AptarGroup, Inc. (NYSE:ATR) today announced its second quarter
results.
Second Quarter 2017 Summary
- Reported sales were in line with the
prior year
- Excluding the negative impact from
changes in foreign currency exchange rates, core sales increased 1%
as robust core sales growth in the Pharma and Food + Beverage
segments offset a decline in Beauty + Home
- Reported net income (11% of net
sales) increased to $65 million (+10%) primarily due to a lower
effective tax rate
- EBITDA (20% of net sales) decreased
to $124 million (-7%) primarily due to decreases in business in
certain markets and higher raw material costs
- Reported earnings per share were
$1.01 compared to $0.91 reported in the prior year (+11%) and $0.90
in the prior year when adjusting for changes in currency exchange
rates (+12%)
- Current period earnings per share
included certain tax benefits equivalent to $0.09 per share related
to stock-based compensation and $0.05 per share primarily related
to the Company’s planned cash repatriation activities
Second Quarter Results
For the quarter ended June 30, 2017, reported sales were in line
with the prior year at $618 million. Core sales, which exclude the
negative impact from changes in currency exchange rates, increased
approximately 1%.
Second Quarter Segment Sales Analysis
(Change Over Prior Year)
Beauty + Home Pharma Food + Beverage Total AptarGroup Core Sales
Growth (4%) 8% 7% 1% Currency Effects (1) (1%) (2%) (1%) (1%) Total
Reported Sales Growth (5%) 6% 6% 0% (1) - Currency effects
are approximated by translating last year's amounts at this year's
foreign exchange rates.
Commenting on the quarter, Stephan Tanda, President and CEO,
said, “Our Pharma and Food + Beverage segments performed very well
in the quarter with growth across each of their respective markets.
Our Beauty + Home segment had another challenging quarter with
decreased product sales across each end market and lower custom
tooling sales. In Brazil we are feeling the effects of the
difficult local economic condition. We also experienced operational
challenges at a facility that produces decorative components sold
to the beauty market and this, along with higher raw material
costs, negatively impacted the segment’s profitability. We are
moving forward with initiatives to return this segment to core
growth while we work to improve operational efficiencies.”
Aptar’s reported earnings per share increased 11% to $1.01
compared to $0.91 reported a year ago. Prior year adjusted earnings
per share, which adjusts for comparable exchange rates, would have
been $0.90. Current period earnings per share included
approximately $0.14 related to certain tax benefits.
Year-to-Date Results
For the six months ended June 30, 2017, reported sales increased
1% to $1.22 billion from $1.20 billion a year ago. Core sales,
which exclude the negative impact from changes in currency exchange
rates and the positive impact from acquisitions, increased
approximately 2%.
Six Months Year-to-Date Segment Sales Analysis
(Change Over Prior Year)
Beauty + Home Pharma Food + Beverage Total AptarGroup Core Sales
Growth (2%) 9% 3% 2% Acquisitions 1% 0% 0% 1% Currency Effects (1)
(1%) (2%) (2%) (2%) Total Reported Sales Growth (2%) 7% 1% 1%
(1) - Currency effects are approximated by translating last
year's amounts at this year's foreign exchange rates.
Tanda commented on the year-to-date results, “It’s been a mixed
first half for our Beauty + Home segment with positive growth in
the first quarter being more than offset by a difficult second
quarter. Our Pharma segment has grown consistently and our Food +
Beverage segment has performed well despite the continued difficult
comparisons to the prior year for our beverage business in
Asia.”
For the six months year-to-date, Aptar’s reported earnings per
share increased 15% to $1.81 compared to $1.58 reported a year ago.
Prior year adjusted earnings per share, which adjusts for costs
related to the Mega Airless acquisition and comparable exchange
rates, would have been $1.64. The six months year-to-date earnings
per share included approximately $0.18 related to certain tax
benefits.
