AptarGroup Achieves Record Quarterly Results; Plans to Increase Capacity for Aptar Stelmi and Also E

AptarGroup Achieves Record Quarterly Results; Plans to Increase Capacity for Aptar Stelmi and Also Expand Aptar's Latin American Presence

CRYSTAL LAKE, Ill.--(BUSINESS WIRE)-- AptarGroup, Inc. (NYS: ATR) today reported record quarterly sales and achieved record earnings per share when charges related to its European Operations Optimization plan are excluded. AptarGroup also announced it is increasing capacity at its Aptar Stelmi facilities in Europe, and establishing a new Aptar manufacturing facility in Colombia to serve the Andean region.

Second Quarter 2013 Summary

  • Reported sales increased 11% from the prior year to a record $641 million (core sales excluding currency effects and the Aptar Stelmi acquisition increased 4%)

  • Reported earnings per share increased to $0.73 from $0.61 in the prior year

  • Earnings per share excluding charges related to the European Operations Optimization (EOO) plan reached an all-time quarterly high of $0.77, up $0.11 or 17% compared to $0.66 in the prior year when costs associated with the Stelmi acquisition are excluded from prior year results

  • Aptar Stelmi contributed $0.07 to earnings per share

  • Pharma and Food + Beverage segments reported strong sales and profit growth

  • Continued softness in the U.S. hampered Beauty + Home results

  • Aptar Stelmi capacity to be increased

  • Plans were announced for a new Aptar facility to serve the Andean region


SECOND QUARTER RESULTS

For the quarter ended June 30, 2013, reported sales increased 11% to $641 million from $578 million a year ago. Aptar Stelmi, which was acquired in July of 2012, contributed approximately $39 million or 7% to the quarterly sales growth. Changes in currency exchange rates did not impact consolidated sales compared to the prior year.

Second Quarter Segment Sales Analysis

(Change Over Prior Year)

Beauty +
Home

Pharma

Food +
Beverage

Total
AptarGroup

Product Sales (including tooling)

2%

8%

10%

4%

Currency Effects

1%

1%

Acquisitions

29%

7%

Total Reported Growth

2%

38%

11%

11%

Commenting on the quarter, Stephen Hagge, President and CEO, said, "We are pleased to report record quarterly sales. End market diversity continues to be a key strength of our business. Our Pharma segment benefited from increased demand from both the consumer health care and prescription drug markets while our Food + Beverage segment also experienced increased sales to each of its markets. In our Beauty + Home segment, increased demand from the personal care market was partially offset by decreased demand from the beauty and home care markets. Also, Aptar Stelmi continued to perform well."

Hagge continued, "Earnings, before any effects of our European Operations Optimization plan, reached a record level due to the strong performances of our legacy Pharma business, Aptar Stelmi, and our Food + Beverage business. While showing improvement from the first quarter of 2013, our Beauty + Home segment's second quarter results compared to the prior year were negatively impacted by decreased sales to the beauty and home care markets."

In the quarter, AptarGroup recognized charges related to its EOO plan and this had a negative effect on earnings per share of approximately $0.04. AptarGroup's previous earnings per share guidance for the second quarter did not include any impact from this optimization plan. Second quarter earnings per share, excluding the charges related to this plan, were $0.77 and this compared to $0.66 per share for the same period a year ago when costs associated with the Stelmi acquisition (approximately $0.05 per share) are excluded from the prior year results.

YEAR-TO-DATE RESULTS

For the six months ended June 30, 2013, reported sales increased 8% to $1.26 billion from $1.17 billion a year ago. Aptar Stelmi contributed approximately $74 million or 6% to the year-to-date sales growth. Changes in currency exchange rates did not impact consolidated sales compared to the prior year.

Six Months Year-to-Date Segment Sales Analysis

(Change Over Prior Year)

Beauty +
Home

Pharma

Food +
Beverage

Total
AptarGroup

Product Sales (including tooling)

-1%

2%

11%

2%

Currency Effects

1%

Acquisitions

27%

6%

Total Reported Growth

-1%

29%

12%

8%

Hagge commented on the year-to-date results, "Our core sales growth for the first half of the year reflected the consistently strong performance of our Food + Beverage segment and the rebound in the second quarter of our Pharma segment. Our Beauty + Home segment sales were negatively affected by the softness in the U.S. relative to other regions. Aptar Stelmi had an outstanding first half."

