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AptarGroup's (ATR) Earnings & Sales Beat Estimates in Q2

AptarGroup, Inc. ATR delivered second-quarter 2020 adjusted earnings per share of 80 cents, which surpassed the Zacks Consensus Estimate of 68 cents. However, the bottom line declined 30% year over year.

On a reported basis, earnings came in at 63 cents per share compared with the year-ago quarter’s $1.12 per share.

Total revenues declined 6% year over year to $699.3 million in the June-end quarter due to negative impacts of the coronavirus pandemic on the beauty and beverage markets, changes in currency exchange rates and passing on lower resin costs. These negatives were offset by contributions from acquisitions. The top line beat the Zacks Consensus Estimate of $655 million. Core sales, excluding currency and acquisition effects, dropped 6% year over year. Sales growth witnessed in the Pharma segment was partly offset by declines in Beauty + Home and Food + Beverage segments.

Operational Update

Cost of sales was down 5.8% year over year to $442 million. Gross profit fell 6% year over year to $257.3 million. Gross margin came in at around 37% during the second quarter, unchanged from the prior-year quarter’s figure.

Selling, research, development and administrative expenses flared up 7.9% year over year to $123 million. Adjusted operating income went down 26.5% year over year to $83 million. Operating margin came in at 11.8% in the quarter, down from the year-ago quarter’s 15.2%. Adjusted EBITDA declined 14.3% year over year to $137 million in the April-June quarter.

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. price-consensus-eps-surprise-chart | AptarGroup, Inc. Quote

Segmental Performance

Total revenues in the Beauty + Homes segment declined 12.4% year over year to $299.8 million. Adjusted operating income in the second quarter plummeted 97.4% year over year to $0.7 million.

Total revenues in the Pharma segment rose 6.7% year over year to $301 million. Adjusted operating income came in at $86 million in the June-end quarter, flat year over year.

Total revenues in the Food + Beverage segment were down 17.6% year over year to $98 million. Operating income slid 30.1% year over year to $8.6 million.

Financial Performance

AptarGroup reported cash and cash equivalents of $247.6 million as of Jun 30, 2020, up from $242 million as of Dec 31, 2019. The company generated $228 million of cash flow from operations in the first half of the current year compared with $221 million in the first half of 2019. As of Jun 30, 2020, long-term debt was approximately $1,083 million, down from $1,085 million as of Dec 31, 2019.

Outlook

The company expects to witness economic uncertainty in some of its markets owing to the recent spike in coronavirus cases in many regions of the world. However, AptarGroup expects gradual improvement in the second half of the year based on the resumption of travel activity, the reopening of retail stores and consumer spending. Considering these factors, the company anticipates third-quarter adjusted earnings per share in the range of 80 cents to 88 cents.

Price Performance

Shares of the company have gained 12.5% in the past three months, compared with the industry’s growth of 15.2%.

Zacks Rank and Stocks to Consider

AptarGroup currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. SLGN), IIVI Incorporated IIVI and Energous Corporation WATT. While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), Energous carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Silgan has a projected earnings growth rate of 31.5% for the current year. The company’s shares have gained 13.1% in the past three months.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in three months’ time.

Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.

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