AptarGroup Inc. (NYSE: ATR) announced another stronger-than-expected quarter late last week, punctuated by solid core sales growth and a hefty new acquisition.
With shares up around 7% as a result, let’s open the lid to get a better idea of what the dispensing systems specialist had to say, as well as what shareholders should expect in the coming months.
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AptarGroup results: The raw numbers
| Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Net sales |
$710.6 million |
$617.7 million |
15% |
|
GAAP net income |
$55.8 million |
$65.2 million |
(14.4%) |
|
GAAP earnings per diluted share |
$0.86 |
$1.01 |
(14.9%) |
What happened with AptarGroup this quarter?
- Core sales (excluding the impact of currencies and acquisitions) grew 11%.
- On an adjusted (non-GAAP) basis — which excludes restructuring and acquisition expenses — earnings increased 4% to $1.09 per share, above guidance provided in April for a per-share range of $0.99 to $1.04.
- By segment: Beauty and home sales grew 14% as reported, including 10% core sales growth, 1% from acquisitions, and a 3% tailwind from currencies. Pharma sales increased 20% as reported, including 14% core sales growth and a 6% contribution from currencies. Food and beverage sales rose 7% as reported, including 5% core sales growth and a 2% contribution from currencies.
- Beauty and home sales grew 14% as reported, including 10% core sales growth, 1% from acquisitions, and a 3% tailwind from currencies.
- Pharma sales increased 20% as reported, including 14% core sales growth and a 6% contribution from currencies.
- Food and beverage sales rose 7% as reported, including 5% core sales growth and a 2% contribution from currencies.
- Adjusted EBITDA increased 14% to $141 million.
- The company announced a binding offer to acquire active packaging technology leader CSP Technologies for an enterprise value of $555 million, or roughly 13 times CSP’s trailing-12-month adjusted EBITDA. Aptar plans to fund the deal with cash on hand and — assuming it passes regulatory muster — expects it to close in the fourth quarter of 2018.
What management had to say
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AptarGroup CEO Stephen Tanda stated:
Tanda also elaborated on the CSP acquisition:
Looking forward
For the third quarter of 2018, AptarGroup anticipates continued year-over-year core sales growth from each segment. On the bottom line, that growth should translate to adjusted earnings per share in the range of $0.90 to $0.95, up from $0.82 per share (adjusted for currencies) in the same year-ago period.
In the end, between AptarGroup’s sustained core sales increases, its continued pursuit of acquisitive growth, and its solid forward earnings guidance, there was little for investors not to like in its latest quarterly report. And it should be no surprise that the stock surged to a fresh all-time high in response.
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