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AptarGroup, Inc. (ATR - Free Report) reported fourth-quarter 2017 earnings per share of 81 cents, beating the Zacks Consensus Estimate of 71 cents. Also, earnings grew 5% year-over-year and came in above management’s guidance range of 68-73 cents per share.
On a reported basis, the company recorded earnings of 77 cents per share, which remained flat year over year.
Operational Update
Total revenues improved 16% year over year to $626 million in the reported quarter driven by 10% core sales growth and a 6% favorable impact from exchange rates. Core sales grew across each business segment, and in each end market and geographic region. Revenues also beat the Zacks Consensus Estimate of $584 million. Robust demand for innovative dispensing and drug delivery systems supported this year-over-year growth.
AptarGroup, Inc. Price, Consensus and EPS Surprise
Cost of sales increased to $411 million from $353 million recorded in the year-ago quarter. Gross profit rose 15.5% year over year to $214.7 million, while gross margin contracted 20 basis points (bps) to 34.3%. Selling, research, development and administrative expenses flared up 16.7% year over year to $95.4 million. Adjusted operating income went up 14.8% year over year to $79.3 million. AptarGroup’s operating margin declined 10 bps year over year to 12.7%.
Segmental Performance
Total revenues in the Beauty + Homes segment were up 16% year over year to $335.5 million. Operating income increased 13.7% to $24.6 million from $21.1 million reported in the year-ago quarter.
Total revenues in the Pharma segment were up 18% year over year to $207.7 million. Operating income grew 16% year over year to $60.5 million in the fourth quarter.
Total revenues in the Food + Beverage segment rose 14.3% year over year to $82.7 million. Operating income increased 44% year over year to $6.8 million.
2017 Performance
AptarGroup reported adjusted earnings per share of $3.44 in 2017, up 5.5% year over year. In addition, earnings beat the Zacks Consensus Estimate of $3.35. On a reported basis, the company’s earnings increased to $3.41 per share from $3.17 recorded in 2016.
Revenues grew 6% year over year to $2,469 million from $2,331 million recorded in 2016. Revenues also outpaced the Zacks Consensus Estimate of $2,343 million.
Financial Performance
AptarGroup reported cash and cash equivalents of $714.4 million as of Dec 31, 2017, up from $466 million as of Dec 31, 2016. At quarter end, long-term debt was approximately $1,191 million, up from $773 million as of Dec 31, 2016. On Jan 18, 2018, AptarGroup announced a quarterly cash dividend of 32 cents per share payable on Feb 21, 2018.
Business Transformation Plan
In late 2017, Aptar began a business-transformation plan in a bid to become a more agile, competitive and customer-centric business. This plan includes a wide range of initiatives to drive sales growth, enhance operational excellence, and improve organizational health and effectiveness.
AptarGroup is poised to gain from its focus on the above-mentioned plan which will yield annual recurring incremental EBITDA of approximately $80 million by the end of 2020. The company expects to incur implementation costs of approximately $90 million over the next three years. It also anticipates capital investments related to the transformation plan of about $45 million, the majority of which will occur in 2018.
Outlook
AptarGroup projects earnings per share for first-quarter 2018 to be in the range of 90-95 cents, excluding any costs related to its business transformation plan. The company expects each segment to report elevated first-quarter revenues over the prior year.
Share Price Performance
Over the past year, AptarGroup has outperformed its industry with respect to price performance. The stock has gained 11.8%, while the industry registered growth of 3.3%.
Zacks Rank & Key Picks
AptarGroup currently carries a Zacks Rank #3 (Hold).
Bemis has a long-term earnings growth rate of 7%. Its shares have gained 4%, over the past six months.
Graphic Packaging has a long-term earnings growth rate of 5%. The company’s shares have rallied 9.4% during the same time frame.
Packaging Corporation of America has a long-term earnings growth rate of 8.3%. The stock has gained 6.9% in six months’ time.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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AptarGroup (ATR) Q4 Earnings & Revenues Beat, View Upbeat
AptarGroup, Inc. (ATR - Free Report) reported fourth-quarter 2017 earnings per share of 81 cents, beating the Zacks Consensus Estimate of 71 cents. Also, earnings grew 5% year-over-year and came in above management’s guidance range of 68-73 cents per share.
