AptarGroup, Inc. (NYSE:ATR) today announced record fourth
quarter and annual earnings for 2016.
Fourth Quarter Summary
- Reported sales declined 1%; sales
growth in Pharma and Food + Beverage offset by decline in Beauty +
Home and the impact of the stronger U.S. dollar
- Segment income margins improved in
Pharma and Beauty + Home
- Reported earnings per share of $0.77
vs. $0.68 in the prior year (+ 13%)
- Comparable adjusted earnings per
share of $0.69 vs. $0.65 in the prior year (+ 6%)
Annual Summary
- Reported sales increased 1%
- Reported annual earnings per share
of $3.17 vs. $3.09 in the prior year (+ 3%)
- Comparable adjusted annual earnings
per share of $3.13 vs. $2.97 in the prior year (+ 5%)
- Reported annual net income (9% of
net sales) increased to $206 million (+ 3%)
- Adjusted annual EBITDA (20% of net
sales) increased to $476 million (+ 5%)
- Paid increased annual dividend for
the 23rd consecutive year (current annualized
dividend is $1.28 per share).
CEO Transition
As previously reported, Stephan B. Tanda was appointed President
and CEO effective February 1, 2017, succeeding Stephen J. Hagge who
had earlier announced his intention to retire after 35 years of
distinguished service. Mr. Hagge will remain with AptarGroup until
the end of March to facilitate a smooth transition and will
continue to serve on AptarGroup’s Board of Directors.
Fourth Quarter Results
For the quarter ended December 31, 2016, reported sales
decreased 1% to $539 million from $547 million a year ago.
Excluding the negative impact from changes in currency exchange
rates and the positive impact from acquisitions, core sales
decreased by 2%.
Fourth Quarter Segment Sales Analysis (Change Over Prior
Year) Beauty +
Food + Total Home
Pharma
Beverage AptarGroup Core Sales Growth (7%) 2% 7% (2%)
Acquisitions 5% 2% 0% 3% Currency Effects (1) (2%) (3%)
(2%) (2%) Total Reported Sales Growth (4%) 1%
5% (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 said, “Our Beauty +
Home segment continued to be affected by challenging conditions
across each of the markets served. Our Pharma segment had another
good quarter with solid growth in sales to the consumer health care
and injectables markets being partially offset by weaker demand
from the prescription drug market where we experienced year-end
destocking among certain customers. Our Food + Beverage segment
reported excellent growth, in part due to higher demand from the
Asian beverage market. Despite some of the challenges we faced, we
expanded margins in two of our three segments over the prior year,
achieved an operating income margin of approximately 12% and an
EBITDA margin of 20% and reported record earnings per share.”
AptarGroup reported earnings per share of $0.77 compared to
$0.68 a year ago. Comparable adjusted earnings per share grew 6% to
$0.69 compared to $0.65 a year ago.
Annual Results
For the year ended December 31, 2016, reported sales increased
1% to $2.33 billion from $2.32 billion a year ago. Excluding the
negative impact from changes in currency exchange rates and the
positive impact from acquisitions, core sales were even with the
prior year.
Annual Segment Sales Analysis (Change Over Prior
Year) Beauty + Food + Total Home
Pharma Beverage AptarGroup Core Sales Growth
(2%) 5% 1% 0% Acquisitions 4% 1% 0% 3% Currency Effects (1) (3%)
(2%) (2%) (2%) Total Reported Sales Growth
(1%) 4% (1%) 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, “It was a difficult
year to deliver growth in our Beauty + Home segment due to weak
market conditions. We had excellent performance from the acquired
Mega Airless business that will continue to play an important part
of this segment’s growth and we deployed new technologies that have
much potential. Our Pharma segment had another excellent year,
reporting growth across each market. Our Food + Beverage segment
performed well despite facing challenging demand in the Asian
beverage market. All things considered, we did an excellent job of
maintaining or growing adjusted EBITDA margins across our business
segments, achieving a consolidated operating income margin of 13%
and adjusted EBITDA margin of 20% and reporting record annual
earnings per share.”
For the year 2016, AptarGroup reported earnings per share of
$3.17 compared to $3.09 a year ago. Comparable adjusted earnings
per share grew 5% to $3.13 compared to $2.97 for 2015.
Outlook
Commenting on AptarGroup’s outlook, Stephan Tanda said, “As I
look to 2017, I am excited by the opportunities to develop new
business, execute on customer projects and focus on growth. Similar
to many companies, we will face some degree of uncertainty as
various political environments shift and settle, but we will remain
focused on our customers and end consumers in order to drive new
technologies to market. I am particularly encouraged by the
opportunities we see to further penetrate and grow in relatively
newer categories such as color cosmetics, sampling and promotion,
facial skin care, pain management, ophthalmics, dermal treatments
and infant nutrition, among others. We will continue to seek new
business and invest in profitable growth opportunities, while at
the same time manage our cost structure. We have an excellent
balance sheet that allows us to pursue our balanced capital
allocation strategy.”
