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AptarGroup (ATR) Earnings Trump Estimates in Q2, Up Y/Y

Zacks Equity Research

AptarGroup, Inc. ATR delivered second-quarter 2019 adjusted earnings per share of $1.15, beating the Zacks Consensus Estimate of $1.13 by a margin of 1.8%. Further, the bottom line went up 9.5% year over year.

On a reported basis, the company recorded earnings of $1.12 per share compared with the year-ago quarter’s 86 cents.

Total revenues improved 4.5% year over year to $743 million in the second quarter. Core sales growth was 4%, acquisitions contributed 6%, while unfavorable exchange rates unfavorably impacted sales by 5%. Strong broad-based demand for drug delivery and food dispensing solutions drove top-line core growth during the quarter. The top line, however, missed the Zacks Consensus Estimate of $752 million.

Operational Update

Cost of sales inched up 1% to $469 million from $464 million recorded in the year-ago quarter. Gross profit increased 11.4% year over year to $274 million. Gross margin came in at 36.8% during the June-end quarter, up from the prior-year quarter’s 34.6%.
 
Selling, research, development and administrative expenses rose 6.5% year over year to $114 million. Adjusted operating income went up 9.4% year over year to $105 million. The company reported operating margin of 14.1% compared with the prior year’s 13.5%. Adjusted EBITDA increased 14.2% year over year to $161 million in the April-June quarter.

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. price-consensus-eps-surprise-chart | AptarGroup, Inc. Quote

Segmental Performance

Total revenues in the Beauty + Homes segment declined 7% year over year to $342 million. Adjusted operating income in the June-end quarter was up 8.7% year over year to $28 million.
 
Total revenues in the Pharma segment increased 17% year over year to $282 million. Adjusted operating income climbed 14.4% year over year to $85.6 million in the second quarter.

Total revenues in the Food + Beverage segment climbed 17.6% year over year to $118.6 million. Operating income grew 6% year over year to $12.3 million.

Financial Performance

AptarGroup reported cash and cash equivalents of $303 million at the end of the reported quarter, up from $262 million as of Dec 31, 2018. At the quarter’s end, long-term debt was approximately $1,148 million, up from $1,125 million as of Dec 31, 2018.

AptarGroup's board has announced quarterly cash dividend of 36 cents per share. The dividend is payable on Aug 21, to shareholders of record as of Jul 31, 2019.

Outlook
 
AptarGroup now projects adjusted earnings per share for third-quarter 2019 between 91 cents and 97 cents. It also reflects a higher tax rate of 30-32%. Moreover, the company expects impressive core product sales growth across all segments in the current year. Furthermore, AptarGroup’s Nanopharm and Gateway Analytical acquisitions will likely expand its service portfolio that supports pharmaceutical and biotech customers.

Share Price Performance

Shares of the company have appreciated around 17.8% over the past year, outperforming the industry’s decline of 31.5%.



 

Zacks Rank & Stocks to Consider

AptarGroup currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Industrial Products sector are Albany International Corporation AIN, Unifirst Corporation UNF, and Cintas Corporation CTAS. While Albany International and Unifirst flaunt a Zacks Rank #1 (Strong Buy), Cintas carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albany International has an estimated earnings growth rate of 32.3% for 2019. The company’s shares have gained 8% in the past year.

Unifirst has a projected earnings growth rate of 15.17% for the current year. The stock has rallied 2% in a year’s time.

Cintas Corporation has an expected earnings growth rate of 11.15% for the ongoing year. The stock has appreciated 19% over the past year.

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