West Pharmaceutical Services Inc. (WST) reported fourth-quarter fiscal 2009 earnings (excluding special items) of 67 cents per share, above the Zacks Consensus Estimate of 64 cents and the year-ago earnings of 56 cents (excluding special items). The favorable earnings in the quarter were attributable to higher sales recorded by the company’s pharmaceutical systems segment.
 
Quarterly Results
 
Net sales in the reported quarter climbed 19.8% to $293.4 million from $244.9 million in the year-ago quarter. Segment-wise, net sales from pharmaceutical systems increased to $229.5 million (inclusive of a favorable foreign exchange impact of $14.1 million) from $181.6 million a year-ago, up 26.4%. Tech group sales increased marginally to $66.3 million compared to $66.2 million in the year-ago quarter.
 
The favorable performance of the pharmaceutical systems unit was mainly due to strong sales of flu vaccination products and prefillable syringes. Pharmaceutical components for H1N1 flu vaccination products accounted for $12.3 million of the rise in sales and pricing contributed $6.2 million to the increase. Other significant product-type increases included $7.5 million of prefillable syringe components and $7.1 million of metal seals.
 
Gross profit for the pharmaceutical systems segment in the reported quarter came in at $77.5 million as against $61.4 million in the year-ago quarter, up 26.2%. However, the gross profit for the tech group fell to $6.4 million in the quarter as against $8.2 million in the year-ago quarter, primarily because of the lower sales volume.
 
The expenditure on research and development in the fourth quarter of 2009 climbed 52.6% to $5.8 million from $3.8 million in the fourth quarter of 2008. Selling, general and administrative expenses in the reported quarter came in at $45.4 million as against $36.9 million in the year-ago quarter, up 23%. Restructuring and other items increased to $10.3 million from $2.4 million incurred in the fourth quarter of 2008.
 
Yearly Results
 
For full year 2009, West Pharmaceutical Services earned $2.11 per share (excluding special items) compared to $2.38 (excluding special items) in fiscal 2008. The Zacks Consensus Estimate for 2009 was $2.09.
 
Revenue for 2009 increased marginally to $1.06 billion from $1.05 billion in 2008. Segment-wise, annual net sales from pharmaceutical systems increased to $808.7 million from $792.1 million a year-ago, up 2.1%. Tech group sales in 2009 decreased 4.5% year-over-year to $258.3 million. The company reported a gross profit of $303.6 million in 2009, up 0.3% year-over-year. The company exited the year with cash and cash equivalents of $83.1 million as against $87.2 million on December 31, 2008.
 
2010 Outlook
 
West Pharmaceutical expects to earn between $2.19 and $2.39 per share (excluding special items) in 2010. Furthermore, the company forecasts revenues between $1.09 billion and $1.12 billion in 2010. The Zacks Consensus Estimate for 2010 is $2.31.

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