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AptarGroup Reports Third Quarter Results

CRYSTAL LAKE, Ill.--(BUSINESS WIRE)--Oct. 26, 2017-- AptarGroup, Inc. (NYSE: ATR), a global leader in innovative packaging technologies that build brand value, today announced its third quarter results.

Third Quarter 2017 Summary

  • Reported sales increased 6% over the prior year driven by 3% core growth and a 3% favorable impact from exchange rates
  • Each business segment achieved core sales growth
  • Lower custom tooling sales negatively impacted the sales growth by 2%
  • Reported net income (9% of net sales) increased to $54 million (+1%)
  • EBITDA (19% of net sales) decreased to $118 million (-4%)
  • Profit margins were negatively impacted by operational challenges at our decorative facility in Europe, higher professional fees, raw material cost increases and certain currency transaction losses
  • Reported earnings per share were $0.83 compared to $0.82 in the prior year (+1%)
  • Compared to the prior year, earnings per share for the current period included certain tax benefits amounting to approximately $0.05 related to foreign tax settlements and $0.01 related to stock-based compensation

Third Quarter Results

For the quarter ended September 30, 2017, reported sales increased 6% over the prior year to $624 million. Core sales, which exclude the positive impact from changes in currency exchange rates, increased approximately 3%.

 
 
Third Quarter Segment Sales Analysis

(Change Over Prior Year)

               

Beauty +

Food + Total

Home

    Pharma     Beverage     AptarGroup
Core Sales Growth 3% 1% 8% 3%
Currency Effects (1) 3%     3%     2%     3%
Total Reported Sales Growth 6%     4%     10%     6%
 
(1) - Currency effects are approximated by translating last year's amounts at this year's foreign exchange rates.
 

Commenting on the quarter, Stephan Tanda, President and CEO, said, “We are pleased to report sales growth in each of our business segments. Our Pharma segment, the leading provider of drug delivery systems to the pharmaceutical industry, grew sales despite a difficult comparison to the prior year, which included a significant amount of custom tooling sales related to a specific project. Demand for our products was broad-based across each end market, and was especially strong in the consumer health care and injectables markets. In our Beauty + Home segment, sales to the personal care and home care markets improved over the prior year, with new business wins contributing to the growth. We continue to offer the industry’s broadest solutions portfolio and are encouraged by the sales improvements in Beauty + Home as we move forward with our initiatives to return this business to long-term sustainable growth. Our Food + Beverage segment had an excellent quarter as demand for our innovative dispensing closures increased in both the food and beverage markets. Offsetting the positive effects of our segments’ sales growth were several factors that negatively impacted our earnings. We continue to address the operational challenges at our decorative facility in Europe, which had a negative impact on our quarterly results. We also experienced higher professional fees related to specific projects, increased raw material costs and negative currency transaction losses related to our operations in Argentina.”

Aptar’s reported earnings per share increased 1% to $0.83 compared to $0.82 reported a year ago. Current period earnings per share included a positive impact of approximately $0.06 related to certain tax benefits compared to the prior year. Adjusting for changes in currency translation rates, comparable earnings per share for the prior year were approximately $0.85.

Year-to-Date Results

For the nine months ended September 30, 2017, reported sales increased 3% to $1.84 billion from $1.79 billion a year ago. Core sales, which exclude the positive impact from acquisitions, increased approximately 2%. Changes in currency exchange rates did not have a significant impact on the sales growth.

 
Nine Months Year-to-Date Segment Sales Analysis

(Change Over Prior Year)

 
    Beauty +         Food +     Total
Home     Pharma     Beverage     AptarGroup
Core Sales Growth 0% 6% 5% 2%
Acquisitions 1% 0% 0% 1%
Currency Effects (1) 0%     0%     (1%)     0%
Total Reported Sales Growth 1%     6%     4%    

3%

 
(1) - Currency effects are approximated by translating last year's amounts at this year's foreign exchange rates.
 

Tanda commented on the year-to-date results, “We reported top line growth through the first nine months of the year and our Pharma and Food + Beverage segments have performed well, with sales growth in each end market. When we exclude the positive contribution from last year’s acquisition, our Beauty + Home segment achieved sales in line with prior year sales. The diversity of our business continues to be a key strength of Aptar as we serve eight end markets across the globe.”

