News Details

CRYSTAL LAKE, Ill.--(BUSINESS WIRE)-- AptarGroup, Inc. (NYSE:ATR) today reported second quarter results for 2020 and provided an update related to COVID-19 including the Company’s ability to supply essential products for critical industries and continued health and safety measures being implemented across its global facilities.

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Photo: Aptar's Corporate Headquarters in Crystal Lake, IL

Second Quarter 2020 Summary

• Reported sales and core sales decreased 6% primarily due to the negative effects of COVID-19 on the beauty and beverage markets as well as passing on lower resin costs; negative currency effects were offset by contributions coming from acquisitions
• Reported sales growth of 7% and core sales growth of 6% in our Pharma segment was offset by decreases in reported sales and core sales in our Beauty + Home and Food + Beverage segments
• “Thank You Award” costs of $3.6 million (pretax) were included in second quarter reported and adjusted earnings; this one-time Award was granted to employees who made it possible for Aptar to continue to supply critical infrastructure industries during the initial phases of the COVID-19 crisis
• Reported earnings per share totaled $0.63 (a decrease of 44% compared to the prior year)
• Adjusted earnings per share totaled $0.80 (a decrease of 30% compared to the prior year)
• Reported net income totaled $42 million (a decrease of 43% compared to the prior year)
• Adjusted EBITDA totaled $137 million (a decrease of 15% compared to the prior year)
• Cash flow from operations was $228 million in the first half of 2020 (an increase of 3% compared to the prior year)
• Free cash flow was $105 million in the first half of 2020 (an increase of 9% compared to the prior year)
• Declared quarterly dividend of $0.36 per share
• Subsequent to the end of the quarter, Kimberly Y. Chainey joined Aptar as EVP General Counsel and is a member of the Executive Committee

COVID-19 Update

“We are proud to live up to our purpose and responsibility to society. Most of the products and solutions we make at Aptar play an important role in everyday life, maybe now more than ever,” said Stephan Tanda, Aptar President and CEO. “We all have these products in our homes, dispensing the medicines we take, the food we consume, and the beauty, personal care and household products we count on to get us through the day.”

Aptar is an essential supply chain partner, supporting industries such as pharmaceuticals and consumer products in the 20 countries in which we operate. Aptar’s facilities remain open and operating, albeit some at reduced capacity. “Our people have shown extreme perseverance and commitment to deliver our critical solutions to our customers during this time,” stated Tanda. “We are working very closely with our customers and remain flexible to meet their changing needs while maintaining execution capabilities for the upturn. We have received numerous expressions of appreciation from customers, thanking our people for rising to this challenge, and we will continue to do so while we focus on health and safety as our number one priority.”

Aptar continues to take strong health and safety measures across its global operations. The Company is providing masks to all employees working in its facilities and has escalated cleaning and sanitizing procedures. All employees are invited to a regular cadence of COVID-19 Town Hall calls and Aptar has issued a new remote and flexible work arrangement policy to ensure a minimum number of employees working in the office during this time.

Aptar is closely monitoring the changing dynamics around the world as countries continue to reopen their economies. The initial re-openings in many regions resulted in improved demand for some of Aptar’s products toward the end of the second quarter. While there has been positive recovery momentum in many countries, the recent rise in confirmed cases of COVID-19, especially in the U.S., has caused several local governments to reinstitute confinement protocols and this could impact the pace of economic recovery in the U.S. and elsewhere.

Second Quarter Results

For the quarter ended June 30, 2020, reported sales decreased 6% to $699 million compared to $743 million in the prior year. The headwinds from changes in currency rates were completely offset by revenue generated by recent acquisitions and therefore core sales also declined 6%.

Commenting on the quarter, Tanda said, “Our Pharma segment had another strong quarter, which partially offset declines in our Beauty + Home and Food + Beverage segments. Demand for our drug delivery and active packaging solutions rose across a variety of non-COVID-19 applications, further underscoring the long-term stability of our Pharma segment. Although demand increased for sanitizer dispensers, the beauty and the on-the-go beverage markets continued to be under significant pressure due to negative effects of COVID-19. Cost containment efforts contributed to our bottom line but were not enough to offset the negative effects from lower volumes caused by COVID-19.”

In the Pharma segment, sales increased to customers in the injectables, consumer health care and active packaging markets and offset declines in the prescription market, which faced challenging comparisons to the very strong prior year. In the Beauty + Home segment, the significant negative effects of COVID-19 on the beauty market were partially offset by an increase in sales to the personal care market related to hand sanitizers and liquid soaps. As retailers began to reopen in June, sales increased toward the end of the quarter to certain Beauty + Home customers. In the Food + Beverage segment, weak demand for single-serve premium bottled water and on-the-go functional drink products, due to COVID-19, resulted in significant sales declines in the beverage market. Also, lower custom tooling sales and the effects of passing through lower resin prices to customers also impacted the segment’s overall growth.

