AptarGroup, Inc. (NYSE:ATR) today announced third quarter
results.
Third Quarter 2016 Summary
- Reported sales increased 1% to $590
million
- Changes in foreign currency exchange
rates had a negative impact of 1% on the sales growth
- Recently acquired Mega Airless
contributed approximately $18 million or 3% of the sales growth and
approximately $0.02 per share to reported earnings per
share
- Reported earnings per share were
$0.82 compared to $0.83 reported in the prior year
- Reported earnings per share included
a negative impact of approximately $0.01 (approximately $1.4
million pre-tax expense) related to the timing of costs in excess
of insurance proceeds associated with a facility fire that occurred
earlier in the year; previous third quarter earnings per share
guidance excluded any potential impact related to the fire
- Adjusting to a comparable foreign
currency environment ($0.01), prior year adjusted earnings per
share were $0.82, or even with current period earnings per
share
- Reported pre-tax earnings of $75
million were approximately 13% of net sales
- EBITDA of $123 million was
approximately 21% of net sales
THIRD QUARTER RESULTS
For the quarter ended September 30, 2016, reported sales
increased 1% to $590 million from $586 million a year ago.
Excluding the negative impact from changes in currency exchange
rates and the positive impact from acquisitions, core sales
decreased by approximately 1%.
Third Quarter Segment Sales Analysis
(Change Over Prior Year)
Beauty +
Home
Pharma
Food +
Beverage
Total
AptarGroup
Core Sales Growth (6 %) 9 % (6 %) (1 %)
Acquisitions 5 % 1 % 0 % 3 % Currency Effects (1) (1 %) (1
%) (2 %) (1 %)
Total Reported Sales Growth
(2 %) 9 % (8
%) 1 % (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, “Challenging market conditions made it difficult to achieve
top line core growth for two of our business segments. Our Beauty +
Home segment experienced sluggish demand in all regions other than
Latin America, which again delivered strong sales growth. The
beauty and personal care markets remain soft and while we believe
there is much potential for the home care market, demand was very
weak compared to the prior year. Our Food + Beverage segment was
impacted by a decrease in sales to the beverage market, mainly in
China, while sales to the food market increased. Our Pharma segment
reported strong sales growth principally due to a significant
increase in custom tooling sales and increased demand related to
our consumer health care business. Sales to the prescription drug
market increased slightly compared to very strong growth recorded a
year ago while sales to the injectables market declined in the
quarter due to the timing of certain validations of our new
capacity in Europe. Despite the mix of market challenges, we were
able to achieve a pre-tax earnings margin of approximately 13% and
a strong consolidated EBITDA margin of approximately 21% in the
quarter.”
AptarGroup reported earnings per share of $0.82 compared to
$0.83 per share a year ago. Adjusting to achieve a comparable
foreign exchange rate environment, comparable prior year third
quarter earnings per share were $0.82, even with the current
year.
YEAR-TO-DATE RESULTS
For the nine months ended September 30, 2016, reported sales
increased 1% to $1.79 billion from $1.77 billion a year ago.
Excluding the negative impact from changes in currency exchange
rates and the positive impact from acquisitions, core sales also
increased by approximately 1%.
Nine Months Year to Date Segment Sales Analysis
(Change Over Prior Year)
Beauty +
Home
Pharma
Food +
Beverage
Total
AptarGroup
Core Sales Growth (1 %) 5 % 0 % 1 %
Acquisitions 4 % 1 % 0 % 2 % Currency Effects (1) (3 %) (1
%) (3 %) (2 %)
Total Reported Sales Growth
0 % 5 % (3
%) 1 % (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, “We reported top
line growth through the first nine months despite challenging
macroeconomic conditions in several markets and improved our
Adjusted EBITDA margin over the prior year. The diversity of our
business continues to be a strength of Aptar. Though sales to the
personal care, home care and beverage markets were below the prior
year, we increased sales in each of the markets served by our
Pharma segment, as well as in the beauty and food markets.”
For the nine months year to date, AptarGroup reported earnings
per share of $2.40 compared to $2.41 per share a year ago.
Comparable adjusted earnings per share increased 6% to $2.45
compared to $2.32 for 2015. Adjustments to reported results
necessary to arrive at comparable adjusted earnings per share are
set forth in the accompanying tables.
