AptarGroup Reports Third Quarter Results; Expands Presence in South America; Declares Quarterly Dividend
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CRYSTAL LAKE, Ill.--(BUSINESS WIRE)-- AptarGroup, Inc. (NYSE: ATR) today reported third quarter results, announced the completion of an acquisition in South America, and declared a quarterly cash dividend of $.15 per share.
Third Quarter 2009 Summary
-- Consolidated sales decreased 11% from the prior year level and decreased
7% excluding currency effects and acquisitions
-- Operating income reached $52.9 million despite challenging conditions, a
decline of 12% from the prior year, of which 4% was due to a charge of
$2.6 million for the previously announced facilities consolidation and
severance program
-- Certain regions and markets stabilized in the third quarter leading to
improved sales and profits over the second quarter
-- South American acquisition was completed
-- Strong balance sheet was maintained
THIRD QUARTER RESULTS
For the quarter ended September 30, 2009, sales decreased 11% to $473.7 million from $532.2 million a year ago. Product and custom tooling sales declined 7%, changes in exchange rates accounted for 5% of the decline and acquisitions added 1% to sales.
Third Quarter Segment Sales Analysis
(Change From Prior Year)
Beauty & Closures Pharma Total
Home AptarGroup
Product and Custom Tooling Sales -7% -9% -3% -7%
Currency Effects -5% -5% -4% -5%
Acquisitions 0% 2% 0% 1%
Reported Change in Sales -12% -12% -7% -11%
Commenting on the quarter, Peter Pfeiffer, President and CEO, said, "Despite the continued difficult economic conditions, we have generally preserved our operating margins through cost savings efforts and the benefits of our diversified business model. Many of our customers remained cautious in the quarter, but we believe inventory reductions were reaching an end in certain markets and our third quarter results improved sequentially over our second quarter results. Although it was still a challenging quarter, we maintained our strong balance sheet."
Pfeiffer added, "Our Beauty & Home segment sales declined 7%, excluding currency effects, primarily due to continued weak demand from the fragrance/cosmetic market in North America and Europe. This weakness was partially offset by continued strong demand from South America and Asia, and we benefited from improved demand in the personal care market. Beauty & Home segment income declined 21% or $4.6 million in the quarter primarily due to underutilized overhead and the negative impact of a $1.2 million charge relating to severance expenses. Excluding the charge for severance expenses, Beauty & Home segment income declined 16% or $3.3 million.
Our Closures segment sales declined 9%, excluding currency effects and acquisitions, due to the pass-through of resin cost decreases and weak demand in Europe. We continued to see strong demand for our food and beverage closures in North America and this offset some of the weakness in Europe. Closures segment income decreased 15% or $1.8 million in the quarter primarily due to the negative impact of a $1.4 million charge relating to consolidation/severance expenses. Excluding the charge for consolidation/severance expenses, Closures segment income declined 4% or approximately $0.5 million."
Pfeiffer continued, "Our Pharma segment reported stable performance in the quarter. Sales declined by 3%, excluding currency effects, primarily due to softer demand for our metered dose valves, but overall the segment reported another strong operating result. Pharma segment income declined 11% primarily due to lower sales and the impact of changes in currency exchange rates."
On a consolidated basis, operating income declined 12% to $52.9 million (including approximately $2.6 million of consolidation/severance expenses), down from $60.5 million a year ago.
Reported diluted earnings per share, which include the consolidation/severance expenses, decreased 16% to $.48 per share. Diluted earnings per share, excluding consolidation/severance expenses of approximately $.03 per share, decreased 11% to $.51 compared to $.57 per share in the prior year.
YEAR-TO-DATE RESULTS
Year-to-date sales decreased 17% to approximately $1.3 billion from approximately $1.6 billion a year ago. Product and custom tooling sales declined 10%, changes in exchange rates accounted for 8% of the decrease and acquisitions contributed 1% to sales.
Operating income decreased 23% to $141.5 million (including approximately $5.7 million of consolidation/severance expenses), down from $183.1 million a year ago. Reported diluted earnings per share, which include the consolidation/severance expenses, decreased 26% to $1.27 per share. Diluted earnings per share, excluding consolidation/severance expenses of approximately $.05 per share, decreased 23% to $1.32 compared to $1.72 per share in the prior year.
