AptarGroup has reported sales decreased 2% and were negatively affected by changes in currency exchange rates
Aptar has reported 2019 fourth quarter and annual results. (Credit: AptarGroup, Inc)
AptarGroup, a global leader in consumer dispensing, active packaging and drug delivery solutions and services, today reported its fourth quarter and full year 2019 financial results.
Fourth Quarter 2019 Summary
• Reported sales decreased 2% and were negatively affected by changes in currency exchange rates
• Core sales, excluding currency and acquisition effects, declined 1% including a negative impact from passing on lower resin costs
• Core sales growth in our Pharma segment was offset by decreases in core sales in our other segments
• Reported earnings per share of $0.73 (up 18% compared to the prior year)
• Adjusted earnings per share of $0.80 (down 13% compared to the prior year)
• Reported net income of $49 million (up 19% compared to the prior year)
• Adjusted EBITDA of $131 million (down 7% compared to the prior year)
• Subsequent to the end of the quarter:
o Completed the previously announced equity investment in BTY, a leading Chinese
provider of decorative and complete color cosmetics packaging solutions
o As previously announced, entered into a binding agreement to acquire FusionPKG,
a design and rapid go-to-market specialist for the North American beauty market
o Announced plans to consolidate North American Beauty + Home footprint
Annual 2019 Summary
• Reported sales increased 3%
• Core sales, excluding currency and acquisition effects, grew 3%
• Reported earnings per share of $3.66 (up 22% compared to the prior year)
• Adjusted earnings per share of $3.95 (up 2% compared to the prior year)
• Reported net income of $242 million (up 24% compared to the prior year)
• Adjusted EBITDA of $592 million (up 8% compared to the prior year)
• Net cash provided by operations of $514 million
• Free cash flow of $272 million
• Raised cash dividend 6% and achieved our 26th consecutive year of paying increased dividends
• Returned $177 million to shareholders for the year in dividends and share repurchases
• Acquired strategic Pharma services (Nanopharm, Gateway Analytical, Noble International)
• Made strategic investment in sustainable solutions partners PureCycle and Terracycle’s Loop
• Named one of America’s Most Responsible Companies by Newsweek
• Named one of America’s Most Sustainable Companies by Barron’s
Fourth Quarter Results
For the quarter ended December 31, 2019, reported sales decreased to $671 million compared to $685 million in the prior year. Core sales, excluding currency and acquisition effects, were negatively impacted by passing on lower resin costs to our customers, which contributed to the negative core sales growth in our Beauty + Home and Food + Beverage segments and Aptar overall.
Commenting on the quarter, Aptar President and CEO Stephan Tanda said, “One of the strengths of our business model is that we are diversified across many different end markets and we grew core sales in several of those markets in the quarter, including the consumer health care, injectables, active packaging and food markets. However, persistent inventory reductions by several key customers in the personal care and beauty markets, and the passing through of lower resin costs, offset the gains. It was also a difficult comparison to the strong prior year fourth quarter. While we navigate through the current short-term market challenges, we are taking steps to better position the company for long-term growth. This includes a consolidation of our North American Beauty + Home operations along with two strategic investments in high-growth areas of our beauty business, the minority interest ownership in BTY and the pending acquisition of FusionPKG.”
For the quarter, Aptar’s reported earnings per share were $0.73, and up 18% compared to $0.62 reported a year ago. Adjusted earnings per share for the quarter, which exclude restructuring costs and acquisition-related expenses, were $0.80 and down 13% from prior year adjusted earnings per share of $0.92, which is on a comparable currency rate basis. Prior year fourth quarter reported and adjusted earnings included approximately $6 million related to a gain on the sale of an equity investment. The fourth quarter effective tax rate on adjusted earnings was 28% compared to 29% in the prior year.
Annual Results
For the year ended December 31, 2019, reported sales increased approximately 3% to $2.9 billion from $2.8 billion a year ago. Core sales, which exclude the impacts from changes in currency exchange rates and acquisitions, also increased approximately 3%.
