190 37.7% to 38.2% Contract-Manufactured Products $310 - $320 17.4% to 18.4% Consolidated $1,490 - $1,510 33.5% to 34.0 % Est. Capital Spending $150 - $175 Est. Adjusted Diluted EPS (1) Est. Reported Diluted EPS (1) (2) $1.76 $2.12 to $2.25 per share to $1.99 per share (1) Guidance includes various currency exchange rate assumptions, most significantly the Euro at $1.12 for the remainder of 2016. Actual results will vary as a result of variability of exchange rates, among other items. (2) Estimated reported diluted EPS includes estimated restructuring charges of $0.23 to $0.28 per share and estimated Venezuela currency devaluation charge of $0.03 to $0.08 per share. 19

Cash-flow and allocation Strong Operating Cash Flow Capital Allocation Priorities: Investing in our business Dividends Inorganic growth Debt repayment Stock repurchase Artist rendering: new plant in Waterford, Ireland 20

Building for the Future Market-led strategy addressing the specific needs of pharmaceutical, biotechnology, generic and medical device customers Strong competitive position with high barriers to entry Quality culture Designed into regulated products Scientific and technical expertise Proprietary products and contract manufacturing expected to drive net sales growth and margin expansion Global Operations expanding capacity to meet growing customer demand Innovations in integrated containment and delivery driving new products and services for long-term growth Financial strength to invest Strong balance sheet and increasing operating cash flow Create Value for Customers, Patients, Employees and Shareholders 21

Appendix: Reconciliation of non-gaap measures 2015 2014 2013 2012 2011 Diluted EPS Reported (GAAP) $1.30 $1.75 $1.57 $1.15 $1.08 Pension settlement charge 0.43 - - - - Executive retirement and related costs 0.09 - - - - License costs - 0.01 - - - Discrete tax items 0.01 0.02 0.06 0.03 0.02 Restructuring, impairment and related charges - - - 0.05 0.05 Acquisition-related contingencies - - - 0.01 (0.01) Extinguishment of debt - - - 0.14 - Special separation benefits - - - - 0.03 Diluted EPS Adjusted (Non-GAAP) $1.83 $1.78 $1.63 $1.38 $1.17 22

Appendix: Reconciliation of non-gaap measures ($ million, except EPS data) Reconciliation of Reported and Adjusted Operating profit, Net Income and Diluted EPS Three months ended March 31, 2016 Operating profit Income tax expense Net income Diluted EPS Reported (GAAP) $30.0 $6.9 $22.1 $0.30 Restructuring and related charges 22.9 7.9 15.0 0.20 Venezuela currency devaluation 2.7 0.2 2.5 0.03 Adjusted (Non-GAAP) $55.6 $15.0 $39.6 $0.53 Reconciliation of Net Sales to Net Sales at Constant Currency (1) Three months ended March 31, 2016 Proprietary CM Eliminations Total Reported net sales (GAAP) $290.8 $71.6 $(0.3) $362.1 Effect of changes in currency translation rates 8.9 0.2-9.1 Net sales at constant currency (Non-GAAP) (1) $299.7 $71.8 $(0.3) $371.2 (1) Net sales at constant currency translates the current-period reported sales of subsidiaries whose functional currency is other than the U.S. dollar at the applicable foreign exchange rates in effect during the comparable prior-year period. 23

Appendix: Reconciliation of non-gaap measures Reconciliation of adjusted diluted EPS guidance to reported diluted EPS guidance Full Year 2016 Guidance (1) (2) Adjusted diluted EPS guidance $2.12 to $2.25 Estimated restructuring charges Estimated currency devaluation (Venezuela) (0.23 to 0.28) (0.03 to 0.08) Reported diluted EPS guidance $1.76 to $1.99 (1) Please refer to Notes to Non-GAAP Financial Measures in West s April 28, 2016 press release. (2) Guidance includes various currency exchange rate assumptions, most significantly the Euro at $1.12 for the remainder of 2016. Actual results will vary as a result of exchange rate variability. 24