MRO Magazine

AptarGroup Reports Strong Operating Results with Record Third Quarter Earnings


October 29, 2015
By Business Wire News

CRYSTAL LAKE, Ill.

AptarGroup, Inc. (NYSE:ATR) today reported record third quarter net income and earnings per share.

Third Quarter 2015 Summary

  • Strong operating results across each business segment drove the consolidated operating income margin to 15% compared to 12% in the prior year
  • Record third quarter earnings per share of $0.83 rose 30% when compared to currency-adjusted prior year earnings per share of $0.64, and rose 14% when compared to reported prior year earnings per share of $0.73
  • Core sales, which exclude currency translation effects, increased approximately 3% (reported sales decreased 10%)

THIRD QUARTER RESULTS

For the quarter ended September 30, 2015, reported sales decreased 10% to $586 million from $652 million a year ago. Core sales, which exclude the negative impact from changes in currency exchange rates, increased by approximately 3%.

Third Quarter Segment Sales Analysis

(Change Over Prior Year)

    Beauty +         Food +       Total
Home     Pharma     Beverage       AptarGroup
Sales Growth Before Currency Effects (Core Sales) (1%) 10% 3% 3%
Currency Effects (1) (14%)     (12%)     (8%)       (13%)
Total Reported Sales Growth (15%)     (2%)     (5%)       (10%)
 
(1) – Currency effects are approximated by translating last year’s amounts at this year’s foreign exchange rates.

Commenting on the quarter, Stephen Hagge, President and CEO, said, “This was an excellent quarter and quite similar to our second quarter record performance. Our Beauty + Home segment performed very well operationally despite continued softness in the personal care and beauty markets, a challenging foreign currency environment and a general deceleration in the developing regions. Our Pharma and Food + Beverage segments each had outstanding quarters as well, with broad-based demand for our innovative dispensing solutions. Food + Beverage’s core sales growth was negatively impacted by decreased tooling sales and the passing through of resin cost decreases. Excluding resin and tooling effects, Food + Beverage core product sales increased approximately 13%. Operating profit margins improved at each segment compared to the prior year and I’m pleased to see the impact of our cost saving efforts across the company.”

AptarGroup reported earnings per share of $0.83 compared to $0.73 per share a year ago. Assuming a comparable foreign currency exchange environment, comparable earnings per share for the prior year were approximately $0.64.

YEAR-TO-DATE RESULTS

For the nine months ended September 30, 2015, reported sales decreased 11% to approximately $1.8 billion from approximately $2.0 billion a year ago. Core sales, which exclude the negative impact from changes in currency exchange rates, increased by approximately 1%.

Nine Months Year-to-Date Segment Sales Analysis

(Change Over Prior Year)

    Beauty +         Food +       Total
Home     Pharma     Beverage       AptarGroup
Sales Growth Before Currency Effects (Core Sales) (3%) 8% 3% 1%
Currency Effects (1) (13%)     (14%)     (7%)       (12%)
Total Reported Sales Growth (16%)     (6%)     (4%)       (11%)
 
(1) – Currency effects are approximated by translating last year’s amounts at this year’s foreign exchange rates.

Hagge commented on the year-to-date results, “Currency translation headwinds significantly affected our year-to-date reported results compared to the prior year. Despite softness in certain markets and the passing through of resin cost decreases, our core sales improved over the prior year. We continue to focus on cost containment while we grow in the various markets we serve and this approach, along with a favorable mix of business, drove our strong operating results through the first nine months of this year.”

AptarGroup reported earnings per share of $2.41 compared to $2.21 a year ago. Excluding the effect of a change in inventory valuation methods made in the second quarter (approximately $0.08 per share), adjusted earnings per share for the nine months year-to-date were $2.33. Assuming a comparable foreign currency exchange environment, comparable earnings per share for the prior year were approximately $1.90.