Aptar reported second quarter earnings per share of $0.63 compared to $1.12 during the same period a year ago. Current year adjusted earnings per share, excluding restructuring expenses and acquisition-related costs, were $0.80 and down 30% from the prior year adjusted earnings per share, including comparable exchange rates, of $1.14. Aptar recorded $3.6 million of pretax expense related to a one-time Thank You Award for our employees who contributed to our ability to supply critical solutions during the initial phases of the COVID-19 pandemic.

Year-to-Date Results

For the six months ended June 30, 2020, reported sales decreased approximately 4% to $1.42 billion from $1.49 billion a year ago. The headwinds from changes in currency rates were completely offset by revenue generated by recent acquisitions and therefore core sales also declined 4%.

Tanda commented on the year-to-date results, “Our Pharma segment continued to report strong year-over-year core sales growth. Our Beauty + Home and Food + Beverage segments experienced a more difficult first half of the year primarily due to the impacts of COVID-19, however we saw progressive signs of improvement for Beauty + Home since the low point in April. Beauty + Home was negatively impacted by reduced orders due to lower prestige beauty sales. Food + Beverage experienced a decline due to lower on-the-go beverage and food service sales due to many people dining at home and the passing through of lower resin costs to customers.”

For the six months year-to-date, Aptar’s reported earnings per share were $1.47, and down 29%, compared to $2.08 reported a year ago. Current year adjusted earnings per share, which exclude restructuring costs and acquisition-related expenses, were $1.72 and down 21% from prior year adjusted earnings per share, including comparable exchange rates, of $2.18.

Strong Cash Flow

The Company generated $228 million of cash flow from operations in the first half of the year, an increase of 3% over $221 million in the prior year. The company generated $105 million of free cash flow (cash flow from operations less capital expenditures) for the first half of 2020, an increase of 9% over $96 million in the prior year, primarily due to a focus on working capital management. Tanda commented, “Despite lower net income, we were able to increase cash flow over the prior year. We continue to invest in our business for the long-term and our balance sheet remains strong.”

Outlook

“There is economic uncertainty in some of our markets, driven in part by the recent spike in COVID-19 cases in many regions of the world. We expect to see gradual improvement in the second half of the year although this will be heavily dependent on the pace and breadth of the resumption of travel activity, the reopening of retail stores and general consumer spending confidence,” said Tanda.

Aptar expects earnings per share for the third quarter of 2020, excluding any restructuring expenses and acquisition-related costs, to be in the range of $0.80 to $0.88. This guidance is based on an effective tax rate range of 28% to 30%.

Cash Dividend

As previously announced, the Board declared a quarterly cash dividend of $0.36 per share. The payment date is August 19, 2020, to stockholders of record as of July 29, 2020.

Open Conference Call

There will be a conference call on Friday, July 31, 2020 at 8:00 a.m. Central Time to discuss the Company’s second quarter results for 2020. 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.

About Aptar

Aptar is a global leader in the design and manufacturing of a broad range of drug delivery, consumer product dispensing and active packaging solutions. Aptar uses insights, design, engineering and science to create dosing, dispensing and protective packaging technologies for the world’s leading brands, in turn making a meaningful difference in the lives, looks, health and homes of millions of people around the world. Aptar’s innovative solutions and services serve a variety of end markets including pharmaceutical, beauty, personal care, home, food and beverage. Aptar is headquartered in Crystal Lake, Illinois and has 14,000 dedicated employees in 20 countries. 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 business transformation charges (restructuring initiatives), acquisition-related expenses and certain purchase accounting adjustments related to acquisitions and investments. 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. Free cash flow is calculated as cash provided by operating activities less capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measure our ability to generate cash internally to fund our initiatives. 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. Our outlook is provided on a non-GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as exchange rates, or reliably predicted because they are not part of the Company's routine activities, such as restructuring and acquisition costs.

This press release contains forward-looking statements, including certain statements set forth under the “Outlook” section of this press release and statements regarding the anticipated impact of the COVID-19 pandemic. 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 or other events 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: outbreaks of pandemics, including the impact of the COVID-19 pandemic on our global supply chain and our global customers and operations; the successful integration of acquisitions and the achievement of the expected benefits of acquisitions and investments; the impact of tax reform legislation including changes in tax rates and other tax-related events or transactions that could impact our effective tax rate; the execution of the business transformation plan; economic conditions worldwide including potential deflationary or inflationary conditions or economic downturn or uncertainty in regions we rely on for growth as a result of the COVID-19 pandemic or otherwise; 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 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; direct or indirect consequences of acts of war or terrorism; and work stoppages due to labor disputes. 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-K and Form 10-Qs. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200730006019/en/

Investor Relations Contact:
Matt DellaMaria
matt.dellamaria@aptar.com
815-479-5530

Media Contact:
Katie Reardon
katie.reardon@aptar.com
815-479-5671

Source: AptarGroup, Inc.