Tanda commented on the annual results, “We are extremely proud of our people and the work we are doing to further a circular economy and in 2019, Aptar was recognized for being a responsible and sustainable company. Overall, we performed well as we grew core sales 3%, achieved an adjusted EBITDA margin of 21% and generated strong cash flow. It was also another year of outstanding performance by our Pharma segment, which grew 10%, driven in part by a very active year of new drug delivery launches. Also, we made several key acquisitions and investments that strengthened our pharma services portfolio and aligned us with key sustainable solutions partners. In addition, we returned value to shareholders, making 2019 our 26th consecutive year of paying an increased cash dividend.”
For the year 2019, Aptar’s reported earnings per share were $3.66, and up 22%, compared to $3.00 reported a year ago. Current year adjusted earnings per share, which exclude restructuring costs and acquisition-related expenses, were $3.95 and up 2% from prior year adjusted earnings per share of $3.86, which is on a comparable currency rate basis. Prior year reported and adjusted earnings included approximately $6 million related to a gain on the sale of an equity investment. The 2019 effective tax rate on adjusted earnings was 29% compared to 26% in the prior year, resulting in a difference in adjusted earnings per share of approximately $0.13.
Pharma Services Acquisitions and Multiple New Drug Delivery Launches
It was an exciting year for our Pharma segment as we broadened our services platform with the acquisitions of two leading analytical laboratories, Nanopharm and Gateway Analytical, and training device and patient onboarding expert Noble International. Also during the year, several customers launched new U.S. FDA approved drugs featuring our delivery technologies. Our Bidose Nasal Spray Device was approved for a breakthrough therapy in the field of depression. In addition, our Unidose Powder System was approved for a drug which is intended to treat severe hypoglycemia in people with diabetes and is protected by an Activ-Polymer™ container developed by Aptar CSP Technologies. Our Activ-Blister™ packaging solution, also developed by Aptar CSP Technologies, was approved for an oral solid dose drug delivery for an HIV prevention medicine. Our Nasal Unidose Device was approved for the first nasal rescue treatment for frequent seizure activity in epilepsy for which Noble International designed a patient onboarding kit with trainer device. Lastly, Aptar also entered into an agreement with Bryn Pharma, a privately held pharmaceutical company, who is in the early stages of developing a nasal spray version of epinephrine using our Bidose Nasal Spray Device.
Building a Winning Beauty Business
We have closed on the previously announced agreement to acquire an initial 49% equity interest in BTY, a leading Chinese manufacturer of high quality, decorative metal components, metal-plastic subassemblies, and complete color cosmetics packaging solutions for the beauty industry. Also, as previously disclosed, we entered into a binding agreement to acquire FusionPKG, a leader in high quality, prestige airless and color cosmetics packaging, with conception-to-launch and turnkey solutions for the North American beauty market.
Further, as part of our efforts to become a more effective, agile and customer-centric organization, we are taking the next steps in our ongoing business transformation. Aptar continuously evaluates and optimizes its operations to adapt to changing market conditions and competitive challenges to ensure we are delivering the very best value to our customers. As a result, we have decided to close our Stratford and Torrington, Connecticut sites by the end of 2020 and consolidate this production capacity into other Aptar North American facilities. With these changes, we will be in a better position to serve our North American Beauty + Home customers more efficiently and with a better focus on long-term, profitable growth. Estimated costs associated with our footprint consolidations are currently expected to be approximately $20 million.
Outlook
Commenting on Aptar’s outlook, Tanda said, “While there will continue to be near-term challenges, we are optimistic about the long-term opportunities for growth and we are excited about our recent strategic acquisitions and investments. Looking to the first quarter, certain Beauty + Home customers are continuing to focus on inventory reductions considering current macroeconomic uncertainties including the negative impact of the coronavirus outbreak. In addition, the travel retail industry, which is a significant part of the beauty market, is particularly exposed. Our Pharma segment is facing difficult comparisons compared to the prior year’s exceptional growth and our Food + Beverage segment’s Asian business may also be negatively affected by the coronavirus impact.”
Aptar expects earnings per share for the first quarter of 2020, excluding any restructuring costs and acquisition-related expenses, to be in the range of $0.85 to $0.93 and this guidance is based on an effective tax rate range of 28% to 30%.
Cash Dividend
As previously announced, the Board declared a quarterly cash dividend of $0.36 per share. The payment date was February 19, 2020, to stockholders of record as of January 29, 2020.
Source: Company Press Release