OUTLOOK

Commenting on AptarGroup’s outlook, Hagge said, “Currency exchange rates will continue to be a significant headwind on our translated results compared to the prior year at least until early next year. We don’t see any significant changes in the macroeconomic conditions that are currently affecting our business, including selected softness in certain markets. Also, we anticipate that certain customers may choose to reduce inventory levels at year end as we have seen in recent years. Despite these near-term issues, we expect fourth quarter earnings on a comparable currency basis to improve over the prior year. In addition, we are optimistic about the future and we remain committed to our market-focused strategy, investing in research and development, and positioning the company for long-term growth.”

AptarGroup expects earnings per share for the fourth quarter, assuming a comparable effective tax rate as the prior year fourth quarter, to be in the range of $0.61 to $0.66 per share compared to $0.63 per share reported in the prior year. Assuming a comparable foreign currency exchange rate environment, comparable earnings per share for the prior year were approximately $0.58.

SHARE REPURCHASE PROGRAM AND INCREASED CASH DIVIDEND

As planned, AptarGroup concluded a previously announced $250 million accelerated share repurchase program near the end of the third quarter and received approximately 720,000 additional shares. This brings the total amount of shares repurchased under the program to approximately 3,853,000 shares. Also, as previously announced, AptarGroup increased the quarterly cash dividend by 7% to $0.30 per share. The payment date is November 25, 2015, to shareholders of record as of November 4, 2015. Hagge stated, “Our strong financial condition allows us to continue to invest in our business and return value to shareholders through share repurchases and increased cash dividends.”

OPEN CONFERENCE CALL

There will be a conference call on Friday, October 30, 2015 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss AptarGroup’s third quarter results for 2015. The call will last approximately one hour. Interested parties are invited to listen to a live webcast by visiting the Investor Relations page at www.aptar.com. Replay of the conference call can also be accessed for a limited time on the Investor Relations page of the website.

AptarGroup, Inc. is a leading global supplier of a broad range of innovative dispensing solutions for the beauty, personal care, home care, prescription drug, consumer health care, injectables, food, and beverage markets. AptarGroup is headquartered in Crystal Lake, Illinois, with manufacturing facilities in North America, Europe, Asia and South America. To learn more, visit www.aptar.com.

This press release contains forward-looking statements. Words such as “expects,” “anticipates,” “believes,” “estimates,” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on management’s beliefs as well as assumptions made by and information currently available to management. Accordingly, AptarGroup’s actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist including, but not limited to, economic conditions worldwide as well as potential deflationary conditions in regions we rely on for growth; political conditions worldwide; significant fluctuations in foreign currency exchange rates; changes in customer and/or consumer spending levels; financial conditions of customers and suppliers; consolidations within our customer or supplier bases; fluctuations in the cost of raw materials, components and other input costs; the availability of raw materials and components; our ability to increase prices, contain costs and improve productivity; changes in capital availability or cost, including interest rate fluctuations; volatility of global credit markets; cybersecurity threats that could impact our networks and reporting systems; fiscal and monetary policies and other regulations, including changes in tax rates; direct or indirect consequences of acts of war or terrorism; work stoppages due to labor disputes; and competition, including technological advances. For additional information on these and other risks and uncertainties, please see AptarGroup’s filings with the Securities and Exchange Commission, including its Form 10-Ks and Form 10-Qs. AptarGroup undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 
 
APTARGROUP, INC.
Condensed Consolidated Financial Statements (Unaudited)
                   
(In Thousands, Except Per Share Data)
CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended Nine Months Ended
September 30,       September 30,

2015

2014

2015

2014

 
Net Sales $ 586,290 $ 651,942 $ 1,770,376 $ 1,998,624
Cost of Sales (exclusive of depreciation
shown below) 381,424 443,520 1,142,681 1,347,982
Selling, Research & Development and
Administrative 81,370 91,649 266,869 294,809
Depreciation and Amortization  35,439    38,158    103,664    113,871  
Operating Income 88,057 78,615 257,162 241,962
Other Income/(Expense):
Interest Expense (8,948 ) (5,332 ) (25,446 ) (15,459 )
Interest Income 1,762 1,386 4,598 3,449
Equity in results of affiliates (209 ) (124 ) (735 ) (1,868 )
Miscellaneous, net  (1,285)  (429)  (2,752)  (582)
Income before Income Taxes 79,377 74,116 232,827 227,502
Provision for Income Taxes  26,115    25,496    76,925    77,390  
Net Income $ 53,262 $ 48,620 $ 155,902 $ 150,112
 