Outlook
Commenting on Aptar’s outlook, Tanda said, “Looking ahead to the
third quarter, we expect our Beauty + Home segment to continue to
face headwinds in the short-term. In addition to continued weakness
in North America and Brazil, we now anticipate some risk with our
business in China due to the recent excessive heat wave resulting
in energy restrictions. This not only impacts our facilities but
our suppliers’ as well. It’s too early to estimate the effects but
we are watching the situation closely. The business pipeline in our
Pharma segment remains solid, although it will likely be difficult
to report year-on-year sales growth due to some significant custom
tooling sales that occurred in the prior year third quarter. We
expect Food + Beverage to continue to grow over the prior year as
we further leverage our capabilities and technologies across
different categories. Though we face certain near-term challenges,
we remain positive about our long-term growth opportunities across
each business segment. We are dedicated to executing our growth
strategy, investing for the future and helping our customers to
grow their businesses with our innovative dispensing
solutions.”
Aptar expects earnings per share for the third quarter to be in
the range of $0.77 to $0.82 compared to $0.82 per share reported in
the prior year. Our guidance range is based on an effective tax
rate range of 26.5% to 28.5%, which includes an estimated potential
tax benefit from our adoption of the new accounting standard for
share-based compensation. Adjusting for changes in foreign currency
exchange rates, comparable adjusted earnings per share for the
prior year were approximately $0.83.
Cash Dividend
As previously reported, the Board declared on July 13, 2017 a
quarterly cash dividend of $0.32 per share, payable August 16, 2017
to stockholders of record as of July 26, 2017.
Open Conference Call
There will be a conference call on Friday, July 28, 2017 at 8:00
a.m. Central Time to discuss AptarGroup’s second quarter results
for 2017. 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.
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 prior year 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. 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. 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.
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,” “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 possible impact and
consequences of the fire at the Company’s facility in Annecy,
France; 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.
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,
2017
2016
2017
2016
Net Sales $ 617,746 $ 619,999 $ 1,219,062 $ 1,202,337 Cost
of Sales (exclusive of depreciation and amortization shown below)
(1) 399,954 389,863 784,886 764,066 Selling, Research &
Development and Administrative (2) 95,659 96,131 197,175 199,146
Depreciation and Amortization
37,242
40,390 74,573
76,277 Operating Income 84,891 93,615
162,428 162,848 Other Income/(Expense): Interest Expense (7,712 )
(9,203 ) (15,974 ) (17,794 ) Interest Income 643 460 973 1,044
Equity in Results of Affiliates (22 ) (51 ) (70 ) (172 )
Miscellaneous, net
1,768
(463 ) 1,691
(1,723 ) Income before Income
Taxes 79,568 84,358 149,048 144,203 Provision for Income Taxes
14,379 25,307
32,054 41,286
Net Income $ 65,189 $ 59,051 $ 116,994 $ 102,917 Net
(Income)/Loss Attributable to Noncontrolling Interests
(15 ) (3
) - (6
) Net Income Attributable to AptarGroup, Inc.
$ 65,174 $
59,048 $ 116,994
$ 102,911 Net Income
Attributable to AptarGroup, Inc. per Common Share: Basic
$ 1.04 $
0.94 $ 1.87
$ 1.64 Diluted
$
1.01 $ 0.91
$ 1.81 $
1.58 Average Numbers of Shares
Outstanding: Basic 62,631 63,053 62,494 62,888 Diluted 64,828
64,785 64,519 65,063 Notes to the Condensed Consolidated
Financial Statements: (1) For the six months ended June 30, 2016,
Cost of Sales included the effect of approximately $2.6 million of
purchase accounting adjustments to inventory related to the Mega
Airless acquisition. (2) For the six months ended June 30,
2016, Selling, Research & Development and Administrative
included approximately $5.6 million of costs related to the Mega
Airless acquisition.
AptarGroup, Inc.
