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AptarGroup (ATR) Q1 Earnings Beat Estimates, Improve Y/Y

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·5 min read
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AptarGroup, Inc.’s ATR adjusted earnings per share was $1.09 in first-quarter 2021, surpassing the Zacks Consensus Estimate of 90 cents. The bottom line also improved 10% year over year and came ahead of the company’s guidance of adjusted earnings per share in the range of 86 cents to 94 cents. The earnings beat failed to impress the market as there has not been significant price change since the earnings release on Apr 29.

On a reported basis, earnings was $1.24 share compared with the year-ago quarter’s 84 cents per share.

Total revenues improved 8% year over year to $777 million during the reported quarter. However, the top line missed the Zacks Consensus Estimate of $784 million. Core sales, excluding currency and acquisition effects, increased 1% year over year.

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. Price, Consensus and EPS Surprise
AptarGroup, Inc. Price, Consensus and EPS Surprise

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

The company continues to gain on increased demand for food dispensing closures as consumers continued to cook at home during the pandemic. Further, it witnessed continued strong sales in the personal care and home care markets fueled by robust demand for dispensing systems used in sanitizers and cleaning products. However, this was offset by weakness in beauty markets thanks to low level of retail and duty-free beauty activity amid the pandemic. Increased demand for injectable components and active material science solutions negated declines in the prescription drug and consumer health care markets. With a drop in non-critical doctor visits and lower incidences of cold and flu illnesses, customers are cutting down inventory of allergy and other respiratory treatment delivery devices.

Operational Update

Cost of sales climbed 8% year over year to $489 million. Gross profit increased 7% year over year to $288 million. Gross margin contracted to 37.1% during the reported quarter compared with the prior-year quarter’s 37.5%.

Selling, research, development and administrative expenses climbed 6.5% year over year to $134 million. Adjusted operating income advanced 2.5% year over year to $87.8 million. Adjusted operating margin came in at 11.3% in the reported quarter, down from the year-ago quarter’s 11.9%. Adjusted EBITDA increased 6% year on year to $152 million in the first quarter.

Segmental Performance

Total revenues in the Beauty + Home segment grew 7% year over year to $347 million. Adjusted operating income in the quarter plunged 21% year over year to $10.8 million.

Total revenues in the Pharma segment rose 5.6% year over year to $314 million. Adjusted operating income amounted to $87.7 million for the March-end quarter compared with the year-earlier quarter’s $90.5 million.

Total revenues in the Food + Beverage segment increased 16% year over year to $116 million. Operating income was $9.9 million in first-quarter 2021, reflecting an improvement of 64% from $6.1 million in the year-ago quarter.

Financial Performance

AptarGroup reported cash and cash equivalents of $255 million as of Mar 31, 2021, down from $300 million as of Dec 31, 2020. The company generated $72 million of cash flow from operations in the first quarter of 2021 compared with the $85 million witnessed in the last-year quarter. As of Dec 31, 2020, long-term debt was approximately $1,037 million, down from $1,055 million as of Dec 31, 2020.

AptarGroup had earlier announced that its board of directors hiked the quarterly cash dividend by 6% to 38 cents per share. The revised dividend will be paid on May 19, 2021, to stockholders of record as of Apr 28, 2021.

Outlook

AptarGroup estimates second-quarter 2021 adjusted earnings per share in the range of 91 cents to 99 cents. The company expects the current market trends to continue. Demand for prescription drug and consumer health care devices will remain under pressure as customers continue to lower existing inventories. However, in some of other markets, the company expects easier comparisons to the prior-year quarter as it bore the brunt of the pandemic induced lockdowns. Earnings are also likely to be negatively impacted by the timing of passing through higher resin and other raw material costs.

Price Performance

Shares of the company have gained 41.2% in the past year, compared with the industry’s rally of 50.7%.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector include Dover Corporation DOV, Caterpillar Inc. CAT and Pentair plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 65%.

Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 112% in the past year.

Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 87% in a year’s time.

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