West Pharmaceutical(WST) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025, and 2024, including statements of income, comprehensive income, balance sheets, cash flows, and detailed notes Condensed Consolidated Statements of Income The company reported increased net sales and operating profit for the second quarter and first half of 2025 compared to the prior year, despite a slight decrease in six-month net income Consolidated Income Statement Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $766.5 | $702.1 | $1,464.5 | $1,397.5 | | Gross Profit | $273.9 | $230.0 | $505.8 | $460.2 | | Operating Profit | $153.7 | $126.2 | $260.7 | $249.0 | | Net Income | $131.8 | $111.3 | $221.6 | $226.6 | | Diluted EPS | $1.82 | $1.51 | $3.05 | $3.06 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income significantly increased in Q2 and H1 2025 compared to the prior year, primarily driven by substantial positive foreign currency translation adjustments Comprehensive Income Summary (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $131.8 | $111.3 | $221.6 | $226.6 | | Other Comprehensive Income (Loss) | $116.8 | $(24.6) | $169.4 | $(73.1) | | Comprehensive Income | $248.6 | $86.7 | $391.0 | $153.5 | Condensed Consolidated Balance Sheets Total assets grew to $3.95 billion as of June 30, 2025, from $3.64 billion at year-end 2024, driven by current assets and PPE, with total equity increasing to $2.93 billion Balance Sheet Summary (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $509.7 | $484.6 | | Inventories | $421.1 | $377.0 | | Total Current Assets | $1,680.9 | $1,538.1 | | Total Assets | $3,952.8 | $3,643.4 | | Total Liabilities | $1,023.7 | $961.1 | | Total Equity | $2,929.1 | $2,682.3 | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased for H1 2025, while cash used in investing activities decreased and cash used in financing activities significantly dropped due to reduced share repurchases Cash Flow Summary for Six Months Ended June 30 (in millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $306.5 | $283.2 | | Net cash used in investing activities | $(146.5) | $(191.8) | | Net cash used in financing activities | $(161.9) | $(489.3) | | Net increase (decrease) in cash | $25.1 | $(407.7) | Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures supporting the financial statements, covering revenue disaggregation, share repurchase programs, a 2025 restructuring plan, and segment data Net Sales Breakdown for Six Months Ended June 30, 2025 | Breakdown by Market Group | % of Sales | | :--- | :--- | | Biologics | 38% | | Pharma | 26% | | Contract-Manufactured Products | 19% | | Generics | 17% | | Breakdown by Product Category | % of Sales | | :--- | :--- | | High-Value Product (HVP) Components | 46% | | Standard Packaging | 22% | | Contract-Manufactured Products | 19% | | High-Value Product (HVP) Delivery Devices | 13% | | Breakdown by Geographic Location | % of Sales | | :--- | :--- | | Americas | 47% | | Europe, Middle East, Africa | 45% | | Asia Pacific | 8% | - In January 2025, the company approved a restructuring plan expected to incur charges of $30-32 million over 24-36 months, with anticipated annualized savings of $35-40 million. For the six months ended June 30, 2025, the company recorded $16.6 million in charges related to this plan[62] - A share repurchase program approved in December 2024 for 550,000 shares was completed in April 2025. For the six months ended June 30, 2025, the company repurchased 552,593 shares at a total cost of $134.0 million[23][24] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the financial results for Q2 and H1 2025, highlighting a 9.2% reported sales increase in Q2 driven by Proprietary Products, expanded gross profit margin, and strong operating cash flow Q2 2025 vs Q2 2024 Net Sales Growth | Segment | As-Reported | Organic | | :--- | :--- | :--- | | Proprietary Products | 10.7% | 8.4% | | Contract-Manufactured Products | 3.0% | 0.5% | | Consolidated | 9.2% | 6.8% | YTD 2025 vs YTD 2024 Net Sales Growth | Segment | As-Reported | Organic | | :--- | :--- | :--- | | Proprietary Products | 5.7% | 5.4% | | Contract-Manufactured Products | 1.2% | 0.6% | | Consolidated | 4.8% | 4.5% | - Consolidated gross profit margin increased by 2.9 percentage points in Q2 2025 and 1.6 percentage points YTD, primarily due to higher plant absorption from increased customer demand and sales price increases in the Proprietary Products segment[100][101][102] Results of Operations This section details operational performance, highlighting Proprietary Products sales growth of 10.7% (8.4% organic) in Q2 2025, improved gross margins, and a 21.8% increase in operating profit - Proprietary Products Q2 sales growth was driven by increased sales of Westar®, NovaChoice®, and Daikyo CZ® products, partially offset by a decline in FluroTec® sales[95] - Contract-Manufactured Products Q2 sales growth was due to increased sales of self-injection devices for obesity and diabetes, partially offset by a decrease in healthcare diagnostic devices[96] Operating Profit by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Proprietary Products | $161.7 | $131.0 | $292.3 | $257.3 | | Contract-Manufactured Products | $17.8 | $17.2 | $31.3 | $34.3 | | Consolidated Operating Profit | $153.7 | $126.2 | $260.7 | $249.0 | Financial Condition, Liquidity and Capital Resources The company's financial condition remains strong, with working capital increasing to $1.08 billion, strong operating cash flow, and $497.7 million available under its revolving credit facility Key Liquidity and Capital Measures (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $509.7 | $484.6 | | Working capital | $1,076.3 | $987.7 | | Debt | $202.6 | $202.6 | - Net cash from operating activities increased by $23.3 million in H1 2025 compared to H1 2024, driven by favorable working capital management[141] - As of June 30, 2025, the company had $497.7 million of available borrowing capacity under its multi-currency revolving credit facility and was in compliance with all debt covenants[148][149] Quantitative and Qualitative Disclosures About Market Risk The company states there have been no material changes in its market risk exposure since the disclosures in its 2024 Annual Report on Form 10-K - There have been no material changes in the company's exposure to market risk or the related disclosures from the 2024 Annual Report[160] Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that as of June 30, 2025, the company's disclosure controls and procedures are effective[163] - No material changes to internal control over financial reporting were identified during the quarter ended June 30, 2025[164] PART II. OTHER INFORMATION Legal Proceedings The company reports a securities class action lawsuit filed on May 5, 2025, alleging violations of the Securities Exchange Act, which the company intends to vigorously defend - A securities class action lawsuit was filed against the company and certain officers on May 5, 2025, alleging violations of securities laws. The company plans to vigorously defend against the allegations[167] Risk Factors This section indicates no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There are no material changes to the risk factors disclosed in the 2024 Annual Report[168] Unregistered Sales of Equity Securities and Use of Proceeds The company provides details on its share repurchase activity for Q2 2025, noting a program authorized in December 2024 for 550,000 shares was completed in April 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid | Program Status | | :--- | :--- | :--- | :--- | | April 2025 | 2,312 | $222.56 | Completed | | May 2025 | 0 | N/A | - | | June 2025 | 0 | N/A | - | | Total Q2 | 2,312 | $222.56 | - | Other Information The company reports no director or officer adopted or terminated any Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[170] Exhibits This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act - The filing includes required certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 (Exhibits 31.1, 31.2, 32.1, 32.2)[171]