SHARE REPURCHASE AUTHORIZATION AND INCREASED CASH
DIVIDEND
As previously announced on October 20, 2016, the Board of
Directors authorized the repurchase of up to $350 million of the
Company’s common stock. This new authorization replaces all
previous authorizations. AptarGroup may repurchase shares through
the open market, privately negotiated transactions or other
programs, subject to market conditions. The Board also increased
the quarterly cash dividend by 7% to $0.32 per share. The payment
date is November 23, 2016, to stockholders of record as of November
2, 2016.
OUTLOOK
Commenting on AptarGroup’s outlook, Hagge said, “We currently
don’t expect a significant change in the macroeconomic conditions
or the cautionary positions of certain customers as we head into
the fourth quarter, which is traditionally a slower quarter for us.
There is still a lot of geopolitical and economic uncertainty
around the globe and this is causing some customers to reduce
inventory levels, reduce promotional spending and delay projects.
Also, the markets we serve remain competitive and we anticipate
that resin costs will increase over the prior year level. It’s
important that we focus on cost containment as we seek out and
invest in growth opportunities. Our balance sheet remains strong
and although market uncertainties may persist in the near-term, our
long-term outlook is positive. We will continue to be a trusted
partner for our customers as we help them grow their businesses
with affordable innovative dispensing and sealing solutions.”
AptarGroup expects earnings per share for the fourth quarter,
excluding any potential impacts of the timing of costs incurred and
any related insurance reimbursements associated with the Aptar
Annecy facility fire, to be in the range of $0.63 to $0.68 compared
to $0.68 per share reported in the prior year. Adjusting for
special items in the prior year, adjusted earnings per share for
the prior year were approximately $0.67.
OPEN CONFERENCE CALL
There will be a conference call on Friday, October 28, 2016 at
8:00 a.m. Central Time to discuss AptarGroup’s third quarter
results for 2016. 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 on the Investor Relations
page of the website.
AptarGroup, Inc. 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 adjusted earnings per share, adjusted EBIT and
adjusted EBITDA, which exclude the impact of transaction costs and
purchase accounting adjustments that affected inventory values
related to the Mega Airless acquisition, certain items included in
the provision for income taxes (primarily a significant tax refund)
that were recorded in the first quarter of 2016, income from a
change in the method of valuing inventory (from LIFO to FIFO) that
was recorded in the second quarter of 2015, transaction costs
associated with the Mega Airless acquisition and a gain on
insurance recovery recorded in the fourth quarter of 2015.
Comparable 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.
AptarGroup’s management believes it is useful to present these
non-GAAP financial measures 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 AptarGroup’s
core operating performance. 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” 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 ability to integrate the
acquired Mega Airless business; economic conditions worldwide
including 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 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,
2016
2015
2016
2015
Net Sales $ 589,729 $ 586,290 $ 1,792,066 $ 1,770,376 Cost
of Sales (exclusive of depreciation and amortization shown below)
381,041 381,424 1,145,107 1,142,681 Selling, Research &
Development and Administrative 86,695 81,370 285,841 266,869
Depreciation and Amortization
39,667
35,439 115,944
103,664 Operating Income 82,326
88,057 245,174 257,162 Other Income/(Expense): Interest Expense
(8,753 ) (8,948 ) (26,547 ) (25,446 ) Interest Income 715 1,762
1,759 4,598 Equity in Results of Affiliates (15 ) (209 ) (187 )
(735 ) Miscellaneous, net
728
(1,285 ) (995
) (2,752 ) Income
before Income Taxes 75,001 79,377 219,204 232,827 Provision for
Income Taxes
21,901
26,115 63,187
76,925 Net Income $ 53,100 $ 53,262 $ 156,017 $
155,902 Net (Income)/Loss Attributable to Noncontrolling
Interests
(2 )
(15 ) (8
) 55 Net Income
Attributable to AptarGroup, Inc.
