News Details

CRYSTAL LAKE, Ill.--(BUSINESS WIRE)--Jul. 26, 2018-- AptarGroup, Inc. (NYSE:ATR) today announced second quarter operating results along with its binding offer to acquire CSP Technologies Parent S.A. (CSP Technologies), a leader in active packaging technology based on proprietary material science expertise.

Second Quarter 2018 Summary

• Reported sales increased 15%, including the positive effect of currency rates (+4%)
• Core sales, excluding currency and acquisition effects, rose 11% driven by growth in each business segment, end market and geographic region
• Reported net income (8% of net sales) decreased 14% to $56 million due to restructuring expenses of $18 million and costs related to the Reboul and CSP Technologies acquisitions of $3 million
• Adjusted EBITDA (20% of net sales), which excludes the restructuring and acquisition expenses, increased 14% to $141 million
• Reported earnings per share, including restructuring and acquisitions expenses, with an effective tax rate of 26%, were $0.86 compared to $1.01 reported in the prior year with an effective tax rate of 18% (prior year included certain tax settlements and higher equity compensation deductions)
• Adjusted earnings per share, which exclude restructuring and acquisition expenses, increased 4% to $1.09, compared to prior year currency adjusted earnings per share of $1.05 with an effective tax rate of 18%
• Prior year earnings per share would have been $0.10 lower had our current effective tax rate been applied to prior year earnings
• Binding offer to acquire CSP Technologies, a leader in active packaging technology, for an enterprise value of $555 million
• Business transformation progressing as planned

Second Quarter Results

For the quarter ended June 30, 2018, reported sales increased to $711 million compared to $618 million in the prior year. Core sales, which exclude the positive impact from changes in currency exchange rates and acquisition effects, increased approximately 11%.

Commenting on the quarter, Stephan Tanda, President and CEO, said, “We had another strong quarter with core sales growth in each segment, across each end market and in each geographic region. Our Beauty + Home segment benefited from healthy demand for our dispensing solutions across each market, aided in part by robust travel retail sales in the Beauty market and increased demand and higher custom tooling sales in the Personal Care market. Our Pharma segment delivered excellent growth with our industry leading drug delivery systems. The growth in the Consumer Health Care and Prescription markets was driven by decongestant and allergy related products. Our Food + Beverage segment also grew across each market due to increased demand for our innovative dispensing closures and higher custom tooling sales.”

Aptar’s reported earnings per share were $0.86 compared to $1.01 reported a year ago. Current year earnings include restructuring and acquisition expenses and an effective tax rate of 26%. Prior year earnings included an effective tax rate of 18% that reflected certain tax settlements and higher equity compensation deductions. Current year adjusted earnings per share, which exclude restructuring and acquisition expenses, were $1.09 and up 4% from the prior year adjusted earnings per share, adjusted for comparable exchange rates, of $1.05 with an effective tax rate of 18%. Prior year earnings per share would have been $0.10 lower had our current effective tax rate been applied to prior year earnings.

Year-to-Date Results

For the six months ended June 30, 2018, reported sales increased 16% to $1.41 billion from $1.22 billion a year ago. Core sales, which exclude the positive impact from changes in currency exchange rates and acquisition effects, increased approximately 9%.

Tanda commented on the year-to-date results, “All segments delivered excellent growth during the first half of the year. Our customers are benefiting from Aptar’s unique differentiated solutions that help them grow their brands. Demand has been strong and widespread across the segments, end markets and geographic regions and that speaks to the strength of our people, our value creating product offerings and our diverse business model.”

For the six months year-to-date, Aptar’s reported earnings per share were $1.78 compared to $1.81 reported a year ago. Current year earnings include restructuring and acquisitions expenses of $26.7 million and an effective tax rate of 26%. Prior year earnings included an effective tax rate of 22% that reflected certain tax settlements and higher equity compensation deductions. Current year adjusted earnings per share, which exclude restructuring and acquisition expenses, were $2.08 and up 6% from prior year adjusted earnings per share, adjusted for comparable exchange rates, of $1.96 with an effective tax rate of 22%. Prior year earnings per share would have been $0.11 lower had our current effective tax rate been applied to prior year earnings.