SOUTH AMERICAN ACQUISITION
In the quarter, AptarGroup acquired Covit do Brasil Componentes de Aluminio para Perfumaria Ltda. (Covit do Brasil) for approximately $7.6 million. Covit do Brasil is a growing company that has been operating in Brazil since 2005 developing and supplying anodized aluminum parts primarily for the fragrance/cosmetic market. Covit do Brasil will generally be supplying parts to other companies within AptarGroup.
Commenting on the acquisition, Pfeiffer said, "AptarGroup welcomes Covit do Brasil's stamping and anodizing capabilities to the group. While this is a relatively small acquisition for us, their products and services will reinforce our product offerings, help us better serve our customers, and enhance our competitiveness in the fast growing South American markets."
OUTLOOK
Discussing the Company's outlook, Pfeiffer stated, "The diversification of our business has been a stabilizing factor in challenging times and we expect that to continue. As we look to the fourth quarter, some of our customers remain cautious going into the end of the year given the continuing weak consumer sentiment and, consequently, our global visibility remains limited at this time. However, we are cautiously optimistic that inventories may be bottoming out in certain markets though we expect the softness in the fragrance/cosmetic market to continue in the near-term. We will continue to diligently manage our costs without jeopardizing the flexibility necessary to respond to our customers' demands and we will maintain our strong balance sheet. When comparing our fourth quarter results to the prior year, it is important to note that declining resin costs in the fourth quarter of 2008 caused a $5.2 million reduction in our LIFO inventory reserve. This positive effect of approximately $.05 per diluted share is not expected to repeat in the fourth quarter of 2009. Excluding facilities consolidation and severance program charges, we anticipate diluted earnings per share for the fourth quarter to be in the range of $.43 to $.48 per share compared to $.46 per share in the prior year."
CASH DIVIDEND AND SHARE REPURCHASE PROGRAM
The Board of Directors declared a quarterly dividend of $.15 per share, payable November 18, 2009 to shareholders of record as of October 28, 2009.
During the quarter, the Company repurchased approximately 100,000 shares of common stock for approximately $3.5 million leaving approximately 4.2 million shares authorized for repurchase at the end of the third quarter.
OPEN CONFERENCE CALL
There will be a conference call on Thursday, October 15, 2009 at 7:00 a.m. CDT to discuss the Company's third quarter results for 2009. 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.aptargroup.com. Replay of the conference call can also be accessed on the Investor Relations page of the web site.
AptarGroup, Inc. is a leading global supplier of a broad range of innovative dispensing systems for the fragrance/cosmetic, personal care, pharmaceutical, household and food/beverage markets. AptarGroup is headquartered in Crystal Lake, Illinois, with manufacturing facilities in North America, Europe, Asia, and South America. For more information, visit the AptarGroup web site at www.aptargroup.com.
This press release contains 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, economic, environmental or political conditions in the various markets and countries in which AptarGroup operates, changes in customer and/or consumer spending levels; financial conditions of customers and suppliers; fluctuations in the cost of raw materials, components and other input costs; the Company's ability to increase prices, contain costs and improve productivity; changes in capital availability or cost, including interest rate fluctuations; the competitive marketplace; fiscal and monetary policy; changes in foreign currency exchange rates; direct or indirect consequences of acts of war or terrorism; and labor relations. 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-K's and Form 10-Q's. Readers are cautioned not to place undue reliance on forward-looking statements. 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 Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net Sales $ 473,668 $ 532,180 $ 1,345,992 $ 1,615,757
Cost of Sales (exclusive
of depreciation
shown below) 320,675 366,637 899,222 1,102,325
Selling, Research &
Development and
Administrative (1) 64,370 72,528 204,971 230,471
Depreciation and Other 33,054 32,537 94,590 99,864
Amortization
Facilities Consolidation 2,631 - 5,726 -
and Severance Expenses
Operating Income (2) 52,938 60,478 141,483 183,097
Other Income/(Expense):
Interest Expense (3,965 ) (5,261 ) (12,569 ) (14,204 )
Interest Income 772 3,475 2,758 10,334
Equity in Results of - 194 - 417
Affiliates
Miscellaneous, net (164 ) (635 ) (1,393 ) (1,320 )
Income before Income 49,581 58,251 130,279 178,324
Taxes
Provision for Income 16,114 18,557 41,746 56,475
Taxes (1)
Net Income $ 33,467 $ 39,694 $ 88,533 $ 121,849
Net (Income)/Loss
Attributable to 31 (43 ) 90 (24 )
Noncontrolling Interests
Net Income Attributable $ 33,498 $ 39,651 $ 88,623 $ 121,825
to AptarGroup, Inc.
