ATR AptarGroup Inc

AptarGroup, Inc. (NYSE:ATR) today reported record fourth quarter and annual net income and earnings per share.

Summary

• Reported record annual and fourth quarter net income and earnings per share despite foreign currency headwinds.
• Reported earnings per share rose 8% for the year and fourth quarter over prior year levels.
• Comparable adjusted earnings per share increased 21% for the year and 18% in the fourth quarter over prior year levels.
• Improved operating margins across each business segment drove adjusted EBITDA(1) margin to 20% for 2015 compared to 18% in the prior year (19% in the fourth quarter compared to 17% in the prior year fourth quarter).
• Achieved adjusted ROIC(2) of 14% for 2015 compared to 13% in the prior year.
• Paid increased annual dividends for the 22nd consecutive year (current annualized dividend is $1.20 per share).
• Fourth quarter adjusted earnings per share were $0.67 compared to currency-adjusted earnings per share of $0.57 in the prior year (fourth quarter 2015 adjusted earnings per share exclude a positive impact of $0.03 per share ($2.9 million of pre-tax income) related to a gain on an insurance recovery, and a negative impact of $0.02 per share ($1.9 million of pre-tax expense) related to costs associated with the Mega Airless acquisition).

(1) Adjusted EBITDA is earnings excluding unusual items before net interest, taxes, depreciation and amortization; see “Presentation of Non-GAAP Information” and accompanying tables for further information. (2) ROIC is return on invested capital calculated by taking adjusted after-tax EBIT (earnings before net interest and taxes) and dividing it by average net capital; see “Presentation of Non-GAAP Information” and accompanying tables for further information.

Fourth Quarter Results

For the quarter ended December 31, 2015, reported sales decreased 9% to $547 million from $599 million a year ago. Core sales, which exclude impacts from changes in currency exchange rates, increased by approximately 1%.

Fourth Quarter Segment Sales Analysis

(Change Over Prior Year)

   

Beauty +

Home

  Pharma  

Food +

Beverage

 

Total

AptarGroup

Sales Growth Before Currency Effects (Core Sales) (1%)   6%   (1%)   1% Currency Effects (1) (11%)   (10%)   (6%)   (10%) Total Reported Sales Growth (12%)   (4%)   (7%)   (9%)   (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, “Despite several challenging conditions, including softness in several markets, we performed very well operationally. We achieved record fourth quarter earnings driven by operating margin improvements across each business segment compared to a year ago. Our Beauty + Home segment continued to see softness in the personal care market although we were encouraged to see year over year quarterly core sales increase in the beauty market for the first time in 2015. Our Pharma segment had another excellent quarter, driven by strong demand for our delivery solutions for the prescription drug and injectables markets that offset weak demand from the consumer healthcare market. Our Food + Beverage segment was negatively impacted by beverage demand seasonality. While we continued to benefit from lower input costs, we also remained focused on containing costs and improving operating efficiencies across each segment. These factors drove adjusted EBITDA margin to 19 percent and resulted in comparable adjusted earnings per share growth of 18 percent.”

AptarGroup reported earnings per share of $0.68 compared to $0.63 per share a year ago. Excluding unusual items from the current period and assuming a comparable foreign currency exchange environment, comparable earnings per share would have been $0.67 compared to $0.57 for the prior year. A reconciliation of adjusted earnings per diluted share to the most directly comparable GAAP measure is provided in the tables that accompany this press release.

Annual Results

For the year ended December 31, 2015, reported sales decreased 11% to approximately $2.3 billion from $2.6 billion a year ago. Core sales, which exclude impacts from changes in currency exchange rates, increased by approximately 1%.

Annual Segment Sales Analysis

(Change Over Prior Year)

   

Beauty +

Home

  Pharma  

Food +

Beverage

 

Total

AptarGroup

Sales Growth Before Currency Effects (Core Sales) (2%)   8%   2%   1% Currency Effects (1) (13%)   (13%)   (7%)   (12%) Total Reported Sales Growth (15%)   (5%)   (5%)   (11%)   (1) - Currency effects are approximated by translating last year's amounts at this year's foreign exchange rates.

