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AptarGroup Dispenses a Nearly Flawless Quarter

AptarGroup Inc. (NYSE: ATR) released another better-than-expected quarter on Monday after the market closed. The dispensing-systems leader highlighted healthy core sales growth in each of its business segments and geographies, punctuated by improvements at the Beauty+Home segment and strong growth in the pharma space.

With shares up nearly 9% on Tuesday, let's take a deeper look at how AptarGroup ended the year, as well as what investors can expect from the company in the coming quarters.

IMAGE SOURCE: APTARGROUP.

AptarGroup results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Growth

Revenue

$625.9 million

$538.9 million

16.1%

Net income

$49.5 million

$49.6 million

(0.2%)

Earnings per diluted share

$0.77

$0.77

0%

DATA SOURCE: APTARGROUP.

What happened with AptarGroup this quarter?

  • On a non-GAAP basis -- which adjusts for a $0.12-per-share negative impact from recent tax legislation and $0.03 per share in restructuring charges, as well as an $0.11-per-share gain on insurance recovery -- Aptar's earnings were $0.81 per share.
  • By comparison, AptarGroup's latest guidance called for lower per-share earnings of $0.68 to $0.73.
  • Excluding a positive 6% impact from foreign currency exchange, core sales grew 10%.
  • By segment:
    • Beauty+Home sales grew 16%, including 10% core sales growth and a 6% contribution from foreign currency exchange.
    • Pharma sales increased 18%, including 11% core sales growth and a 7% contribution from currencies.
    • Food+Beverage sales grew 14%, including 11% core sales growth and a 3% increase from currencies.
  • Adjusted EBITDA grew 9% to $118 million.

What management had to say

AptarGroup CEO Stephen Tanda elaborated:

This was a strong quarter with robust and wide-spread demand for our innovative dispensing and drug delivery systems. Core sales grew across each business segment, and in each end market and geographic region. Our Beauty + Home segment built on the momentum experienced in the third quarter, particularly the recovery in demand from the beauty market. Our Pharma segment experienced strong growth in the prescription drug and consumer healthcare markets as demand rose for allergy and asthma related devices, as well as for decongestant nasal sprays and saline systems. Our Food + Beverage segment grew sales in each market and continued to penetrate the vast beverage market with our value-adding dispensing closures. With the sales growth and our continued drive to capture value and contain costs, each segment reported adjusted EBITDA growth over the prior year.

Looking forward

AptarGroup expects this positive momentum to carry through to the first quarter of 2018, with continued top-line growth from each segment on a year over-year basis.

Tanda also cautioned, however, that despite high expectations for tax-rate reductions from recent U.S. tax reform, Aptar anticipates it will see "little benefit" to its overall effective tax rates in the near term -- primarily a consequence of the new legislation's tax effects on its international business.

Still, AptarGroup expects first-quarter adjusted earnings per share in the range of $0.90 to $0.95 -- comfortably ahead of investors' expectations for Q1 earnings of $0.89 per share.

In the end, there was little not to like about AptarGroup's latest performance, and the company offered plenty of reason to be optimistic for the future even despite dashing hopes for a tax-centric windfall. As such, it should be no surprise to see AptarGroup stock touching a fresh all-time high today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends AptarGroup. The Motley Fool has a disclosure policy.

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