Net Income Attributable
to AptarGroup, Inc. Per
Common Share:
Basic $ 0.49 $ 0.59 $ 1.31 $ 1.79
Diluted $ 0.48 $ 0.57 $ 1.27 $ 1.72
Average Numbers of Shares
Outstanding:
Basic 67,691 67,670 67,691 67,958
Diluted 69,550 69,937 70,000 70,812
Notes to Consolidated Statements of Income:
(1) In order to be comparable to the current period presentation, the Company
revised its 2008 presentation relating to a French research and development tax
credit by reclassifying amounts from Provision for Income Taxes to Selling,
Research & Development and Administrative. For further details, refer to the
Company's Form 8-K that was filed with the Securities and Exchange Commission on
July 17, 2009.
(2) Included in total Operating Income are expenses related to stock options of
approximately $1.6 million and $8.4 million in the third quarter and first nine
months, respectively, of 2009, and $1.3 million and $9.9 million in the third
quarter and first nine months, respectively, of 2008.
APTARGROUP, INC.
Condensed Consolidated Financial Statements (Unaudited)
(continued)
(In Thousands)
CONSOLIDATED BALANCE SHEETS
September 30, 2009 December 31, 2008
ASSETS
Cash and Equivalents $ 294,851 $ 192,072
Receivables, net 325,392 343,937
Inventories 229,871 244,775
Other Current Assets 66,159 78,965
Total Current Assets 916,273 859,749
Net Property, Plant and Equipment 770,547 720,882
Goodwill, net 232,987 227,041
Other Assets 21,442 24,150
Total Assets $ 1,941,249 $ 1,831,822
LIABILITIES AND EQUITY
Short-Term Obligations $ 90,461 $ 64,619
Accounts Payable and Accrued Liabilities 282,891 310,408
Total Current Liabilities 373,352 375,027
Long-Term Obligations 210,773 226,888
Deferred Liabilities 96,376 98,109
Total Liabilities 680,501 700,024
AptarGroup, Inc. Stockholders' Equity 1,260,021 1,131,030
Noncontrolling Interests in Subsidiaries 727 768
Total Equity 1,260,748 1,131,798
Total Liabilities and Equity $ 1,941,249 $ 1,831,822
APTARGROUP, INC.
Condensed Consolidated Financial Statements (Unaudited)
(continued)
(In Thousands)
SEGMENT INFORMATION
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
NET SALES
Beauty & Home $ 239,621 $ 271,654 $ 665,234 $ 844,328
Closures 124,788 142,424 365,051 420,945
Pharma 109,258 118,102 315,705 350,479
Other 1 - 2 5
Total Net Sales $ 473,668 $ 532,180 $ 1,345,992 $ 1,615,757
SEGMENT INCOME (1) (2)
Beauty & Home (3) $ 16,815 $ 21,409 $ 38,769 $ 76,451
Closures (3) 10,443 12,280 35,800 35,597
Pharma (3) 31,269 35,077 91,752 101,171
Corporate Expenses and (5,722 ) (8,772 ) (26,141 ) (31,049 )
Other
Total Income Before $ 52,805 $ 59,994 $ 140,180 $ 182,170
Interest and Taxes
Interest Expense, Net (3,193 ) (1,786 ) (9,811 ) (3,870 )
Net Income/(Loss)
Attributable to (31 ) 43 (90 ) 24
Noncontrolling Interests
Income before Income $ 49,581 $ 58,251 $ 130,279 $ 178,324
Taxes
SEGMENT INCOME AS % OF
NET SALES
Beauty & Home 7.0 % 7.9 % 5.8 % 9.1 %
Closures 8.4 % 8.6 % 9.8 % 8.5 %
Pharma 28.6 % 29.7 % 29.1 % 28.9 %
Notes to Segment
Information:
(1) The Company evaluates performance of its business units and allocates
resources based upon income before interest expense net of interest income,
stock option and corporate expenses, income taxes and certain unusual items.
(2) In order to be comparable to the current period presentation, the Company
revised its 2008 presentation relating to a French research and development tax
credit. For further details, see Note (1) to Consolidated Statements of Income.
(3) Included in the segment income figures reported above, are
consolidation/severance expenses as follows:
CONSOLIDATION/SEVERANCE
EXPENSES
Beauty & Home $ 1,246 $ - $ 1,503 $ -
Closures 1,385 - 4,223 -
Pharma - - - -
Total
Consolidation/Severance $ 2,631 $ - $ 5,726 $ -
Expenses
Source: AptarGroup, Inc.
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