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AptarGroup, Inc. (ATR)
Q4 2008 Earnings Call
February 6, 2009 9:00 am ET
Ralph Polterman - Executive Vice President, Treasurer
Peter H. Pfeiffer - President and Chief Executive Officer
Stephen J. Hagge - Chief Operating Officer
Robert Kuhn - Chief Financial Officer
George Staphos - Banc of America
Claudia Hueston - J.P. Morgan
Chris Manuel - KeyBanc Capital
Meggan Friedman - William Blair & Company
Mike Hamilton - RBC Capital
Greg Halter - Great Lakes Review
Susan McCary - Granahan
Previous Statements by ATR
» AptarGroup Inc. Q3 2009 Earnings Call Transcript
» AptarGroup Inc. Q2 2009 Earnings Call Transcript
» AptarGroup, Inc. F1Q09 Earnings Call Transcript
Before we begin I would like to point out that the discussion to follow includes some forward-looking comments and that actual results or outcomes could differ materially from those projected or contained in the forward-looking statements. To review important factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements, please refer to AptarGroup's SEC filings.
The information in this conference call is relevant on the date of this live call. Although the company will post a replay of this conference call on its website as a service to those investors who are not able to listen today, information contained in the replay will be dated and to be used for background information only. The company undertakes no obligation to update material changes and forward-looking information contained therein.
Participating on this call today, are Peter Pfeiffer, President and Chief Executive Officer of AptarGroup, Steve Hagge, Executive Vice President and Chief Operating Officer, and Bob Kuhn, Executive Vice President and Chief Financial Officer. I would now like to turn the conference over to Mr. Pfeiffer.
Peter H. Pfeiffer
Good morning everyone. This is Peter Pfeiffer. I will briefly comment on our overall results and outlook and then provide some comments on our beauty & homes statement. Steve will then provide insight in our closures and pharma segments and Bob will review our financials.
Focusing on our overall results for the quarter, our results were adversely affected by the breadth and severity of the economic slowdown as well as the stronger dollar. The strength of the pharma segment sales helped us offset the weakness we faced in our beauty & home and closure segments. Although we took action during the quarter to reduce costs, we could not completely offset the negative impact of softer demand.
Turning to the full year, I would like to remind you that 2007 was a record year for us and as a result we were up against tough comparisons in 2008. In spite of this, we reported record sales and profits for the year. The year 2008 was comprised of two distinctly different halves with the strength of the first half being offset somewhat by the slowdown in the second half.
Looking forward, our visibility continues to be very limited. Presently we expect that the conditions we saw in the fourth quarter will continue into the first quarter and that our first quarter results will be adversely impacted by continued underutilization of our capacity.
We are intensifying our review of our operations in an attempt to further reduce costs and minimize underutilization of capacity, while at the same time balancing the needs to the precision for the long-term growth of the company and continuing to focus on innovations.
In light of the tough economic and credit environment some of our customers have expressed to us their desire to become more closely aligned to companies like Aptar, that are innovative and financially strong.
These comments support our confidence that the diversity of our business model, along with our commitments to innovation, our strong balance sheet, and our experienced management team, will help us through these difficult business conditions.
Focusing to the beauty & home segment, for the fourth quarter of 2008, excluding changes in exchange rates, sales in the beauty & home segment decreased 2% from the prior year. Acquisitions accounted for about 1% of sales.
Our customers are being very cautious in this uncertain environment and we experienced weak demand in each market served by the beauty & home segment. Excluding changes in exchange rates, sales through the personal care market were flat. Sales through the fragrance cosmetic market decreased by 3%, and sales through the household market decreased 11%. Underutilized capacity due the weak demand led to a decline in the beauty & home segments income.
Regarding new products, a new mass market airless system for cosmetic products was introduced to the market and Colgate launched a new soft soap package using our lotion pumps with custom decorative features.
I would now like to turn the call over to Steve.
Stephen J. Hagge
I will provide my comments and turn the call over to Bob to review our financial results.
First, looking at the closure segment, around the end of October we purchased the remaining 50% of a joint venture we had in Spain. This relatively small acquisition will allow us to improve our closures market position in Western Europe by better serving the local Spanish market as well as a number of global customers. The cost of the acquisition was in the area of $6.0 million.
Compared to the prior year, fourth quarter reported sales increased 3%. Changes in exchange rates was a drag on sales of about 6%. The acquisition I just mentioned above accounted for about 1% of sales. Sales growth, excluding currency and acquisition, was 2% in the quarter and mainly due to resin pass-throughs.