For the nine months year-to-date, Aptar’s reported earnings per share increased 10% to $2.64 compared to $2.40 reported a year ago. The nine months year-to-date earnings per share included a positive impact of approximately $0.20 related to certain tax benefits compared to the prior year. Prior year adjusted earnings per share, which adjusts for costs related to the Mega Airless acquisition, would have been $2.49.

Outlook

Commenting on Aptar’s outlook, Tanda said, “Looking ahead to the fourth quarter, we expect revenue growth in each segment. We also anticipate certain headwinds will continue, including higher raw material costs and lower results at our decorative facility. We see these as transitory and thus not affecting our long-term view. We remain committed to returning Beauty + Home to profitable growth in the near-term and successfully implementing our new initiatives. Our strong balance sheet allows us to invest in new capabilities and technologies while we remain well-positioned to take advantage of strategic opportunities. We look forward to continuing to leverage our deep understanding of consumer trends and behaviors in order to create value-enhancing solutions for our customers and end consumers around the world.”

Aptar expects earnings per share for the fourth quarter to be in the range of $0.68 to $0.73, excluding any costs related to our current initiatives, compared to $0.77 per share reported in the prior year. Our guidance range is based on an effective tax rate range of 26.5% to 28.5%, which includes an estimate of a potential tax benefit from our adoption of the new accounting standard for share-based compensation. Prior year earnings per share included a positive impact of approximately $0.08 related to certain tax benefits. Adjusting for changes in currency translation rates, comparable earnings per share for the prior year were approximately $0.82.

Cash Dividend

As previously reported, the Board declared on October 19, 2017 a quarterly cash dividend of $0.32 per share, payable November 22, 2017 to stockholders of record as of November 1, 2017.

Open Conference Call

There will be a conference call on Friday, October 27, 2017 at 8:00 a.m. Central Time to discuss Aptar’s third quarter results for 2017. 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.

Aptar is a leading global supplier of a broad range of innovative dispensing and sealing 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. For more information, visit www.aptar.com.

Presentation of Non-GAAP Information

This press release refers to certain non-GAAP financial measures, including prior year adjusted earnings per share and adjusted EBITDA, which exclude the impact of transaction costs and purchase accounting adjustments that affected inventory values related to the Mega Airless acquisition. Core sales and adjusted earnings per share also exclude the impact of foreign currency translation effects. Non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures provided by other companies. Aptar’s management believes these non-GAAP financial measures provide useful information to our investors because they allow for a better period over period comparison of operating results by removing the impact of items that, in management’s view, do not reflect Aptar’s core operating performance. These non-GAAP financial measures also provide investors with certain information used by Aptar’s management when making financial and operational decisions. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial results, but should be read in conjunction with the unaudited condensed consolidated statements of income and other information presented herein. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in the accompanying tables.

This press release contains forward-looking statements, including certain statements set forth under the “Outlook” section of this press release. Words such as “expects,” “anticipates,” “believes,” “estimates,” “future,” “potential” 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 our beliefs as well as assumptions made by and information currently available to us. Accordingly, our 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 in our operations and business environment including, but not limited to, the possible impact and consequences of the fire at the Company’s facility in Annecy, France; the impact and extent of contamination found at the Company’s facility in Brazil; economic conditions worldwide including potential deflationary conditions in regions we rely on for growth; political conditions worldwide; significant fluctuations in foreign currency exchange rates or our effective tax rate; 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 materials, components and other input costs; the availability of raw materials and components; our ability to successfully implement facility expansions and new facility projects; 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 our filings with the Securities and Exchange Commission, including the discussion under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-Ks and Form 10-Qs. We undertake 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,