AptarGroup expects earnings per share for the first 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 $0.72 to $0.77 compared
to $0.67 per share reported in the prior year. Our guidance range
does not include any potential impact from our anticipated adoption
of the new accounting standard for share-based compensation.
Adjusting for special items in the prior year, comparable adjusted
earnings per share for the prior year were approximately $0.74.
Open Conference Call
There will be a conference call on Friday, February 10, 2017 at
8:00 a.m. Central Time to discuss AptarGroup’s fourth quarter and
annual 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 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
was recorded in the first quarter of 2016 and certain adjustments
related to income tax incentives recorded in the fourth 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 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 AptarGroup’s core operating
performance. These non-GAAP financial measures also provide
investors with certain information used by AptarGroup’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” 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; 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 Year Ended December 31, December
31,
2016
2015
2016
2015
Net Sales $ 538,868 $ 546,773 $ 2,330,934 $ 2,317,149 Cost
of Sales (exclusive of depreciation and amortization shown below)
(1) 352,963 359,969 1,498,070 1,502,650 Selling, Research &
Development and Administrative (2) 81,721 84,592 367,562 351,461
Depreciation and Amortization
38,858
35,229 154,802
138,893 Operating Income 65,326
66,983 310,500 324,145 Other Income/(Expense): Interest Expense
(8,690 ) (9,169 ) (35,237 ) (34,615 ) Interest Income 884 998 2,643
5,596 Equity in Results of Affiliates (4 ) 17 (191 ) (718 )
Miscellaneous, net (3)
3,777
2,915 2,782
163 Income before Income Taxes 61,293 61,744
280,497 294,571 Provision for Income Taxes
11,706 18,351
74,893 95,276 Net
Income $ 49,587 $ 43,393 $ 205,604 $ 199,295 Net
(Income)/Loss Attributable to Noncontrolling Interests
(6 ) (2
) (14 )
53 Net Income Attributable to AptarGroup, Inc.
$ 49,581 $
43,391 $ 205,590
$ 199,348 Net Income
Attributable to AptarGroup, Inc. per Common Share: Basic
$ 0.79 $
0.69 $ 3.27
$ 3.19 Diluted
$
0.77 $ 0.68
$ 3.17 $
3.09 Average Numbers of Shares
Outstanding: Basic 62,586 62,461 62,804 62,585 Diluted 64,220
64,266 64,849 64,492 Notes to the Condensed
Consolidated Financial Statements: (1) Cost of Sales
included approximately $2.6 million of purchase accounting
adjustments related to the Mega Airless acquisition for the year
ended December 31, 2016 and approximately $7.4 million of income
related to a change in inventory valuation methodology recorded in
the second quarter of 2015 for the year ended December 31, 2015.
(2) Selling, Research & Development and Administrative
included approximately $5.6 million and $1.9 million of costs
related to the Mega Airless acquisition for the year ended December
31, 2016 and the quarter and year ended December 31, 2015,
respectively. (3) Miscellaneous, net included approximately
$2.9 million of gain on an insurance recovery for the quarter and
year ended December 31, 2015.
AptarGroup, Inc. Condensed
Consolidated Financial Statements (Unaudited) (continued) (In
Thousands)
Consolidated Balance Sheets
December 31, 2016 December 31, 2015
ASSETS Cash and Equivalents $ 466,287 $ 489,901 Short-term
Investments
- 29,816 Total
Cash and Equivalents, and Short-term Investments 466,287 519,717
Receivables, net 433,127 391,571 Inventories 296,914 294,912 Other
Current Assets
73,842
88,794 Total Current Assets 1,270,170 1,294,994 Net
Property, Plant and Equipment 784,321 765,383 Goodwill, net 407,522
310,240 Other Assets
144,772
66,428 Total Assets
$
2,606,785 $ 2,437,045
LIABILITIES AND EQUITY Short-Term Obligations $ 173,816 $
56,967 Accounts Payable and Accrued Liabilities
369,139 354,928 Total Current
Liabilities 542,955 411,895 Long-Term Obligations 772,737 760,848
Deferred Liabilities
116,851
114,596 Total Liabilities 1,432,543 1,287,339
AptarGroup, Inc. Stockholders' Equity 1,173,950 1,149,411
Noncontrolling Interests in Subsidiaries
292
295 Total Equity
1,174,242