Binding Offer to Acquire CSP Technologies

Aptar has made a binding offer to acquire CSP Technologies, a leader in active packaging technology based on proprietary material science expertise, for an enterprise value of $555 million, which represents a multiple of slightly less than 13 times adjusted EBITDA (last twelve months). Aptar plans to fund the transaction with available cash on hand. The consultation process with CSP Technologies’ works council in France will begin as soon as possible. Upon completion of the French works council consultation process, Aptar expects to enter into a definitive stock purchase agreement with CSP Technologies for the proposed transaction. The proposed transaction, which has been approved by Aptar’s Board of Directors, will also be subject to customary closing conditions, including regulatory approvals, and is expected to close in the fourth quarter of this year.

Founded in 1965, CSP Technologies has over 30 years of experience as a leader in integrated, active desiccant and product protection technologies in the Pharma and Food Service markets. CSP Technologies operates two manufacturing locations in the U.S. and one in France, with opportunities for growth and expansion across Asia and other high-growth economies. CSP Technologies is a profitable, well-managed business with annual revenues of approximately $140 million (unaudited).

Commenting on the transaction, Stephan Tanda said, “We are pleased to announce that we have submitted a binding offer to acquire CSP Technologies. This strategic transaction meets our disciplined criteria for acquiring companies with strong positions in attractive markets, proprietary technologies, solid margins and robust growth fundamentals. Similar to Aptar, CSP Technologies has an innovative culture with intellectual property that drives product development and enables highly engineered solutions, including their three-phase polymer technology. They are also experienced in navigating the relevant regulatory environments and have highly automated visual inspection and quality control systems, and analytical performance testing of individual products. We plan to welcome CSP Technologies’ experienced team to Aptar and we look forward to growing the existing business in the Pharma and Food Safety markets, and leveraging their active packaging and material science know-how in other end markets. Together we will continue to develop value-creating, differentiated solutions as a global leader in packaging solutions.”

Wells Fargo Securities acted as the exclusive financial advisor to Aptar in connection with the transaction and Sidley Austin LLP acted as legal counsel.

Business Transformation

Aptar remains on track with its business transformation to become a more agile, competitive and customer-centric business. Tanda commented on the progress by stating, “Our business transformation is engaging the full organization and we have a dynamic, agile process in place to ensure we are meeting our transformation milestones with a common goal of restoring our entrepreneurial spirit and maintaining profitable growth.”

Outlook

Commenting on Aptar’s outlook, Tanda said, “Looking ahead to the third quarter, we expect core sales growth in each segment. Our sales growth momentum is expected to remain broad-based though at varying degrees across most of our end markets. We continue to serve attractive markets as a leading provider of innovative dispensing solutions. We remain committed to executing our growth strategy in order to create long-term value for all stakeholders.”

Aptar expects earnings per share for the third quarter, excluding any restructuring expenses and effects associated with the CSP Technologies acquisition, to be in the range of $0.90 to $0.95 compared to $0.83 per share reported in the prior year. Our guidance range is based on an effective tax rate range of 29% to 31%. Prior year adjusted earnings per share, adjusted for comparable exchange rates, would have been approximately $0.82. Prior year earnings per share would have been $0.08 lower had our current effective tax rate been applied to prior year earnings.

Cash Dividend

As previously reported, the Board approved on July 18, 2018 an increase in the quarterly cash dividend of 6% to $0.34 per share. The current dividend is payable on August 22, 2018 to stockholders of record as of August 1, 2018.

Open Conference Call

There will be a conference call on Friday, July 27, 2018 at 8:00 a.m. Central Time to discuss Aptar’s second quarter results for 2018. 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. Aptar 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 current year adjusted earnings per share and adjusted EBITDA, which exclude the impact of restructuring costs, transaction costs and purchase accounting adjustments that affected inventory values related to an acquisition. Core sales and adjusted earnings per share also neutralize the impact of foreign currency translation effects when comparing current results to the prior year. 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. For CSP Technologies, adjusted EBITDA includes adjustments principally for management fees and costs related to the transaction.

This press release contains forward-looking statements, including certain statements set forth under the “Outlook” and “Business Transformation” sections 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 completion of the CSP Technologies acquisition; the successful integration of the CSP Technologies business; the impact of tax reform legislation; the execution of the business transformation; 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.

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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