$ 53,098
$ 53,247 $
156,009 $ 155,957
Net Income Attributable to AptarGroup, Inc. per Common
Share: Basic
$ 0.84 $
0.85 $ 2.48
$ 2.49 Diluted
$
0.82 $ 0.83
$ 2.40 $
2.41 Average Numbers of Shares
Outstanding: Basic 62,858 62,886 62,878 62,627 Diluted 64,690
64,454 64,989 64,609
AptarGroup, Inc. Condensed
Consolidated Financial Statements (Unaudited) (continued) (In
Thousands)
Consolidated Balance Sheets
September 30,
2016
December 31,
2015
ASSETS Cash and Equivalents $ 432,737 $ 489,901 Short-term
Investments
- 29,816 Total
Cash and Equivalents, and Short-term Investments 432,737 519,717
Receivables, net 463,472 391,571 Inventories 322,028 294,912 Other
Current Assets
83,974
88,794 Total Current Assets 1,302,211 1,294,994 Net
Property, Plant and Equipment 818,030 765,383 Goodwill, net 424,780
310,240 Other Assets
139,861
66,428 Total Assets
$
2,684,882 $ 2,437,045
LIABILITIES AND EQUITY Short-Term Obligations $ 142,012 $
56,967 Accounts Payable and Accrued Liabilities
362,358 354,928 Total Current
Liabilities 504,370 411,895 Long-Term Obligations 776,766 760,848
Deferred Liabilities
117,400
114,596 Total Liabilities 1,398,536 1,287,339
AptarGroup, Inc. Stockholders' Equity 1,286,051 1,149,411
Noncontrolling Interests in Subsidiaries
295
295 Total Equity
1,286,346
1,149,706 Total Liabilities and Equity
$ 2,684,882 $
2,437,045 AptarGroup, Inc. Reconciliation of
EBIT and EBITDA to Net Income (Unaudited) (In Thousands)
Three Months Ended September 30, 2016
Consolidated
Beauty +
Home
Pharma
Food +
Beverage
Corporate
& Other
Net 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 ) 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 8.0 % 28.8
% 12.2 % EBITDA margins (EBITDA / Reported Net Sales) 20.8 % 14.9 %
34.1 % 19.6 % Three Months Ended September 30, 2015
Consolidated
Beauty +
Home
Pharma
Food +
Beverage
Corporate
& Other
Net Interest
Net Sales $ 586,290
321,638 175,427 89,225 - -
Reported net income
$ 53,262 Reported income taxes
26,115
Reported income before income
taxes 79,377 27,961 52,941 13,236
(7,575 ) (7,186 ) Interest expense
8,948 8,948 Interest income (1,762 )
(1,762 )
Earnings before net interest and taxes (EBIT) 86,563 27,961 52,941
13,236 (7,575 ) - Depreciation and amortization 35,439
19,096 9,070
5,465 1,808
- Earnings before net interest, taxes, depreciation
and amortization (EBITDA) $ 122,002 $ 47,057
$ 62,011 $ 18,701 $
(5,767 ) $ - Segment income margins 8.7 % 30.2
% 14.8 % EBITDA margins (EBITDA / Reported Net Sales) 20.8 % 14.6 %
35.3 % 21.0 %
AptarGroup, Inc. Reconciliation of Adjusted
EBIT and Adjusted EBITDA to Net Income (Unaudited) (In
Thousands) Nine Months Ended September 30, 2016
Consolidated
Beauty +
Home
Pharma
Food +
Beverage
Corporate
& Other
Net 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 8.2 % 29.5 % 12.9 % Adjusted EBITDA margins
(Adjusted EBITDA / Reported Net Sales) 20.5 % 14.9 % 34.9 % 19.9 %
Nine Months Ended September 30, 2015 Consolidated
Beauty +
Home
Pharma
Food +
Beverage
Corporate
& Other
Net Interest
Net Sales $ 1,770,376
970,176 537,396 262,804 - -
Reported net income
$ 155,902 Reported income taxes
76,925
Reported income before income
taxes 232,827 78,529 160,404 37,277
(22,535 ) (20,848 ) Adjustments: Change
in inventory valuation methods (from LIFO to FIFO) (7,427 ) (7,427
)
Adjusted earnings before income taxes 225,400
78,529 160,404 37,277 (29,962 ) (20,848 ) Interest expense 25,446
25,446 Interest income (4,598 )
(4,598 ) Adjusted
earnings before net interest and taxes (Adjusted EBIT) 246,248
78,529 160,404 37,277 (29,962 ) - Depreciation and amortization
103,664 56,914
26,699 15,717
4,334 - Adjusted earnings before net
interest, taxes, depreciation and amortization (Adjusted EBITDA) $
349,912 $ 135,443 $ 187,103
$ 52,994 $ (25,628 ) $ -
Segment income margins 8.1 % 29.8 % 14.2 % Adjusted EBITDA