Hagge commented on the annual results, “It was a challenging year with sluggish macroeconomic conditions, foreign currency translation headwinds and softness in several key markets. Even though we faced these issues, we grew the top line on a core basis, adapted to the softer market conditions with a company-wide focus on cost containment and benefited from lower input costs. As a result, we achieved an adjusted EBITDA margin of 20 percent, return on invested capital of 14 percent and grew comparable adjusted earnings per share by 21 percent. We also executed our balanced capital allocation strategy and completed our accelerated share repurchase program, increased our dividend and announced a strategic acquisition just after the end of the year.”

AptarGroup reported earnings per share of $3.09 compared to $2.85 a year ago. Excluding exceptional items from the current period and assuming a comparable foreign currency exchange environment, comparable earnings per share would have been $3.00 compared to $2.48 for the prior year. A reconciliation of adjusted earnings per diluted share to the most directly comparable GAAP measure is provided in the tables that accompany this press release.

Outlook

Commenting on AptarGroup’s outlook, Hagge said, “We don’t anticipate significant changes in the various macro challenges that we are facing in the coming quarter. The foreign currency exchange environment is expected to have a negative impact on our reported results. We will remain flexible to adapt to changing market conditions with a continued focus on containing costs while we invest in innovation and new solutions that are designed to help our customers grow their businesses. We also look forward to closing the Mega Airless transaction and moving forward with our plans to grow our expanded airless platform globally.”

AptarGroup expects earnings per share for the first quarter, excluding any impacts from costs associated with the Mega Airless acquisition, to be in the range of $0.69 to $0.74 per share compared to $0.70 per share reported in the prior year. Assuming a comparable foreign currency exchange rate environment, comparable earnings per share for the prior year would have been approximately $0.68 per share.

Open Conference Call

There will be a conference call on Friday, February 5, 2016 at 8:00 a.m. Central Time to discuss AptarGroup’s fourth quarter and annual results for 2015. 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. A 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 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 EBITDA and adjusted ROIC, which exclude the impact of costs related to an acquisition and a gain from an insurance recovery that were recorded in the fourth quarter of 2015, 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 adjusted earnings per share also excludes the impact of foreign currency 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 each non-GAAP financial measure to the most directly comparable GAAP measure is included in the accompanying tables.

This press release contains forward-looking statements. 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 management’s beliefs as well as assumptions made by and information currently available to management. Accordingly, AptarGroup’s 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 including, but not limited to, the ability to complete the Mega Airless acquisition; economic conditions worldwide as well as 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 raw materials, components and other input costs; the availability of raw materials and components; 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 AptarGroup’s filings with the Securities and Exchange Commission, including its Form 10-Ks and Form 10-Qs. AptarGroup undertakes 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,  

2015

2014

2015

2014

 

  Net Sales $ 546,773 $ 599,185 $ 2,317,149 $ 2,597,809 Cost of Sales (exclusive of depreciation shown below) (1) 359,969 407,284 1,502,650 1,755,266 Selling, Research & Development and Administrative (2) 84,592 89,100 351,461 383,909 Depreciation and Amortization   35,229     38,347     138,893     152,218   Operating Income 66,983 64,454 324,145 306,416 Other Income/(Expense): Interest Expense (9,169 ) (5,570 ) (34,615 ) (21,029 ) Interest Income 998 1,348 5,596 4,797 Equity in results of affiliates 17 (49 ) (718 ) (1,917 ) Miscellaneous, net (3)   2,915     (1,384 )   163     (1,966 ) Income before Income Taxes 61,744 58,799 294,571 286,301 Provision for Income Taxes   18,351     17,287     95,276     94,677   Net Income $ 43,393 $ 41,512 $ 199,295 $ 191,624   Net Loss Attributable to Noncontrolling Interests   (2 )   86     53     34   Net Income Attributable to AptarGroup, Inc. $ 43,391   $ 41,598   $ 199,348   $ 191,658   Net Income Attributable to AptarGroup, Inc. Per Common Share: Basic $ 0.69   $ 0.65   $ 3.19   $ 2.95   Diluted $ 0.68   $ 0.63   $ 3.09   $ 2.85     Average Numbers of Shares Outstanding: Basic 62,461 64,368 62,585 65,009 Diluted 64,266 66,121 64,492 67,292