Condensed Consolidated Financial Statements (Unaudited)
(continued) (In Thousands)
Consolidated Balance Sheets
June 30,
2017
December 31,
2016
ASSETS Cash and Equivalents $ 336,915 $ 466,287 Receivables,
net 499,697 433,127 Inventories 320,082 296,914 Other Current
Assets
87,775 73,842 Total
Current Assets 1,244,469 1,270,170 Net Property, Plant and
Equipment 831,708 784,321 Goodwill 429,579 407,522 Other Assets
158,108 144,772 Total
Assets
$ 2,663,864 $
2,606,785 LIABILITIES AND EQUITY
Short-Term Obligations $ 7,889 $ 173,816 Accounts Payable and
Accrued Liabilities
471,171
369,139 Total Current Liabilities 479,060 542,955
Long-Term Obligations 770,648 772,737 Deferred Liabilities
104,980 116,851 Total Liabilities
1,354,688 1,432,543 AptarGroup, Inc. Stockholders' Equity
1,308,877 1,173,950 Noncontrolling Interests in Subsidiaries
299 292 Total Equity
1,309,176 1,174,242 Total
Liabilities and Equity
$ 2,663,864
$ 2,606,785 AptarGroup,
Inc. Reconciliation of EBIT and EBITDA to Net Income
(Unaudited) (In Thousands)
Three Months Ended June 30, 2017 Consolidated
Beauty + Home Pharma Food + Beverage
Corporate & Other Net Interest
Net Sales
$ 617,746 322,117 201,702 93,927 - -
Reported net income $ 65,189 Reported
income taxes 14,379
Reported
income before income taxes 79,568 25,203
59,792 12,577 (10,935 ) (7,069
) Adjustments: None
Earnings before
income taxes 79,568 25,203 59,792 12,577 (10,935 ) (7,069 )
Interest expense 7,712 7,712 Interest income (643 )
(643 ) Earnings before net interest and taxes (EBIT) 86,637
25,203 59,792 12,577 (10,935 ) - Depreciation and amortization
37,242 19,347
9,857 6,117 1,921
- Earnings before net interest, taxes,
depreciation and amortization (EBITDA) $ 123,879
$ 44,550 $ 69,649 $ 18,694
$ (9,014 ) $ - Segment income
margins (Income before income taxes / Reported Net Sales) 7.8 %
29.6 % 13.4 % EBITDA margins (EBITDA / Reported Net Sales) 20.1 %
13.8 % 34.5 % 19.9 % Three Months Ended June 30, 2016
Consolidated Beauty + Home Pharma Food
+ Beverage Corporate & 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
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
) Earnings before net interest and taxes (EBIT) 93,101 30,547
58,597 13,593 (9,636 ) - Depreciation and amortization
40,390 22,239
10,360 6,072 1,719
- Earnings before net interest, taxes,
depreciation and amortization (EBITDA) $ 133,491
$ 52,786 $ 68,957 $ 19,665
$ (7,917 ) $ - Segment income
margins (Income before income taxes / Reported Net Sales) 9.0 %
30.7 % 15.3 % EBITDA margins (EBITDA / Reported Net Sales) 21.5 %
15.5 % 36.1 % 22.2 %
AptarGroup, Inc.
