AptarGroup, Inc. Returns to Growth

By Steve Symington Markets Fool.com

AptarGroup Inc. (NYSE: ATR) announced first-quarter 2017 results on Thursday after the market closed, punctuated by a return to core sales growth thanks to strength in its beauty-and-home and pharma businesses. When all was said and done on Friday, shares of the consumer-packaging specialist climbed almost 2%.

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Let's break the seal, then, and have a closer look at what drove AptarGroup's business as it rang in the new year, as well as what we should expect from the company going forward.

Image source: AptarGroup.

AptarGroup results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Growth

Revenue

$601.3 million

$582.3 million

3.3%

GAAP net income

$51.8 million

$43.9 million

18%

GAAP earnings per diluted share

$0.81

$0.67

20.9%

Data source: AptarGroup..

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What happened with AptarGroup this quarter?

  • Adjusting for special items and currency changes, net income climbed 9.5% from comparable earnings of $0.74 per share in last year's first quarter.
  • Both years' Q1 earnings also included a $0.04-per-share tax benefit not included in previous guidance. Even so, AptarGroup's results would have arrived at the high end of guidance provided last quarter for earnings per share of $0.72 to $0.77.
  • Revenue by segment included:
    • 3% growth in the beauty-and-home segment, including 1% core sales growth, 3% from acquisitions, and a 1% headwind from foreign currency exchange.
    • 8% growth from pharma, including 10% core sales growth, 1% from acquisitions, and a 3% headwind from currencies.
    • a 3% decline in the food-and-beverage segment, including a 1% decline in core sales and a 2% headwind from currencies.
  • AptarGroup continues to invest in connected electronic drug-delivery devices. Notable developments this quarter included:
    • Receiving the first order for Aptar's eLockout, the first integrated electronic nasal lockout device approved by the European Medicines Agency. This marked a major milestone after a multi-year development process with Takeda Pharmaceuticals.
    • Agreeing to acquire a 20% minority stake in Kali Care, which specializes in digital-monitoring systems for ophthalmic medications.

What management had to say

AptarGroup CEO Stephen Tanda stated:

The diversity of our business continues to be a key strength. Our pharma segment had an excellent quarter with growth across all three of its markets. The destocking effect that we saw at the end of 2016 appears to be over, and we saw more normalized order levels in the prescription market and strong demand in the consumer healthcare market for decongestants and ophthalmics. We also achieved core sales growth in our beauty and home segment, and were able to offset continuing challenges in the U.S. market with growth in the other regions. Our beauty and home and food and beverage segments were negatively affected by rising raw-material costs, and our food and beverage segment was further impacted by lower sales volumes in the Chinese beverage market.

Looking forward

For the current quarter, AptarGroup expects to achieve growth in both its pharma and food-and-beverage segments, while the beauty-and-home segment faces uncertainties primarily surrounding economic growth rates in the U.S. and Brazil.On the bottom line, Aptar group anticipates earnings per share in the second quarter of $0.92 to $0.97, up from comparable adjusted earnings of $0.87 per share in the same year-ago period.

All things considered, this was a strong quarter from AptarGroup as it successfully weathered last year's difficult market conditions. And though similar uncertainties may crop up in the future, with shares up more than 9% so far in 2017 as of this writing, I think investors should be pleased with where AptarGroup stands today.

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