Hagge continued, "Our earnings, excluding any effects of our European Operations Optimization plan, improved due to the contribution from the Aptar Stelmi acquisition and the strength of our Pharma and Food + Beverage segments."

AptarGroup reported earnings per share of $1.31 compared to $1.24 a year ago. Charges related to the Company's EOO plan had a negative effect on earnings per share in 2013 of approximately $0.09, and prior year earnings per share included the negative effect of approximately $0.06 related to costs associated with the Stelmi acquisition. Year-to-date 2013 earnings per share, excluding the charges related to the EOO plan, were $1.40 and this compared to $1.30 per share for the same period a year ago when costs associated with the Stelmi acquisition are excluded from the prior year results.

GEOGRAPHIC EXPANSION PLANS

AptarGroup announced plans to increase the capacity of its Aptar Stelmi business with a $26 million investment for expanded facilities, new equipment and upgraded technology over the next year. Aptar Stelmi, which was acquired by AptarGroup in July of 2012, is a European-based supplier of elastomer primary packaging components to the injectable drug delivery industry. Aptar Stelmi's products include syringe plungers, vial stoppers, and needle shields. Hagge stated, "Aptar Stelmi is benefiting from the growth in the injectable drug delivery industry and the current production facilities are nearly at full capacity. While our long-term objective is to establish a production facility closer to growing markets outside of Europe, our initial investment in capacity expansion will be at Aptar Stelmi's existing facilities in Europe. This will allow us to better serve our existing customers and integrate the new technology before we expand globally."

After decades of serving customers in the Andean region by importing products from various facilities, AptarGroup is establishing a production facility in Colombia which is intended to be operational by mid-2014. In addition to regional customers, several of Aptar's multinational customers have operations in the region. "We have been selling into the Andean region for some time and we want to better serve our customers with a local facility," said Hagge. "Our initial capital investment in this operation is expected to be approximately $5 million over the next 18 months. We are optimistic about the growth potential for each of our segments in this region."

EUROPEAN OPERATIONS OPTIMIZATION PLAN UPDATE

Commenting on the previously announced operations optimization plan, Hagge stated, "Our plan is on schedule and progressing well."

In the second quarter, AptarGroup recognized approximately $3.1 million of expense related to the plan, of which $0.6 million were non-cash expenses. For the year-to-date, AptarGroup recognized approximately $7.6 million of expense related to the plan, of which $1 million were non-cash expenses. Using current exchange rates, AptarGroup expects to recognize approximately $6 million in additional costs, most of which will be incurred in 2013. Savings from the plan are expected to be approximately $12 million on an annualized basis.

OUTLOOK

Commenting on AptarGroup's outlook, Hagge said, "Looking to the third quarter, we anticipate that each of our business segments will grow over the prior year. Even though we expect challenges in several of the markets we serve, the diversity of our product portfolio, geographic presence, customer base and end markets, protect us from exposure to softness in any particular market or region."

AptarGroup expects earnings per share for the third quarter, before costs associated with the EOO plan, to be in the range of $0.68 to $0.73 per share compared to $0.62 per share reported in the prior year. Prior year results include a negative impact of $0.02 per share from Aptar Stelmi's results which included acquisition accounting adjustments.

SHARE REPURCHASE PROGRAM AND CASH DIVIDEND

As previously announced, the Board of Directors increased the number of shares authorized for repurchase by 4 million shares bringing the total currently authorized for repurchase to 5.2 million shares. The Board also declared on July 18, 2013, a quarterly dividend of $0.25 per share, payable August 21, 2013 to shareholders of record as of July 31, 2013.

OPEN CONFERENCE CALL

There will be a conference call on Thursday, July 25, 2013 at 8:00 a.m. Central Time to discuss AptarGroup's second quarter results for 2013. The call will last approximately one hour. Interested parties are invited to listen to a live webcast by visiting the Investor Relations page at www.aptar.com. Replay of the conference call can also be accessed on the Investor Relations page of the website.

AptarGroup, Inc. is a leading global supplier of a broad range of innovative dispensing systems for the beauty, personal care, home care, pharmaceutical, food, and beverage markets. AptarGroup is headquartered in Crystal Lake, Illinois, with manufacturing facilities in North America, Europe, Asia and South America. For more information, visit www.aptar.com.