Reconciliation of EBIT, Adjusted EBIT, EBITDA and Adjusted
EBITDA to Net Income (Unaudited) (In Thousands)
Six Months Ended June 30, 2017
Consolidated Beauty + Home Pharma
Food + Beverage Corporate & Other Net
Interest
Net Sales $ 1,219,062 644,565 398,614
175,883 - -
Reported net income $
116,994 Reported income taxes 32,054
Reported income before income taxes
149,048 47,411 118,862 19,717
(21,941 ) (15,001 ) Adjustments: None
Earnings before income taxes 149,048 47,411
118,862 19,717 (21,941 ) (15,001 ) Interest expense 15,974 15,974
Interest income (973 )
(973 ) Earnings before
net interest and taxes (EBIT) 164,049 47,411 118,862 19,717 (21,941
) - Depreciation and amortization 74,573
39,227 19,628
11,923 3,795 -
Earnings before net interest, taxes, depreciation and
amortization (EBITDA) $ 238,622 $ 86,638
$ 138,490 $ 31,640 $
(18,146 ) $ - Segment income margins (Income
before income taxes / Reported Net Sales) 7.4 % 29.8 % 11.2 %
EBITDA margins (EBITDA / Reported Net Sales) 19.6 % 13.4 % 34.7 %
18.0 % Six Months Ended June 30, 2016 Consolidated
Beauty + Home Pharma Food + Beverage
Corporate & 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 (Income before income taxes /
Reported Net Sales) 8.3 % 29.9 % 13.2 % Adjusted EBITDA margins
(Adjusted EBITDA / Reported Net Sales) 20.4 % 14.9 % 35.2 % 20.0 %
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,
2017
2016
2017
2016
Income before Income Taxes $ 79,568
$ 84,358 $ 149,048 $
144,203
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) (1,189 )
(2,729 ) Adjusted Income before Income
Taxes $ 79,568 $ 83,169 $ 149,048
$ 149,691
Provision for Income
Taxes $ 14,379 $ 25,307 $
32,054 $ 41,286
Adjustments:
Transaction costs related to the Mega Airless acquisition 1,483
Purchase accounting adjustments related to Mega Airless inventory
859 Foreign currency effects (1) (344 )
(675 ) Adjusted Provision for Income Taxes $
14,379 $ 24,963 $ 32,054 $
42,953
Net (Income)/Loss
Attributable to Noncontrolling Interests $ (15
) $ (3 ) $ - $
(6 ) Net Income Attributable to AptarGroup,
Inc. $ 65,174 $ 59,048 $
116,994 $ 102,911
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) (845 )
(2,054 ) Adjusted Net Income
Attributable to AptarGroup, Inc. $ 65,174 $ 58,203
$ 116,994 $ 106,732
Average
Number of Diluted Shares Outstanding 64,828
64,785 64,519 65,063 Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $
1.01 $ 0.91 $ 1.81 $
1.58
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) (0.01 )
(0.03 ) Adjusted Net Income
Attributable to AptarGroup, Inc. Per Diluted Share $ 1.01
$ 0.90 $ 1.81 $ 1.64 (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.
AptarGroup, Inc. Reconciliation of Adjusted Earnings Per
Diluted Share (Unaudited) ($ in thousands, except per share
information) Three Months Ended September 30,
Expected
2017
2016
Income before Income Taxes $ 75,001
Adjustments:
Foreign currency effects (1) 1,020 Adjusted Income
before Income Taxes $ 76,021
Provision for
Income Taxes $ 21,901
Adjustments:
Foreign currency effects (1) 307 Adjusted Provision
for Income Taxes $ 22,208
Net (Income)/Loss
Attributable to Noncontrolling Interests $ (2
) Net Income Attributable to AptarGroup, Inc.
$ 53,098
Adjustments:
Foreign currency effects (1) 713 Adjusted Net Income
Attributable to AptarGroup, Inc. $ 53,811
Average
Number of Diluted Shares Outstanding 64,690
Net Income Attributable to AptarGroup, Inc. Per Diluted Share
(2) $0.77 - $0.82
$ 0.82
Adjustments:
Foreign currency effects (1) 0.01
Adjusted Net Income Attributable to AptarGroup, Inc. Per
Diluted Share (2) $0.77 - $0.82 $ 0.83
(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, 2017. (2)
AptarGroup’s expected earnings per share range for the third
quarter of 2017 is based on an effective tax rate range of 26.5% to
28.5% which includes an estimate of a potential impact from our
adoption of the new accounting standard for share-based
compensation.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006588/en/
AptarGroup, Inc.Investor Relations
Contact:Matthew
DellaMariamatt.dellamaria@aptar.com815-477-0424orMedia Contact:Katie
Reardonkatie.reardon@aptar.com815-477-0424
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