2017

2016

2017

2016

 
Net Sales $ 624,326 $ 589,729 $ 1,843,388 $ 1,792,066
Cost of Sales (exclusive of depreciation and amortization shown below) (1) 408,081 381,041 1,192,967 1,145,107
Selling, Research & Development and Administrative (2) 95,748 86,695 292,923 285,841
Depreciation and Amortization   40,087     39,667     114,660     115,944  
Operating Income 80,410 82,326 242,838 245,174
Other Income/(Expense):
Interest Expense (9,733 ) (8,753 ) (25,707 ) (26,547 )
Interest Income 1,113 715 2,086 1,759
Equity in Results of Affiliates (72 ) (15 ) (142 ) (187 )
Miscellaneous, net   (2,200 )   728     (509 )   (995 )
Income before Income Taxes 69,518 75,001 218,566 219,204
Provision for Income Taxes   15,989     21,901     48,043     63,187  
Net Income $ 53,529 $ 53,100 $ 170,523 $ 156,017
 
Net Income Attributable to Noncontrolling Interests   (6 )   (2 )   (6 )   (8 )
Net Income Attributable to AptarGroup, Inc. $ 53,523   $ 53,098   $ 170,517   $ 156,009  
Net Income Attributable to AptarGroup, Inc. per Common Share:
Basic $ 0.86   $ 0.84   $ 2.73   $ 2.48  
Diluted $ 0.83   $ 0.82   $ 2.64   $ 2.40  
 
Average Numbers of Shares Outstanding:
Basic 62,592 62,858 62,527 62,878
Diluted 64,821 64,690 64,626 64,989
 
Notes to the Condensed Consolidated Financial Statements:
(1) For the nine months ended September 30, 2016, Cost of Sales included the effect of approximately $2.6 million of purchase accounting adjustments to inventory related to the Mega Airless acquisition.
 
(2) For the nine months ended September 30, 2016, Selling, Research & Development and Administrative included approximately $5.6 million of costs related to the Mega Airless acquisition.
 

AptarGroup, Inc.
Condensed Consolidated Financial Statements (Unaudited)
(continued)
(In Thousands)
Consolidated Balance Sheets
       

September 30, 2017

December 31, 2016

ASSETS
 
Cash and Equivalents $ 1,018,666 $ 466,287
Receivables, net 510,144 433,127
Inventories 323,404 296,914
Other Current Assets   89,181   73,842
Total Current Assets 1,941,395 1,270,170
Net Property, Plant and Equipment 858,439 784,321
Goodwill 439,147 407,522
Other Assets   169,873   144,772
Total Assets $ 3,408,854 $ 2,606,785
 
LIABILITIES AND EQUITY
 
Short-Term Obligations $ 246,240 $ 173,816
Accounts Payable and Accrued Liabilities   458,797   369,139
Total Current Liabilities 705,037 542,955
Long-Term Obligations 1,271,530 772,737
Deferred Liabilities   110,463   116,851
Total Liabilities 2,087,030 1,432,543
 
AptarGroup, Inc. Stockholders' Equity 1,321,514 1,173,950
Noncontrolling Interests in Subsidiaries   310   292
Total Equity   1,321,824   1,174,242
 
Total Liabilities and Equity $ 3,408,854 $ 2,606,785
 

AptarGroup, Inc.
Reconciliation of EBIT and EBITDA to Net Income (Unaudited)
(In Thousands)
             
Three Months Ended
September 30, 2017
 

Beauty +

Food + Corporate &

Net

Consolidated  

Home

  Pharma   Beverage   Other  

Interest

Net Sales $ 624,326 333,748 199,547 91,031 - -
 
Reported net income $ 53,529
Reported income taxes   15,989                      
Reported income before income taxes 69,518 21,837 55,426 11,668 (10,793 ) (8,620 )
Adjustments:
None
 
Earnings before income taxes 69,518 21,837 55,426 11,668 (10,793 ) (8,620 )
Interest expense 9,733 9,733
Interest income   (1,113 )                     (1,113 )
Earnings before net interest and taxes (EBIT) 78,138 21,837 55,426 11,668 (10,793 ) -
Depreciation and amortization   40,087       20,790       10,834       6,448       2,015       -  
Earnings before net interest, taxes, depreciation and amortization (EBITDA) $ 118,225     $ 42,627     $ 66,260     $ 18,116     $ (8,778 )   $ -  
 
Segment income margins (Income before income taxes / Reported Net Sales) 6.5 % 27.8 % 12.8 %
EBITDA margins (EBITDA / Reported Net Sales) 18.9 % 12.8 % 33.2 % 19.9 %
 