This press release contains forward-looking statements.Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on management's beliefs as well as assumptions made by and information currently available to management.Accordingly, AptarGroup's actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist including, but not limited to, economic, environmental or political conditions in the various markets and countries in which AptarGroup operates, changes in customer and/or consumer spending levels including the recent slowdown in Europe; financial conditions of customers and suppliers; fluctuations in the cost of raw materials, components and other input costs; the Company's ability to increase prices, contain costs and improve productivity; the timing and successful completion of our European operations optimization plan; changes in capital availability or cost, including interest rate fluctuations; the competitive marketplace; fiscal and monetary policy; changes in foreign currency exchange rates; direct or indirect consequences of acts of war or terrorism; and labor relations.For additional information on these and other risks and uncertainties, please see AptarGroup's filings with the Securities and Exchange Commission, including its Form 10-K's and Form 10-Q's. Readers are cautioned not to place undue reliance on forward-looking statements.AptarGroup undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

APTARGROUP, INC.

Condensed Consolidated Financial Statements (Unaudited)

(In Thousands, Except Per Share Data)

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Net Sales

$

641,441

$

577,503

$

1,259,074

$

1,170,001

Cost of Sales (exclusive of depreciation shown below)

431,351

390,225

849,837

791,295

Selling, Research & Development and Administrative

88,111

87,840

182,418

176,339

Depreciation and Other Amortization (1)

38,614

32,597

74,785

65,151

Restructuring Initiatives

2,511

(215

)

6,578

(215

)

Operating Income

80,854

67,056

145,456

137,431

Other Income/(Expense):

Interest Expense

(5,442

)

(3,904

)

(10,523

)

(9,146

)

Interest Income

846

794

1,695

1,822

Equity in results of affiliates

(61

)

(158

)

(323

)

(289

)

Miscellaneous, net

73

(1,247

)

(633

)

(1,000

)

Income before Income Taxes

76,270

62,541

135,672

128,818

Provision for Income Taxes

26,390

20,889

45,814

43,353

Net Income

$

49,880

$

41,652

$

89,858

$

85,465

Net (Gain)/Loss Attributable to Noncontrolling Interests

(78

)

34

(27

)

30

Net Income Attributable to AptarGroup, Inc.

$

49,802

$

41,686

$

89,831

$

85,495

Net Income Attributable to AptarGroup, Inc. Per Common Share:

Basic

$

0.75

$

0.63

$

1.36

$

1.29

Diluted

$

0.73

$

0.61

$

1.31

$

1.24

Average Numbers of Shares Outstanding:

Basic

66,420

66,580

66,288

66,388

Diluted

68,106

68,758

68,339

68,940

(1) Depreciation and Amortization for the quarter and year-to-date ended June 30, 2013 included approximately $0.6 million and $1 million, respectively, of accelerated depreciation related to the European Operations Optimization plan.

APTARGROUP, INC.

Condensed Consolidated Financial Statements (Unaudited)

(continued)

(In Thousands)

CONSOLIDATED BALANCE SHEETS

June 30, 2013

December 31, 2012

ASSETS

Cash and Equivalents

$

189,990

$

229,755

Receivables, net

455,935

396,788

Inventories

337,625

321,885

Other Current Assets

101,070

90,505

Total Current Assets

1,084,620

1,038,933

Net Property, Plant and Equipment

836,708

848,233

Goodwill, net

346,730

351,552

Other Assets

71,323

85,694

Total Assets

$

2,339,381

$

2,324,412

LIABILITIES AND EQUITY

Short-Term Obligations

$

35,277

$

74,654

Accounts Payable and Accrued Liabilities

404,001

380,669

Total Current Liabilities

439,278

455,323

Long-Term Obligations

352,636

352,860

Deferred Liabilities

136,805

135,731

Total Liabilities

928,719

943,914

AptarGroup, Inc. Stockholders' Equity

1,410,022

1,379,890

Noncontrolling Interests in Subsidiaries

640

608

Total Equity

1,410,662

1,380,498

Total Liabilities and Equity

$

2,339,381

$

2,324,412

APTARGROUP, INC.

Condensed Consolidated Financial Statements (Unaudited)

(continued)

(In Thousands)

SEGMENT INFORMATION

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

NET SALES

Beauty + Home

$

374,984

$

369,284

$

738,456

$

746,435

Pharma

182,931

132,979

351,800

273,022

Food + Beverage

83,526