Bernard J. Birkett
Senior Vice President and Chief Financial Officer at West Pharmaceutical Services
Thank you, Eric, and good morning. Let's review the numbers in more detail. We'll first look at Q3 2021 revenues and profits where we saw continued strong sales and EPS growth led by strong revenue performance in our biologics, generics and pharma market units. I will take you through the margin growth we saw in the quarter as well as some balance sheet takeaways. And finally, we will provide an update to our 2021 guidance.
First up, Q3. Our financial results are summarized on slide nine and the reconciliation of non-U.S. GAAP measures are described on slide 17 to 21. We recorded net sales of $706.5 million, representing organic sales growth of 27.9%. COVID-related net revenues are estimated to have been approximately $115 million in the quarter. These net revenues include our assessment of components associated with vaccines, treatments and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.
Looking at slide 10. Proprietary Products sales grew organically by 35.7% in the quarter. High-value products, which made up approximately 73% of Proprietary Product sales in the quarter grew double digits and had solid momentum across all of our market units in Q3. Looking at the performance of the market units, the biologics market unit delivered strong double-digit growth. We continue to work with many biotech and biopharma customers who are using West and Daikyo high-value product offerings. The generics market unit also experienced double-digit growth led by sales of FluroTec and Westar components. Our pharma market unit also saw strong double-digit growth with sales led by high-value products including Westar, FluroTec and NovaPure components. And Contract Manufacturing had low single-digit organic sales growth for the third quarter, led once again by sales of health care-related medical devices. We continue to see improvement in gross profit. We recorded $288.2 million in gross profit, $93.6 million or 48.1% above Q3 of last year. And our gross profit margin of 40.8% was a 530 basis point expansion from the same period last year. We saw improvement in adjusted operating profit with $182.8 million recorded this quarter compared to $103.9 million in the same period last year for a 75.9% increase. Our adjusted operating profit margin, 25.9%, was a 690 basis point increase from the same period last year. Finally, adjusted diluted EPS grew 79% for Q3. Excluding stock-based compensation tax benefit of $0.11 in Q3, EPS grew by approximately 72%. Let's review the growth drivers in both revenue and profit.
On slide 11, we show the contributions to sales growth in the quarter. Volume and mix contributed $142.9 million or 26.1 percentage points of growth, including approximately $83 million of incremental volume driven by COVID-19-related net demand. Sales price increases contributed $10.1 million or 1.8 percentage points of growth. Looking at margin performance. slide 19 shows our consolidated gross profit margin of 40.8% for Q3 2021, up 35.5% in Q3 2020. Proprietary Products third quarter gross profit margin of 46.3% was 550 basis points above the margin achieved in the third quarter of 2020. The key drivers for continued improvement in Proprietary Products gross profit margin were favorable mix of products sold, driven by growth in high-value products, production efficiencies and sales price increases, partially offset by increased overhead costs, inclusive of compensation. Contract Manufacturing third quarter gross profit margin of 16.1% was 180 basis points below the margin achieved in the quarter of 2020. The decrease in margin is largely attributed to a mix of products sold as well as timing of the pass-through of raw material price increases to customers.
Now let's look at our balance sheet takeaway and review how we've done in terms of generating more cash for the business. On slide 13, we have listed some key cash flow metrics. Operating cash flow was $423.2 million for the third quarter of 2021, an increase of $99.4 million compared to the same period last year, a 30.7% increase. Operating cash flow in the period was adversely impacted by our working capital increase as well as timing of tax payments. Our third quarter 2021 year-to-date capital spending was $176.9 million, $60.2 million higher than the same period last year. Working capital of approximately $1 billion at September 30, 2021 increased by $169.4 million from December 31, 2020, primarily due to higher accounts receivable from our increased sales. Our cash balance at September 30 of $688 million was $72.5 million higher than our December 2020 balance. The increase in cash is primarily due to our strong operating results in the period, offset by our share repurchase program and higher capex.
Turning to guidance. Slide 14 provides a high-level summary. Full year 2021 net sales are expected to be in a range of $2.8 billion and $2.81 billion compared to our prior guidance range of $2.76 billion to $2.785 billion. This guidance includes estimated net COVID incremental revenues of approximately $450 million. There is an estimated benefit of $55 million based on current foreign exchange rates compared to a prior estimated benefit of $80 million. This $25 million reduction in FX tailwind has been absorbed into our guidance. We expect organic sales growth to be approximately 28% compared to a prior range of 24% to 25%. We expect our full year 2021 reported diluted EPS guidance to be in a range of $8.40 to $8.50 compared to a prior range of $8.05 to $8.20. This revised guidance includes a $0.35 EPS positive impact of tax benefits from stock-based compensation from the first nine months 2021. Also, our capex guidance remains at $265 million to $275 million for the year. There are some key elements I want to bring your attention to as we review our guidance. Estimated FX benefit on EPS has an impact of approximately $0.19 based on current foreign currency exchange rates compared to a prior estimated benefit of $0.27. And our guidance excludes future tax benefits from stock-based compensation.
To summarize the key takeaways for the third quarter, strong top line growth in Proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS and growth in operating cash flow, delivering in line with our pillars of execute, innovate and grow.
I'd now like to turn the call back over to Eric.