Three Months Ended
September 30, 2016
 

Beauty +

Food + Corporate &

Net

Consolidated  

Home

  Pharma   Beverage   Other  

Interest

Net Sales $ 589,729 316,030 191,194 82,505 - -
 
Reported net income $ 53,100
Reported income taxes   21,901                      
Reported income before income taxes 75,001 25,380 55,037 10,101 (7,479 ) (8,038 )
Adjustments:
None
 
Earnings before income taxes 75,001 25,380 55,037 10,101 (7,479 ) (8,038 )
Interest expense 8,753 8,753
Interest income   (715 )                     (715 )
Earnings before net interest and taxes (EBIT) 83,039 25,380 55,037 10,101 (7,479 ) -
Depreciation and amortization   39,667       21,653       10,185       6,064       1,765       -  
Earnings before net interest, taxes, depreciation and amortization (EBITDA) $ 122,706     $ 47,033     $ 65,222     $ 16,165     $ (5,714 )   $ -  
 
Segment income margins (Income before income taxes / Reported Net Sales) 8.0 % 28.8 % 12.2 %
EBITDA margins (EBITDA / Reported Net Sales) 20.8 % 14.9 % 34.1 % 19.6 %
 

AptarGroup, Inc.
Reconciliation of EBIT, Adjusted EBIT, EBITDA and Adjusted EBITDA to Net Income (Unaudited)
(In Thousands)
             
Nine Months Ended
September 30, 2017
 
Beauty + Food + Corporate &

Net

Consolidated   Home   Pharma   Beverage   Other  

Interest

Net Sales $ 1,843,388 978,313 598,161 266,914 - -
 
Reported net income $ 170,523
Reported income taxes   48,043                      
Reported income before income taxes 218,566 69,248 174,288 31,385 (32,734 ) (23,621 )
Adjustments:
None
 
Earnings before income taxes 218,566 69,248 174,288 31,385 (32,734 ) (23,621 )
Interest expense 25,707 25,707
Interest income   (2,086 )                     (2,086 )
Earnings before net interest and taxes (EBIT) 242,187 69,248 174,288 31,385 (32,734 ) -
Depreciation and amortization   114,660       60,017       30,462       18,371       5,810       -  
Earnings before net interest, taxes, depreciation and amortization (EBITDA) $ 356,847     $ 129,265     $ 204,750     $ 49,756     $ (26,924 )   $ -  
 
Segment income margins (Income before income taxes / Reported Net Sales) 7.1 % 29.1 % 11.8 %
EBITDA margins (EBITDA / Reported Net Sales) 19.4 % 13.2 % 34.2 % 18.6 %
 
Nine Months Ended
September 30, 2016
 
Beauty + Food + Corporate &

Net

Consolidated   Home   Pharma   Beverage   Other  

Interest

Net Sales $ 1,792,066 970,687 565,363 256,016 - -
 
Reported net income $ 156,017
Reported income taxes   63,187                      
Reported income before income taxes 219,204 79,455 166,870 32,977 (35,310 ) (24,788 )
Adjustments:
Transaction costs related to the Mega Airless acquisition 5,640 5,640
Purchase accounting adjustments related to Mega Airless inventory   2,577       2,151       426              
Adjusted earnings before income taxes 227,421 81,606 167,296 32,977 (29,670 ) (24,788 )
Interest expense 26,547 26,547
Interest income   (1,759 )                     (1,759 )
Adjusted earnings before net interest and taxes (Adjusted EBIT) 252,209 81,606 167,296 32,977 (29,670 ) -
Depreciation and amortization   115,944       63,150       29,802       17,960       5,032       -  
Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 368,153     $ 144,756     $ 197,098     $ 50,937     $ (24,638 )   $ -  
 
Segment income margins (Income before income taxes / Reported Net Sales) 8.2 % 29.5 % 12.9 %
Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 20.5 % 14.9 % 34.9 % 19.9 %
 

AptarGroup, Inc.
Reconciliation of Adjusted Earnings Per Diluted Share (Unaudited)
($ in thousands, except per share information)
 