Net (Income)/Loss Attributable to Noncontrolling Interests  (15)  (25)  55    (52)
Net Income Attributable to AptarGroup, Inc.$53,247  $48,595  $155,957  $150,060  
Net Income Attributable to AptarGroup, Inc. Per Common Share:
Basic$0.85  $0.75  $2.49  $2.30  
Diluted$0.83  $0.73  $2.41  $2.21  
 
Average Numbers of Shares Outstanding:
Basic 62,885 64,886 62,627 65,225
Diluted 64,454 66,845 64,609 67,761
 
 
APTARGROUP, INC.
Condensed Consolidated Financial Statements (Unaudited)
(continued)
(In Thousands)
CONSOLIDATED BALANCE SHEETS
           
September 30, 2015 December 31, 2014
ASSETS
 
Cash and Equivalents $ 434,059 $ 399,762
Short-term Investments  67,053  
Total Cash and Equivalents, and Short-term Investments 501,112 399,762
Receivables, net 422,895 406,976
Inventories 310,844 311,072
Other Current Assets  97,651  96,128
Total Current Assets 1,332,502 1,213,938
Net Property, Plant and Equipment 773,203 811,655
Goodwill, net 316,382 329,741
Other Assets  69,665  81,856
Total Assets$2,491,752$2,437,190
 
LIABILITIES AND EQUITY
 
Short-Term Obligations $ 72,748 $ 251,976
Accounts Payable and Accrued Liabilities  365,460  352,762
Total Current Liabilities 438,208 604,738
Long-Term Obligations 763,731 588,892
Deferred Liabilities  129,909  139,644
Total Liabilities 1,331,848 1,333,274
 
AptarGroup, Inc. Stockholders’ Equity 1,159,606 1,103,407
Noncontrolling Interests in Subsidiaries  298  509
Total Equity  1,159,904  1,103,916
 
Total Liabilities and Equity$2,491,752$2,437,190
 
 
APTARGROUP, INC.
Condensed Consolidated Financial Statements (Unaudited)
(continued)
(In Thousands)
SEGMENT INFORMATION
           
Three Months Ended Nine Months Ended
September 30,     September 30,
 

2015

2014

2015

2014

NET SALES

Beauty + Home $ 321,638 $ 378,905 $ 970,176 $ 1,155,367
Pharma 175,427 179,191 537,396 569,230
Food + Beverage  89,225    93,846    262,804    274,027  
Total Net Sales$586,290  $651,942  $1,770,376  $1,998,624  
 

SEGMENT INCOME (1)

Beauty + Home $ 27,961 $ 25,399 $ 78,529 $ 80,378
Pharma 52,941 49,314 160,404 154,589
Food + Beverage 13,236 11,713 37,277 33,209
Corporate and Other  (7,575)  (8,364)  (22,535)  (28,664)
Total Income Before Interest and Taxes $ 86,563 $ 78,062 $ 253,675 $ 239,512
Interest Expense, Net  (7,186)  (3,946)  (20,848)  (12,010)
Income before Income Taxes$79,377  $74,116  $232,827  $227,502  
 

SEGMENT INCOME AS % OF NET SALES

Beauty + Home 8.7 % 6.7 % 8.1 % 7.0 %
Pharma 30.2 % 27.5 % 29.8 % 27.2 %
Food + Beverage 14.8 % 12.5 % 14.2 % 12.1 %
 
Notes to Condensed Consolidated Financial Statements:
(1) – The Company evaluates performance of its business units and allocates resources based upon segment income defined as earnings before net interest expense, certain corporate expenses and income taxes.

AptarGroup, Inc.
Matthew DellaMaria
815-477-0424