In an effort to provide incremental returns to shareholders, the board of directors at AptarGroup, Inc. (ATR) approved a 12% increase in its quarterly dividend to 28 cents. Shares of AptarGroup rose around 2.5% to $67.35 but closed at $64.72 at the end of trading on Apr 11 following the announcement.
The new dividend will be paid on May 21, 2014, to shareholders of record on Apr 30, 2014. The latest increase in distribution depicts the company’s ability to generate healthy free cash flow and reflects its balance sheet strength as well. The last dividend hike of 14% from 22 cents to 25 cents was announced in Jan 2013.
AptarGroup paid dividend of over $65 million in 2013. Balanced capital allocation strategy allows the company to distribute incremental dividends and share repurchases, which will support its commitment to improve shareholders’ value facilitating future growth.
AptarGroup ended 2013 with cash and cash equivalents of $309.8 million, up from $229.7 million as of 2012 end. In addition, AptarGroup repurchased 2 million shares for $119 million in 2013. Exiting 2013, the company has nearly 4 million shares authorized remaining for repurchase.
AptarGroup expects earnings in the range of 65 to 70 cents per share for the first quarter of 2014. The company remains focused on cost containment and development of innovative products. AptarGroup will also benefit from targeted savings of $10 million to $12 million on an annualized basis from its restructuring plan in Europe. Reducing the footprint should augment returns over the long term and help boost the company’s growth in Europe.
In Dec 2013, AptarGroup acquired a 20% stake in Bapco Closures for approximately $5 million and secured an exclusive global license for Bapco’s sealing technology. The acquisition, along with the exclusive global license for Bapco’s innovative closure sealing technology, gives AptarGroup a better foothold in the market.
However, effects of the challenging currency environment (particularly in Latin America and Southeast Asia) and modest pricing pressure on the Beauty + Home segment, increase in resin prices and a sluggish U.S. personal care end market remain headwinds.
Crystal Lake, IL-based AptarGroup is a leading global supplier of a broad range of innovative dispensing systems for the fragrance/cosmetic, personal care, pharmaceutical, household and food/beverage markets.
AptarGroup currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry include Packaging Corporation of America (PKG), Neenah Paper, Inc. (NP) and KapStone Paper and Packaging Corporation (KS). While Packaging Corporation and Neenah Paper sport a Zacks Rank #1 (Strong Buy), KapStone Paper has a Zacks Rank #2 (Buy).
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