AptarGroup, Inc. (NYSE:ATR) today announced record quarterly net
income and earnings per share. The Company also announced that it
is expanding its Congers, New York facility to include elastomer
component capacity for the U.S. injectables market.
Second Quarter 2016 Summary
- Reported sales increased 4% to $620
million
- Changes in foreign currency exchange
rates had a negative impact of 2% 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 rose to
a quarterly record of $0.91 compared to $0.90 reported in the prior
year
- Excluding the effects of a change to
the FIFO inventory valuation method ($0.08 per share), and
adjusting to a comparable foreign currency environment ($0.01),
prior year adjusted earnings per share were $0.81
- Operating margins were strong across
each business segment
- Reported pre-tax earnings of $84
million were approximately 14% of net sales
- EBITDA of $133 million was
approximately 22% of net sales
SECOND QUARTER RESULTS
For the quarter ended June 30, 2016, reported sales increased 4%
to $620 million from $594 million a year ago. Excluding the
negative impact from changes in currency exchange rates and the
positive impact from acquisitions, core sales increased by
approximately 3%.
Second Quarter Segment Sales Analysis (Change Over
Prior Year) Beauty + Food + Total Home
Pharma Beverage AptarGroup Core Sales Growth 4
% 3 % (1 %) 3 % Acquisitions 5 % 1 % -- 3 % Currency Effects (1) (2
%) -- (2 %) (2 %) Total Reported Sales
Growth 7 % 4 % (3 %) 4 %
(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, “I’m pleased that we achieved record earnings that were
substantially driven by strong operating margins across each
segment. The recently acquired Mega Airless business also
contributed to our reported results. Our consolidated reported
pre-tax earnings margin was approximately 14%, and our consolidated
EBITDA margin reached approximately 22% in the quarter.”
Hagge continued, “We continue to benefit from our diversified
business model that serves eight different markets with a broad
portfolio of dispensing and sealing solutions across many different
geographies. This diversification consistently supports our overall
growth even though we may face softness in one market or region.
Our Beauty + Home segment posted core sales growth primarily due to
increased demand from the beauty market. Our Pharma segment also
grew core sales due to increased demand across each market. Core
sales declined in our Food + Beverage segment due in part to
decreased custom tooling sales and the negative effects of passing
through lower resin costs to our customers. In addition, our Food +
Beverage segment was negatively impacted by a decrease in demand
from food and beverage customers in Asia.”
AptarGroup reported earnings per share rose 1% to $0.91 compared
to $0.90 per share a year ago. Prior year second quarter earnings
per share included a positive impact of approximately $0.08
(after-tax) related to a change in accounting for certain
inventories from the last-in, first-out (LIFO) method to the
first-in, first-out (FIFO) method. Excluding the effect of the
inventory valuation method change, and adjusting to achieve a
comparable foreign exchange rate environment, comparable prior year
second quarter earnings per share were $0.81. Taking into account
these adjustments, current year earnings per share increased 12%
over the prior year adjusted earnings per share.
YEAR-TO-DATE RESULTS
For the six months ended June 30, 2016, reported sales increased
2% to $1.20 billion from $1.18 billion a year ago. Excluding the
negative impact from changes in currency exchange rates and the
positive impact from acquisitions, core sales increased by
approximately 2%.
Six Months Year to Date Segment Sales Analysis
(Change Over Prior Year) Beauty +
Pharma Food + Total Home Beverage
AptarGroup Core Sales Growth 1 % 4 % 3 % 2 % Acquisitions 4
% 1 % -- 2 % Currency Effects (1) (4 %) (2 %) (3 %)
(2 %) Total Reported Sales Growth 1 % 3 % 0 %
2 %
(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 continue to
focus on our customers’ needs and end consumer behavior in order to
offer the best dispensing and sealing solutions worldwide. Our
ability to execute on this strategy has delivered core sales growth
and strong margins across each of our business segments through the
first half of this year. This achievement is despite some lingering
softness in certain markets such as the U.S. personal care market,
and recently reduced demand from the food and beverage markets in
Asia that we saw toward the end of the second quarter.”
For the six months year to date, AptarGroup reported earnings
per share decreased approximately 1% to $1.58 compared to $1.59 per
share a year ago. Comparable adjusted earnings per share increased
9% to $1.63 compared to $1.50 for 2015. Adjustments to reported
results necessary to arrive at comparable adjusted earnings per
share are set forth in the accompanying tables.