margins (Adjusted EBITDA / Reported Net Sales) 19.8 % 14.0 % 34.8 %
20.2 %
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,
2016
2015
2016
2015
Income before Income Taxes $ 75,001
$ 79,377 $ 219,204 $
232,827
Adjustments:
Transaction costs related to the Mega Airless acquisition 5,640
Purchase accounting adjustments related to Mega Airless inventory
2,577 Change in inventory valuation methods (from LIFO to FIFO)
(7,427 ) Foreign currency effects (1) (1,076 )
(2,624 ) Adjusted Income before Income
Taxes $ 75,001 $ 78,301 $ 227,421
$ 222,776
Provision for
Income Taxes $ 21,901 $ 26,115
$ 63,187 $ 76,925
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
2,923 Transaction costs related to the Mega Airless acquisition
1,483 Purchase accounting adjustments related to Mega Airless
inventory 859 Change in inventory valuation methods (from LIFO to
FIFO) (2,599 ) Foreign currency effects (1)
(581 ) (1,105 ) Adjusted Provision for
Income Taxes $ 21,901 $ 25,534 $ 68,452
$ 73,221
Net
(Income)/Loss Attributable to Noncontrolling Interests $
(2 ) $ (15 ) $ (8
) $ 55 Net Income Attributable to
AptarGroup, Inc. $ 53,098 $ 53,247
$ 156,009 $ 155,957
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
(2,923 ) Transaction costs related to the Mega Airless acquisition
4,157 Purchase accounting adjustments related to Mega Airless
inventory 1,718 Change in inventory valuation methods (from LIFO to
FIFO) (4,828 ) Foreign currency effects (1)
(495 ) (1,519 ) Adjusted Net Income
Attributable to AptarGroup, Inc. $ 53,098 $ 52,752
$ 158,961 $ 149,610
Average Number of Diluted Shares Outstanding 64,690
64,454 64,989 64,609 Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $
0.82 $ 0.83 $ 2.40 $
2.41
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
(0.04 ) Transaction costs related to the Mega Airless acquisition
0.06 Purchase accounting adjustments related to Mega Airless
inventory 0.03 Change in inventory valuation methods (from LIFO to
FIFO) (0.07 ) Foreign currency effects (1)
(0.01 ) (0.02 ) Adjusted Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $ 0.82
$ 0.82 $ 2.45 $ 2.32
(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. (2)
Items included in the Provision for Income Taxes primarily reflect
the effect of a French income tax refund.
AptarGroup, Inc.
Reconciliation of Adjusted Earnings Per Diluted Share
(Unaudited) ($ in thousands, except per share
information) Three Months Ended December 31,
Expected
2016
2015
Income before Income Taxes $ 61,744
Adjustments:
Costs associated with Mega Airless acquisition 1,892 Gain on
insurance recovery (2,900 ) Adjusted Income before Income
Taxes $ 60,736
Provision for Income Taxes
$ 18,351
Adjustments:
Costs associated with Mega Airless acquisition 354 Gain on
insurance recovery (986 ) Adjusted Provision for Income
Taxes $ 17,719
Net (Income)/Loss Attributable to
Noncontrolling Interests $ (2 )
Net Income Attributable to AptarGroup, Inc. $
43,391
Adjustments:
Costs associated with Mega Airless acquisition 1,538 Gain on
insurance recovery (1,914 ) Adjusted Net Income Attributable
to AptarGroup, Inc. $ 43,015
Average Number of
Diluted Shares Outstanding 64,266 Net Income
Attributable to AptarGroup, Inc. Per Diluted Share (1) $ 0.63 -
$0.68
$ 0.68
Adjustments:
Costs associated with Mega Airless acquisition 0.02 Gain on
insurance recovery (0.03 ) Adjusted Net Income
Attributable to AptarGroup, Inc. Per Diluted Share (1) $ 0.63 -
$0.68 $ 0.67 (1) AptarGroup’s expected earnings per
share range for the fourth quarter of 2016 excludes any potential
effects of the timing of costs incurred and the related insurance
reimbursements associated with the Aptar Annecy facility fire,
which amounts cannot be reasonably estimated.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027006894/en/
AptarGroup, Inc.Matthew DellaMaria815-477-0424
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