West Pharmaceutical Services, Inc. (NYSE: WST) today announced its results for the third quarter of 2009. Summary comparative results were as follows:
($millions, except per-share data) Three Months Ended September 30 2009 2008 Net Sales $258.9 $256.2 Gross Profit 71.7 66.0 Reported Operating Profit 25.9 17.9 Adjusted Operating Profit (1) 22.0 19.7 Reported Diluted EPS $0.50 $0.40 Adjusted Diluted EPS(1) $0.45 $0.37 (1) See "Restructuring and Other Items" section of the release and "Supplemental Information and Notes to Non-GAAP Financial Measures" in the tables following the text of this release.
Consolidated sales were 1.0% higher in the quarter when compared to the prior year period including $8.2 million, or 3.3 percentage points, of adverse effects of foreign currency translation. Excluding currency translation effects, consolidated sales were 4.3% higher than in the prior year quarter, with component sales for H1N1 flu vaccinations contributing substantially. The resulting growth in the Pharmaceutical Systems segment more than compensated for lower sales in the Tech Group segment.
Consolidated gross profit margin was 27.7% in the quarter, compared to 25.7% in the third quarter of 2008. The two margin point increase includes the combined effect of overall higher selling prices and lower raw material costs, net of higher depreciation charges. As a result of improved margins, gross profit increased $5.7 million, to $71.7 million in the current quarter, net of $1.8 million of adverse foreign currency translation.
Adjusted Operating Profit grew by 11.7% compared to the prior year period. The effect of the consolidated gross margin improvement was muted by $2.8 million in higher U.S. pension expense and $0.7 million of unfavorable foreign currency translation, net of $0.6 million in lower stock-based compensation expense.
The Company announced plans to restructure certain business operations, which will result in the elimination of approximately 100 jobs, and to re-evaluate certain business initiatives and assets. These will result in total charges in the range of $8.0 million to $10.0 million. Approximately $7.0 million of charges are expected to be included in the Company's reported results for the fourth quarter of 2009. The restructuring is expected to result in annual savings of approximately $6.0 million in 2010 and approximately $8.0 million annually thereafter.
Executive Commentary