EXPANDING CONGERS, NEW YORK FACILITY TO INCLUDE ELASTOMER
COMPONENT CAPACITY
AptarGroup is investing in elastomer component capacity at its
facility in Congers, New York. The investment is expected to total
approximately $10 million and will provide an array of processing,
finishing and product testing capabilities to better serve
customers in the U.S. injectables market. It is expected that the
new capacity will be installed by the end of 2016 and will be
validated and ready for commercial supply during the first half of
2017.
OUTLOOK
Commenting on AptarGroup’s outlook, Hagge said, “Looking to the
third quarter, while we expect continued weakness in the Asian
beverage market, we are expecting growth in other markets and our
level of project dialog with our customers across each segment
remains high. We’re also very excited to be investing in our
elastomer capacity for the U.S. market and look forward to that
capacity being validated by customers in the first half of
2017.”
AptarGroup expects earnings per share for the third 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 $0.79 to $0.84 compared
to $0.83 per share reported in the prior year. Assuming a
comparable foreign currency exchange rate environment, comparable
earnings per share for the prior year were approximately $0.81.
CASH DIVIDEND
As previously reported, the Board declared on July 13, 2016 a
quarterly dividend of $0.30 per share, payable August 17, 2016 to
shareholders of record as of July 27, 2016.
OPEN CONFERENCE CALL
There will be a conference call on Friday, July 29, 2016 at 8:00
a.m. Central Time to discuss AptarGroup’s second 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 recently closed 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, and income from a change in the method of valuing inventory
(from LIFO to FIFO) that was recorded in the second 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 Six Months Ended June 30, June 30,
2016
2015
2016
2015
Net Sales $ 619,999 $ 594,275 $ 1,202,337 $ 1,184,086 Cost
of Sales (exclusive of depreciation and amortization shown below)
389,863 375,278 764,066 761,257 Selling, Research & Development
and Administrative 96,131 89,312 199,146 185,499 Depreciation and
Amortization
40,390
34,165 76,277
68,225 Operating Income 93,615 95,520 162,848
169,105 Other Income/(Expense): Interest Expense (9,203 ) (9,195 )
(17,794 ) (16,498 ) Interest Income 460 1,105 1,044 2,836 Equity in
Results of Affiliates (51 ) (407 ) (172 ) (526 ) Miscellaneous, net
(463 ) (1,268
) (1,723 )
(1,467 ) Income before Income Taxes
84,358 85,755 144,203 153,450 Provision for Income Taxes
25,307 28,214
41,286 50,810 Net
Income $ 59,051 $ 57,541 $ 102,917 $ 102,640 Net
(Income)/Loss Attributable to Noncontrolling Interests
(3 ) (2
) (6 )
70 Net Income Attributable to AptarGroup, Inc.
$ 59,048 $
57,539 $ 102,911
$ 102,710 Net Income
Attributable to AptarGroup, Inc. per Common Share: Basic
$ 0.94 $
0.92 $ 1.64
$ 1.64 Diluted
$
0.91 $ 0.90
$ 1.58 $
1.59 Average Numbers of Shares
Outstanding: Basic 63,053 62,697 62,888 62,496 Diluted 64,785
64,276 65,063 64,603