Notes to Condensed Consolidated Financial Statements:

(1) Cost of Sales for the year ended December 31, 2015 included approximately $7.4 million of income related to a change in inventory valuation methodology recorded in the second quarter of 2015. (2) Selling, Research & Development and Administrative for the quarter and year ended December 31, 2015 included approximately $1.9 million of costs related to the Mega Airless acquisition. (3) Miscellaneous, net for the quarter and year ended December 31, 2015 included approximately $2.9 million of gain on an insurance recovery. AptarGroup, Inc. Condensed Consolidated Financial Statements (Unaudited) (continued) (In Thousands) Consolidated Balance Sheets     December 31, 2015 December 31, 2014 ASSETS   Cash and Equivalents $ 489,901 $ 399,762 Short-term Investments   29,816   - Total Cash and Equivalents, and Short-term Investments 519,717 399,762 Receivables, net 377,038 406,976 Inventories 294,912 311,072 Other Current Assets   88,795   96,128 Total Current Assets 1,280,462 1,213,938 Net Property, Plant and Equipment 765,383 811,655 Goodwill, net 310,240 329,741 Other Assets   68,109   81,856 Total Assets $ 2,424,194 $ 2,437,190   LIABILITIES AND EQUITY   Short-Term Obligations $ 56,972 $ 251,976 Accounts Payable and Accrued Liabilities   340,396   352,762 Total Current Liabilities 397,368 604,738 Long-Term Obligations 762,524 588,892 Deferred Liabilities   114,596   139,644 Total Liabilities 1,274,488 1,333,274   AptarGroup, Inc. Stockholders' Equity 1,149,411 1,103,407 Noncontrolling Interests in Subsidiaries   295   509 Total Equity   1,149,706   1,103,916   Total Liabilities and Equity $ 2,424,194 $ 2,437,190 AptarGroup, Inc. Condensed Consolidated Financial Statements (Unaudited) (continued) (In Thousands) Segment Information     Three Months Ended       Year Ended December 31,       December 31,    

2015

2014

2015

2014

NET SALES

Beauty + Home $ 302,770 $ 342,930 $ 1,272,946 $ 1,498,297 Pharma 174,824 181,996 712,220 751,226 Food + Beverage   69,179     74,259     331,983     348,286   Total Net Sales $ 546,773   $ 599,185   $ 2,317,149   $ 2,597,809    

SEGMENT INCOME (1)

Beauty + Home $ 20,178 $ 17,990 $ 98,707 $ 98,368 Pharma 50,105 50,109 210,509 204,698 Food + Beverage 5,454 4,519 42,731 37,728 Corporate and Other (2)   (5,822 )   (9,597 )   (28,357 )   (38,261 ) Total Income Before Interest and Taxes $ 69,915 $ 63,021 $ 323,590 $ 302,533 Interest Expense, Net   (8,171 )   (4,222 )   (29,019 )   (16,232 ) Income before Income Taxes $ 61,744   $ 58,799   $ 294,571   $ 286,301    