    Three Months Ended     Nine Months Ended
September 30,     September 30,

2017

 

2016

2017

 

2016

 
Income before Income Taxes $ 69,518 $ 75,001 $ 218,566 $ 219,204
 

Adjustments:

Transaction costs related to the Mega Airless acquisition 5,640
Purchase accounting adjustments related to Mega Airless inventory 2,577
Foreign currency effects (1)       3,008             279  
Adjusted Income before Income Taxes $ 69,518     $ 78,009       $ 218,566     $ 227,700  
 
 
Provision for Income Taxes $ 15,989 $ 21,901 $ 48,043 $ 63,187
 

Adjustments:

Transaction costs related to the Mega Airless acquisition 1,483
Purchase accounting adjustments related to Mega Airless inventory 859
Foreign currency effects (1)       798             123  
Adjusted Provision for Income Taxes $ 15,989     $ 22,699       $ 48,043     $ 65,652  
 
 
 
Net Income Attributable to Noncontrolling Interests $ (6 ) $ (2 ) $ (6 ) $ (8 )
 
Net Income Attributable to AptarGroup, Inc. $ 53,523 $ 53,098 $ 170,517 $ 156,009
 

Adjustments:

Transaction costs related to the Mega Airless acquisition 4,157
Purchase accounting adjustments related to Mega Airless inventory 1,718
Foreign currency effects (1)       2,210             156  
Adjusted Net Income Attributable to AptarGroup, Inc. $ 53,523     $ 55,308       $ 170,517     $ 162,040  
 
Average Number of Diluted Shares Outstanding 64,821 64,690 64,626 64,989
 
Net Income Attributable to AptarGroup, Inc. Per Diluted Share $ 0.83 $ 0.82 $ 2.64 $ 2.40
 

Adjustments:

Transaction costs related to the Mega Airless acquisition 0.06
Purchase accounting adjustments related to Mega Airless inventory 0.03
Foreign currency effects (1)       0.03             -  
Adjusted Net Income Attributable to AptarGroup, Inc. Per Diluted Share $ 0.83     $ 0.85       $ 2.64     $ 2.49  
 
(1) Foreign currency effects are approximations of the adjustment necessary to state the prior year earnings and earnings per share using current period foreign currency exchange rates.

AptarGroup, Inc.
Reconciliation of Adjusted Earnings Per Diluted Share (Unaudited)
($ in thousands, except per share information)
 
    Three Months Ended
December 31,

Expected 2017

   

2016

 
Income before Income Taxes $ 61,293
 

Adjustments:

Foreign currency effects (1)   4,396  
Adjusted Income before Income Taxes $ 65,689  
 
 
Provision for Income Taxes $ 11,706
 

Adjustments:

Foreign currency effects (1)   936  
Adjusted Provision for Income Taxes $ 12,642  
 
 
Net Income Attributable to Noncontrolling Interests $ (6 )
 
Net Income Attributable to AptarGroup, Inc. $ 49,581
 

Adjustments:

Foreign currency effects (1)   3,460  
Adjusted Net Income Attributable to AptarGroup, Inc. $ 53,041  
 
Average Number of Diluted Shares Outstanding 64,220
 
Net Income Attributable to AptarGroup, Inc. Per Diluted Share (2) $0.68 - $0.73 $

0.77

 

 

Adjustments:

Foreign currency effects (1)        

0.05

 

Adjusted Net Income Attributable to AptarGroup, Inc. Per Diluted Share (2) $0.68 - $0.73     $

0.82

 

 
(1) Foreign currency effects are approximations of the adjustment necessary to state the prior year earnings per share using foreign currency exchange rates as of September 30, 2017.
 
(2) AptarGroup’s expected earnings per share range for the fourth quarter of 2017 is based on an effective tax rate range of 26.5% to 28.5%, which includes an estimate of a potential tax benefit from our adoption of the new accounting standard for share-based compensation.
 

Source: AptarGroup, Inc.

AptarGroup, Inc.
Investor Relations Contact:
Matthew DellaMaria
matt.dellamaria@aptar.com
815-477-0424
or
Media Contact:
Katie Reardon
katie.reardon@aptar.com
815-477-0424

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