AptarGroup, Inc.
(
ATR
) reported third-quarter 2012 adjusted earnings of 64 cents per
share compared with 74 cents in the year-ago quarter. Earnings
were in line with the Zacks Consensus Estimate and within
management's guidance of 61 cents to 66 cents.
Adjusted earnings in the reported quarter excluded expenses of
2 cents pertaining to the Stelmi acquisition. The year-ago
quarter's results excluded a positive impact of 2 cents per share
related to a lower effective tax rate. Including these, earnings
came in at 62 cents per share in the quarter versus 72 cents a
share in the year-ago quarter.
Operational Update
Total revenue decreased 2% year over year to $589.6 million,
but surpassed the Zacks Consensus Estimate of $586 million. Core
sales increased 2% excluding currency effects and acquisition.
Changes in currency exchange rates had an 8% negative impact on
sales in the quarter. Aptar Stelmi contributed
approximately $25 million to sales in the quarter. Latin
America and Asian markets remained strong while Europe continued
to be weak.
Cost of sales remained flat at $407 million in the quarter.
Selling, Research & Development and Administrative expenses
declined 8% to $80 million. Operating income declined 10% to $67
million with operating margin contracting 100 basis points to
11.3%.
Segment Performance
Total revenue in the Beauty + Homes segment declined 7% to
$358 million in the quarter. Operating income declined 6% to $30
million. Segment operating margin decreased 10 basis points to
8.4%.
Total revenue in the Pharma segment increased 7% to $156
million. Operating income dropped 24% to $34 million.
Consequently, operating margin contracted 870 bps to 21.9%.
Total revenue in the Food + Beverage segment jumped 12% to $75
million. Operating income increased 39% to $9.6 million.
Operating income also expanded 260 basis points to 12.8% in the
quarter.
Financial Performance
Cash and cash equivalents were $174.3 million as of September
30, 2012, compared with $300.9 million as of June 30, 2012. Total
debt amounted to $397.8 million as of September 30, 2012, versus
$384.2 million as of June 30, 2012.
Optimization Plan of European Operations
AptarGroup announced a plan to transfer and consolidate
production capacity in twelve facilities and shut down two
facilities in Europe. The concerned facilities serve the beauty,
personal care, food, beverage, and consumer health care markets.
Total costs will be to the tune of €14 million (approximately $18
million), of which approximately €4 million (approximately $5
million using current exchange rates) relates to non-cash
expenses. The plan is estimated to generate annual savings of
approximately €9 million (approximately $12 million) beginning in
late 2013.
Outlook
The company expects earnings to remain in the range of 53
cents to 58 cents per share in the fourth quarter. This includes
approximately 3 cents per share from the results of Aptar
Stelmi.
Our View
AptarGroup has recently completed the acquisition of Stelmi
Group, the manufacturer of elastomer primary packaging components
for injectable drug delivery. With this purchase, AptarGroup
enters the new arena of primary packaging components used in the
injectable drug delivery. This acquisition endows AptarGroup with
the opportunity to expand its product portfolio of pharmaceutical
solutions in the Pharma segment. The integration is on track and
the acquisition is expected to result in an accretion of
between 12 cents and 16 cents per share beginning in the fourth
quarter.
Furthermore, the optimization plan in Europe will position the
company well for future growth. However, the ongoing weak
economic conditions prevailing in Europe and foreign currency
translation may affect results in the fourth quarter.
Crsytal Lake, Illinois-based AptarGroup 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 also faces competition from
companies like
Amcor Ltd.
(
AMCRY
) and
Rexam plc
(
REXMY
). AptarGroup retains a short-term Zacks #3 Rank
(Hold).
AMCOR LTD ADR (AMCRY): Free Stock Analysis
Report
APTARGROUP INC (ATR): Free Stock Analysis
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REXAM PLC-ADR (REXMY): Free Stock Analysis
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