SEGMENT INCOME AS % OF NET SALES

Beauty + Home 6.7 % 5.2 % 7.8 % 6.6 % Pharma 28.7 % 27.5 % 29.6 % 27.2 % Food + Beverage 7.9 % 6.1 % 12.9 % 10.8 % Notes to Condensed Consolidated Financial Statements: (1) The Company evaluates performance of its business units and allocates resources based upon segment income, defined as earnings before net interest expense, certain corporate expenses and income taxes. (2) Corporate and Other for the quarter and year ended December 31, 2015 included approximately $1.9 million of costs related to the Mega Airless acquisition and approximately $2.9 million of gain on an insurance recovery, and the year ended December 31, 2015 also included approximately $7.4 million of income related to a change in inventory valuation methodology recorded in the second quarter of 2015. AptarGroup, Inc. Reconciliation of Adjusted EBIT and Adjusted EBITDA to Net Income (Unaudited) (In Thousands)     Three Months Ended   Year Ended December 31, December 31,    

2015

2014

2015

2014

Reported net income $ 43,393 $ 41,512 $ 199,295 $ 191,624 Reported income taxes   18,351       17,287       95,276       94,677   Reported income before income taxes 61,744 58,799 294,571 286,301 Adjustments: Change in inventory valuation method (from LIFO to FIFO) (7,427 ) Costs associated with Mega Airless acquisition 1,892 1,892 Gain on insurance recovery   (2,900 )         (2,900 )     Adjusted earnings before income taxes 60,736 58,799 286,136 286,301 Interest expense 9,169 5,570 34,615 21,029 Interest income   (998 )     (1,348 )     (5,596 )     (4,797 ) Adjusted earnings before net interest and taxes (Adjusted EBIT) 68,907 63,021 315,155 302,533 Depreciation and amortization   35,229       38,347       138,893       152,218   Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 104,136     $ 101,368     $ 454,048     $ 454,751     Adjusted EBITDA margin (Adjusted EBITDA / Reported Net Sales) 19 % 17 % 20 % 18 %   Adjusted earnings before net interest and taxes (Adjusted EBIT) $ 315,155 $ 302,533 Effective income tax rate (reported income taxes / reported income before income taxes)   32.3 %     33.1 % Taxes on Adjusted EBIT   101,795       100,138   Adjusted EBIT After Taxes $ 213,360     $ 202,395   AptarGroup, Inc. Reconciliation of Capital to Stockholders' Equity (Unaudited) (In Thousands)  

2015

 

2014

  Total AptarGroup, Inc. Stockholders' Equity $ 1,149,411 $ 1,103,407 Long-term obligations 762,524 588,892 Short-term obligations   56,972     251,976   1,968,907 1,944,275 Less: Cash and equivalents, and short-term investments   519,717     399,762   Total Capital $ 1,449,190   $ 1,544,513     Average Capital (average of beginning of year and end of year capital) $ 1,496,852 $ 1,604,496   Adjusted EBIT After Taxes $ 213,360 $ 202,395 ROIC (Adjusted EBIT After Taxes / Average Capital) 14 % 13 % AptarGroup, Inc. Reconciliation of Adjusted Earnings Per Diluted Share (Unaudited)     Three Months Ended     Year Ended December 31,     December 31,

2015

 

2014

2015

 

2014

  Net Income Attributable to AptarGroup, Inc. Per Diluted Share $ 0.68 $ 0.63 $ 3.09 $ 2.85  

Adjustments (1):

Cost related to the Mega Airless acquisition 0.02 0.02 Gain on an insurance recovery (0.03 ) (0.03 ) Income from change in inventory valuation method (0.08 ) Foreign currency effects (2)       (0.06 )           (0.37 ) Adjusted Earnings Per Diluted Share $ 0.67     $ 0.57       $ 3.00     $ 2.48     (1) Tax effects of the after-tax adjustments noted above are as follows: Three Months Ended Year Ended December 31, December 31,

2015

2014

2015

2014

Cost related to the Mega Airless acquisition $ 0.01 $ 0.01 Gain on an insurance recovery $ (0.01 ) $ (0.01 ) Income from change in inventory valuation method $ (0.03 ) Foreign currency effects $ (0.02 ) $ (0.18 )   (2) Foreign currency effects are approximations of the adjustment necessary to state the prior year earnings per share using current period exchange rates.

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AptarGroup, Inc.Matthew DellaMaria815-477-0424