1,149,706 Total Liabilities and Equity
$ 2,606,785 $
2,437,045 AptarGroup, Inc. Reconciliation of
Adjusted EBIT and Adjusted EBITDA to Net Income (Unaudited) (In
Thousands) Three Months
Ended December 31, 2016 Beauty + Food + Corporate
Consolidated Home Pharma Beverage &
Other Net Interest
Net Sales $ 538,868
290,399 176,110 72,359 - -
Reported net income
$ 49,587 Reported income taxes
11,706
Reported income before income
taxes 61,293 21,114 52,169 4,720
(8,904 ) (7,806 ) Adjustments: None
Adjusted earnings before income taxes 61,293 21,114
52,169 4,720 (8,904 ) (7,806 ) Interest expense 8,690 8,690
Interest income (884 )
(884 ) Adjusted earnings before
net interest and taxes (Adjusted EBIT) 69,099 21,114 52,169 4,720
(8,904 ) - Depreciation and amortization 38,858
21,123 9,974
5,931 1,830 -
Adjusted earnings before net interest, taxes, depreciation
and amortization (Adjusted EBITDA) $ 107,957 $ 42,237
$ 62,143 $ 10,651 $
(7,074 ) $ - Segment income margins 7.3 % 29.6
% 6.5 % Adjusted EBITDA margins (Adjusted EBITDA / Reported Net
Sales) 20.0 % 14.5 % 35.3 % 14.7 % Three Months Ended
December 31, 2015 Beauty + Food + Corporate Consolidated
Home Pharma Beverage & Other
Net Interest
Net Sales $ 546,773 302,770
174,824 69,179 - -
Reported net income $
43,393 Reported income taxes 18,351
Reported income before income taxes
61,744 20,178 50,105 5,454
(5,822 ) (8,171 ) Adjustments:
Transaction costs related to the Mega Airless acquisition 1,892
1,892 Gain on insurance recovery (2,900 )
(2,900 )
Adjusted earnings before income taxes 60,736 20,178 50,105 5,454
(6,830 ) (8,171 ) Interest expense 9,169 9,169 Interest income
(998 )
(998 ) Adjusted earnings before net interest
and taxes (Adjusted EBIT) 68,907 20,178 50,105 5,454 (6,830 ) -
Depreciation and amortization 35,229
18,375 9,309 5,630
1,915 - Adjusted earnings
before net interest, taxes, depreciation and amortization (Adjusted
EBITDA) $ 104,136 $ 38,553 $ 59,414
$ 11,084 $ (4,915 ) $ -
Segment income margins 6.7 % 28.7 % 7.9 % Adjusted EBITDA
margins (Adjusted EBITDA / Reported Net Sales) 19.0 % 12.7 % 34.0 %
16.0 %
AptarGroup, Inc. Reconciliation of Adjusted EBIT
and Adjusted EBITDA to Net Income (Unaudited) (In Thousands)
Year Ended December 31,
2016 Beauty + Food + Corporate & Consolidated
Home Pharma Beverage Other Net Interest
Net Sales $ 2,330,934 1,261,086 741,473
328,375 - -
Reported net income $
205,604 Reported income taxes 74,893
Reported income before income taxes
280,497 100,569 219,039 37,697
(44,214 ) (32,594 ) 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 288,714 102,720 219,465
37,697 (38,574 ) (32,594 ) Interest expense 35,237 35,237 Interest
income (2,643 )
(2,643 ) Adjusted earnings before net
interest and taxes (Adjusted EBIT) 321,308 102,720 219,465 37,697
(38,574 ) - Depreciation and amortization 154,802
84,273 39,776
23,891 6,862 -
Adjusted earnings before net interest, taxes, depreciation
and amortization (Adjusted EBITDA) $ 476,110 $
186,993 $ 259,241 $ 61,588
$ (31,712 ) $ - Segment income margins
8.0 % 29.5 % 11.5 % Adjusted EBITDA margins (Adjusted EBITDA /
Reported Net Sales) 20.4 % 14.8 % 35.0 % 18.8 % Year Ended
December 31, 2015 Beauty + Food + Corporate &
Consolidated Home Pharma Beverage Other
Net Interest
Net Sales $ 2,317,149
1,272,946 712,220 331,983 - -
Reported net income
$ 199,295 Reported income taxes
95,276
Reported income before income
taxes 294,571 98,707 210,509 42,731
(28,357 ) (29,019 ) Adjustments: Change
in inventory valuation methods (from LIFO to FIFO) (7,427 ) (7,427
) Transaction costs related to the Mega Airless acquisition 1,892
1,892 Gain on insurance recovery (2,900 )
(2,900 )
Adjusted earnings before income taxes 286,136 98,707 210,509 42,731
(36,792 ) (29,019 ) Interest expense 34,615 34,615 Interest income
(5,596 )
(5,596 ) Adjusted earnings before net interest
and taxes (Adjusted EBIT) 315,155 98,707 210,509 42,731 (36,792 ) -
Depreciation and amortization 138,893
75,289 36,008 21,347
6,249 - Adjusted
earnings before net interest, taxes, depreciation and amortization
(Adjusted EBITDA) $ 454,048 $ 173,996 $
246,517 $ 64,078 $ (30,543 ) $ -
Segment income margins 7.8 % 29.6 % 12.9 % Adjusted
EBITDA margins (Adjusted EBITDA / Reported Net Sales) 19.6 % 13.7 %