AptarGroup, Inc. Condensed
Consolidated Financial Statements (Unaudited) (continued) (In
Thousands)
Consolidated Balance Sheets
June 30,
2016
December 31,
2015
ASSETS Cash and Equivalents $ 361,664 $ 489,901 Short-term
Investments
- 29,816 Total
Cash and Equivalents, and Short-term Investments 361,664 519,717
Receivables, net 488,591 391,571 Inventories 325,724 294,912 Other
Current Assets
89,264
88,794 Total Current Assets 1,265,243 1,294,994 Net
Property, Plant and Equipment 816,438 765,383 Goodwill, net 421,745
310,240 Other Assets
143,496
66,428 Total Assets
$
2,646,922 $ 2,437,045
LIABILITIES AND EQUITY Short-Term Obligations $ 118,952 $
56,967 Accounts Payable and Accrued Liabilities
381,876 354,928 Total Current
Liabilities 500,828 411,895 Long-Term Obligations 771,695 760,848
Deferred Liabilities
115,807
114,596 Total Liabilities 1,388,330 1,287,339
AptarGroup, Inc. Stockholders' Equity 1,258,298 1,149,411
Noncontrolling Interests in Subsidiaries
294
295 Total Equity
1,258,592
1,149,706 Total Liabilities and Equity
$ 2,646,922 $
2,437,045 AptarGroup, Inc. Reconciliation of
Adjusted EBIT and Adjusted EBITDA to Net Income (Unaudited) (In
Thousands) Three Months
Ended June 30, 2016 Beauty + Food + Corporate Consolidated
Home Pharma Beverage & Other
Net Interest
Net Sales $ 619,999 340,321
191,034 88,644 - -
Reported net income $
59,051 Reported income taxes 25,307
Reported income before income taxes
84,358 30,547 58,597 13,593
(9,636 ) (8,743 ) Adjustments: None
Adjusted earnings before income taxes 84,358 30,547
58,597 13,593 (9,636 ) (8,743 ) Interest expense 9,203 9,203
Interest income (460 )
(460 ) Adjusted earnings before
net interest and taxes (Adjusted EBIT) 93,101 30,547 58,597 13,593
(9,636 ) (0 ) Depreciation and amortization 40,390
22,239 10,360
6,072 1,719 -
Adjusted earnings before net interest, taxes, depreciation
and amortization (Adjusted EBITDA) $ 133,491 $ 52,786
$ 68,957 $ 19,665 $
(7,917 ) $ (0 ) Segment income margins 9.0 % 30.7 %
15.3 % Adjusted EBITDA margins (Adjusted EBITDA / Reported Net
Sales) 21.5 % 15.5 % 36.1 % 22.2 % Three Months Ended June
30, 2015 Beauty + Food +
Corporate
Consolidated Home Pharma Beverage
& Other
Net Interest
Net Sales $ 594,275
319,124 183,300 91,851 - -
Reported net income
$ 57,541 Reported income taxes
28,214
Reported income before income
taxes 85,755 27,193 55,462 14,991
(3,801 ) (8,090 ) Adjustments: Change
in inventory valuation methods (from LIFO to FIFO) (7,427 ) (7,427
)
Adjusted earnings before income taxes 78,328 27,193
55,462 14,991 (11,228 ) (8,090 ) Interest expense 9,195 9,195
Interest income (1,105 )
(1,105 ) Adjusted earnings
before net interest and taxes (Adjusted EBIT) 86,418 27,193 55,462
14,991 (11,228 ) - Depreciation and amortization 34,165
18,790 8,856
5,121 1,398
- Adjusted earnings before net interest, taxes, depreciation
and amortization (Adjusted EBITDA) $ 120,583 $ 45,983
$ 64,318 $ 20,112 $
(9,830 ) $ - Segment income margins 8.5 % 30.3
% 16.3 % Adjusted EBITDA margins (Adjusted EBITDA / Reported Net
Sales) 20.3 % 14.4 % 35.1 % 21.9 %
AptarGroup, Inc.