On a reported basis, the company recorded earnings of 77 cents per share, which remained flat year over year.
Operational Update
Total revenues improved 16% year over year to $626 million in the reported quarter driven by 10% core sales growth and a 6% favorable impact from exchange rates. Core sales grew across each business segment, and in each end market and geographic region. Revenues also beat the Zacks Consensus Estimate of $584 million. Robust demand for innovative dispensing and drug delivery systems supported this year-over-year growth.
AptarGroup, Inc. Price, Consensus and EPS Surprise
AptarGroup, Inc. Price, Consensus and EPS Surprise | AptarGroup, Inc. Quote
Cost of sales increased to $411 million from $353 million recorded in the year-ago quarter. Gross profit rose 15.5% year over year to $214.7 million, while gross margin contracted 20 basis points (bps) to 34.3%. Selling, research, development and administrative expenses flared up 16.7% year over year to $95.4 million. Adjusted operating income went up 14.8% year over year to $79.3 million. AptarGroup’s operating margin declined 10 bps year over year to 12.7%.
Segmental Performance
Total revenues in the Beauty + Homes segment were up 16% year over year to $335.5 million. Operating income increased 13.7% to $24.6 million from $21.1 million reported in the year-ago quarter.
Total revenues in the Pharma segment were up 18% year over year to $207.7 million. Operating income grew 16% year over year to $60.5 million in the fourth quarter.
Total revenues in the Food + Beverage segment rose 14.3% year over year to $82.7 million. Operating income increased 44% year over year to $6.8 million.
2017 Performance
AptarGroup reported adjusted earnings per share of $3.44 in 2017, up 5.5% year over year. In addition, earnings beat the Zacks Consensus Estimate of $3.35. On a reported basis, the company’s earnings increased to $3.41 per share from $3.17 recorded in 2016.
Revenues grew 6% year over year to $2,469 million from $2,331 million recorded in 2016. Revenues also outpaced the Zacks Consensus Estimate of $2,343 million.
Financial Performance
AptarGroup reported cash and cash equivalents of $714.4 million as of Dec 31, 2017, up from $466 million as of Dec 31, 2016. At quarter end, long-term debt was approximately $1,191 million, up from $773 million as of Dec 31, 2016. On Jan 18, 2018, AptarGroup announced a quarterly cash dividend of 32 cents per share payable on Feb 21, 2018.
Business Transformation Plan
In late 2017, Aptar began a business-transformation plan in a bid to become a more agile, competitive and customer-centric business. This plan includes a wide range of initiatives to drive sales growth, enhance operational excellence, and improve organizational health and effectiveness.
AptarGroup is poised to gain from its focus on the above-mentioned plan which will yield annual recurring incremental EBITDA of approximately $80 million by the end of 2020. The company expects to incur implementation costs of approximately $90 million over the next three years. It also anticipates capital investments related to the transformation plan of about $45 million, the majority of which will occur in 2018.
Outlook
AptarGroup projects earnings per share for first-quarter 2018 to be in the range of 90-95 cents, excluding any costs related to its business transformation plan. The company expects each segment to report elevated first-quarter revenues over the prior year.
Share Price Performance
Over the past year, AptarGroup has outperformed its industry with respect to price performance. The stock has gained 11.8%, while the industry registered growth of 3.3%.
Zacks Rank & Key Picks
AptarGroup currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same sector include Bemis Company, Inc. , Graphic Packaging Holding Company (GPK - Free Report) and Packaging Corporation of America (PKG - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Bemis has a long-term earnings growth rate of 7%. Its shares have gained 4%, over the past six months.
Graphic Packaging has a long-term earnings growth rate of 5%. The company’s shares have rallied 9.4% during the same time frame.
Packaging Corporation of America has a long-term earnings growth rate of 8.3%. The stock has gained 6.9% in six months’ time.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>