34.6 % 19.3 %
AptarGroup, Inc. Reconciliation of Adjusted
Earnings Per Diluted Share (Unaudited) ($ in thousands,
except per share information) Three Months Ended
Year Ended December 31, December 31,
2016
2015
2016
2015
Income before Income Taxes $ 61,293
$ 61,744 $ 280,497 $
294,571
Adjustments:
Transaction costs related to the Mega Airless acquisition 1,892
5,640 1,892 Purchase accounting adjustments related to Mega Airless
inventory 2,577 Change in inventory valuation methods (from LIFO to
FIFO) (7,427 ) Gain on insurance recovery (2,900 ) (2,900 ) Foreign
currency effects (1) (704 )
(3,572 ) Adjusted Income before Income Taxes $ 61,293
$ 60,032 $ 288,714 $
282,564
Provision for Income Taxes
$ 11,706 $ 18,351 $
74,893 $ 95,276
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
5,345 8,268 Transaction costs related to the Mega Airless
acquisition 354 1,483 354 Purchase accounting adjustments related
to Mega Airless inventory 859 Change in inventory valuation methods
(from LIFO to FIFO) (2,599 ) Gain on insurance recovery (986 ) (986
) Foreign currency effects (1) 400
(706 ) Adjusted Provision for Income
Taxes $ 17,051 $ 18,119 $ 85,503
$ 91,339
Net (Income)/Loss
Attributable to Noncontrolling Interests $ (6
) $ (2 ) $ (14 )
$ 53 Net Income Attributable to AptarGroup,
Inc. $ 49,581 $ 43,391 $
205,590 $ 199,348
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
(5,345 ) (8,268 ) Transaction costs related to the Mega Airless
acquisition 1,538 4,157 1,538 Purchase accounting adjustments
related to Mega Airless inventory 1,718 Change in inventory
valuation methods (from LIFO to FIFO) (4,828 ) Gain on insurance
recovery (1,914 ) (1,914 ) Foreign currency effects (1)
(1,104 ) (2,866 )
Adjusted Net Income Attributable to AptarGroup, Inc. $ 44,236
$ 41,911 $ 203,197 $
191,278
Average Number of Diluted Shares
Outstanding 64,220 64,266 64,849
64,492 Net Income Attributable to AptarGroup, Inc.
Per Diluted Share $ 0.77 $ 0.68
$ 3.17 $ 3.09
Adjustments:
Net effect of items included in the Provision for Income Taxes (2)
(0.08 ) (0.13 ) Transaction costs related to the Mega Airless
acquisition 0.02 0.06 0.02 Purchase accounting adjustments related
to Mega Airless inventory 0.03 Change in inventory valuation
methods (from LIFO to FIFO) (0.07 ) Gain on insurance recovery
(0.03 ) (0.03 ) Foreign currency effects (1)
(0.02 ) (0.04 ) Adjusted Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $ 0.69
$ 0.65 $ 3.13 $ 2.97
(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 release of income tax uncertainties, the
effect of a French income tax refund and adjustments related to
certain tax incentives.
AptarGroup, Inc. Reconciliation
of Adjusted Earnings Per Diluted Share (Unaudited) ($ in
thousands, except per share information) Three Months
Ended March 31,
Expected
2017
2016
Income before Income Taxes $ 59,845
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) (2,200 ) Adjusted Income
before Income Taxes $ 65,862
Provision for
Income Taxes $ 15,979
Adjustments:
Transaction costs related to the Mega Airless acquisition 1,483
Purchase accounting adjustments related to Mega Airless inventory
859 Foreign currency effects (1) (588 ) Adjusted Provision
for Income Taxes $ 17,733
Net (Income)/Loss
Attributable to Noncontrolling Interests $ (3
) Net Income Attributable to AptarGroup, Inc.
$ 43,863
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) (1,612 ) Adjusted Net
Income Attributable to AptarGroup, Inc. $ 48,126
Average Number of Diluted Shares Outstanding 65,063
Net Income Attributable to AptarGroup, Inc. Per Diluted
Share (2) $0.72 - $0.77
$ 0.67
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) (0.02 )
Adjusted Net Income Attributable to AptarGroup, Inc. Per Diluted
Share (2) $0.72 - $0.77 $ 0.74 (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 December 31, 2016. (2) AptarGroup’s
expected earnings per share range for the first quarter of 2017
excludes any potential impacts from our anticipated adoption of the
new accounting standard for share-based compensation and 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/20170209006330/en/
Matthew DellaMariaAptarGroup, Inc.815-477-0424
AptarGroup (NYSE:ATR)
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