Reconciliation of Adjusted EBIT and Adjusted EBITDA to Net
Income (Unaudited) (In Thousands)
Six Months Ended June 30, 2016 Beauty + Food +
Corporate
Consolidated Home Pharma Beverage &
Other
Net Interest
Net Sales $ 1,202,337 654,657 374,169 173,511
- -
Reported net income $ 102,917
Reported income taxes 41,286
Reported income before income taxes 144,203
54,075 111,833 22,876 (27,831 )
(16,750 ) 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
152,420 56,226 112,259 22,876 (22,191 ) (16,750 ) Interest expense
17,794 17,794 Interest income (1,044 )
(1,044 ) Adjusted
earnings before net interest and taxes (Adjusted EBIT) 169,170
56,226 112,259 22,876 (22,191 ) - Depreciation and amortization
76,277 41,497
19,617 11,896 3,267
- Adjusted earnings before net
interest, taxes, depreciation and amortization (Adjusted EBITDA) $
245,447 $ 97,723 $ 131,876
$ 34,772 $ (18,924 ) $ -
Segment income margins 8.3 % 29.9 % 13.2 % Adjusted EBITDA margins
(Adjusted EBITDA / Reported Net Sales) 20.4 % 14.9 % 35.2 % 20.0 %
Six Months Ended June 30, 2015 Beauty + Food +
Corporate Consolidated Home Pharma Beverage
& Other Net Interest
Net Sales $
1,184,086 648,539 361,969 173,578 - -
Reported net
income $ 102,640 Reported income taxes
50,810
Reported income before income
taxes 153,450 50,569 107,463 24,041
(14,961 ) (13,662 ) Adjustments: Change
in inventory valuation methods (from LIFO to FIFO) (7,427 ) (7,427
)
Adjusted earnings before income taxes 146,023 50,569
107,463 24,041 (22,388 ) (13,662 ) Interest expense 16,498 16,498
Interest income (2,836 )
(2,836 ) Adjusted earnings
before net interest and taxes (Adjusted EBIT) 159,685 50,569
107,463 24,041 (22,388 ) - Depreciation and amortization
68,225 37,818 17,629
10,252 2,526
- Adjusted earnings before net interest,
taxes, depreciation and amortization (Adjusted EBITDA) $ 227,910
$ 88,387 $ 125,092 $
34,293 $ (19,862 ) $ - Segment
income margins 7.8 % 29.7 % 13.9 % Adjusted EBITDA margins
(Adjusted EBITDA / Reported Net Sales) 19.2 % 13.6 % 34.6 % 19.8 %
AptarGroup, Inc. Reconciliation of Adjusted Earnings Per
Diluted Share (Unaudited) ($ in thousands, except per share
information) Three Months Ended Six Months
Ended June 30, June 30,
2016
2015
2016
2015
Income before Income Taxes $ 84,358
$ 85,755 $ 144,203 $
153,450
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 ) (7,427 ) Foreign currency effects (1)
(777 ) (1,548 ) Adjusted Income before
Income Taxes $ 84,358 $ 77,551 $
152,420 $ 144,475
Provision
for Income Taxes $ 25,307 $ 28,214
$ 41,286 $ 50,810
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 ) (2,599 ) Foreign currency effects (1)
(243 ) (524 ) Adjusted Provision
for Income Taxes $ 25,307 $ 25,372 $
46,551 $ 47,687
Net
(Income)/Loss Attributable to Noncontrolling Interests $
(3 ) $ (2 ) $ (6
) $ 70 Net Income Attributable to
AptarGroup, Inc. $ 59,048 $ 57,539
$ 102,911 $ 102,710
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 ) (4,828 ) Foreign currency effects (1)
(534 ) (1,024 ) Adjusted Net
Income Attributable to AptarGroup, Inc. $ 59,048 $
52,177 $ 105,863 $ 96,858
Average Number of Diluted Shares Outstanding 64,785
64,276 65,063 64,603 Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $
0.91 $ 0.90 $ 1.58 $
1.59
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) (0.08 ) (0.07 ) Foreign currency effects (1)
(0.01 ) (0.02 ) Adjusted Net
Income Attributable to AptarGroup, Inc. Per Diluted Share $ 0.91
$ 0.81 $ 1.63 $ 1.50
(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 September 30,
Expected
2016
2015
Income before Income Taxes $ 79,377
Adjustments:
Foreign currency effects (1) (1,374 ) Adjusted Income before
Income Taxes $ 78,003
Provision for Income
Taxes $ 26,115
Adjustments:
Foreign currency effects (1) (452 ) Adjusted Provision for
Income Taxes $ 25,663
Net (Income)/Loss
Attributable to Noncontrolling Interests $ (15
) Net Income Attributable to AptarGroup, Inc.
$ 53,247
Adjustments:
Foreign currency effects (1) (922 ) Adjusted Net Income
Attributable to AptarGroup, Inc. $ 52,325
Average
Number of Diluted Shares Outstanding 64,454
Net Income Attributable to AptarGroup, Inc. Per Diluted Share
(2) $0.79 - $0.84
$ 0.83
Adjustments:
Foreign currency effects (1) (0.02 ) Adjusted
Net Income Attributable to AptarGroup, Inc. Per Diluted Share (2)
$0.79 - $0.84 $ 0.81
(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 June 30, 2016.
(2) AptarGroup’s expected earnings per share range for the third
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728006586/en/
Matthew DellaMariaAptarGroup, Inc.815-477-0424
AptarGroup (NYSE:ATR)
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