Aptargroup reports third quarter results; announces european
operations optimization plan
Crystal lake, ill.--(business wire)--aptargroup, inc. (nyse:atr) today reported third quarter results and announced a plan to optimize certain european operations. third quarter 2012 summary reported sales declined 2% (core sales increased 2% excluding currency effects and acquisition) certain markets in europe continued to be soft; latin america and asia remained strong aptar stelmi added $25 million in reported sales changes in currency exchange rates negatively impacted sales by approximately 8% and earnings by approximately 7% earnings per share of $0.62 included a negative impact of $0.02 per share related to aptar stelmi’s results that included acquisition accounting effects european operations optimization plan announced third quarter results for the quarter ended september 30, 2012, reported sales declined 2% to $589.6 million from $601.2 million a year ago. changes in currency exchange rates negatively impacted sales by approximately 8%. recently acquired aptar stelmi contributed approximately $25.3 million or 4% to the quarterly sales growth. commenting on the quarter, stephen hagge, president and ceo, said, “the diversity of our business continued to help us achieve growth in a difficult environment. as we expected, it was a challenging quarter compared to the prior year, particularly in the beauty, food and consumer health care markets. certain customers in the european beauty market remained cautious but this weakness was offset by increased demand from the personal care market. global sales to the beverage market continued to be strong and this more than offset softer food volumes, mainly in the u.s. also, demand from the consumer health care market, particularly in russia and eastern europe, declined from last year’s very strong levels. however, our businesses in latin america and asia continued to perform quite well.” hagge continued, “the u.s. dollar continued to be strong relative to numerous other currencies and this had a significant negative impact on our results. we estimate that the negative impact of changes in currency exchange rates accounted for approximately 8% of the decline in sales and approximately 7% of the decline in earnings in the quarter. included in our results for the first time were the results of aptar stelmi, our most recent acquisition. aptar stelmi contributed approximately $25 million to our sales but the required purchase accounting adjustments had a negative impact on earnings. third quarter earnings per share of $0.62 included a negative impact of $0.02 per share from the aptar stelmi results which included the acquisition accounting adjustments. this compared to $0.72 per share reported a year ago. if today’s exchange rates were in place a year ago, we estimate that the prior year’s third quarter earnings per share would have been approximately $0.67 per share. in addition, prior year results were positively impacted by approximately $0.02 per share related to a lower effective tax rate.” year-to-date results for the nine months ended september 30, 2012, reported sales declined 2% to $1.76 billion from $1.79 billion a year ago. changes in currency exchange rates negatively impacted sales by approximately 6%. recently acquired aptar stelmi contributed approximately $25.3 million or 1% to the year-to-date sales growth. hagge commented on the company’s year-to-date performance, “in spite of challenging conditions through the first nine months, we’ve been able to grow core sales by 3% and this is on top of strong sales growth last year. sales growth in the beauty market has been negatively impacted by the recent softness attributable to economic uncertainties, principally in europe. however, global beauty sales are above last year’s level for the nine months due to a good start to the year and continued strong growth in latin america. also driving our sales growth was strong demand for our innovative beverage closures as well as increased demand from the personal care and prescription drug markets over the prior year.” hagge continued, “throughout the year we’ve been facing a challenging exchange rate environment. we estimate that on a year-to-date basis, changes in exchange rates have negatively impacted sales by approximately 6% with essentially the same impact on our earnings. aptar stelmi’s third quarter results contributed approximately 1% to our sales growth in the first nine months but negatively impacted earnings because of the required acquisition accounting adjustments.” reported diluted earnings per share, which included a negative impact of $0.08 per share related to the aptar stelmi acquisition ($0.06 per share from acquisition costs and $0.02 per share from the third quarter aptar stelmi results that reflected the acquisition accounting adjustments), decreased 11% to $1.86 per share compared to $2.08 per share a year ago. if the 2012 exchange rates were in place in 2011, aptargroup estimates that the earnings per share for the first nine months of 2011 would have been approximately $1.95 per share. prior year earnings per share also reflect a positive impact of $0.04 per share from a lower effective tax rate. stelmi acquisition update hagge commented on the recent acquisition, “we are extremely pleased with the progress of the aptar stelmi integration and the efforts of the combined team to make sure the business continues to grow uninterrupted. customer feedback has been very positive and demand for aptar stelmi’s products has been strong in 2012. volumes are up 9% in the third quarter compared to the prior year. we continue to expect the aptar stelmi business to be accretive annually between $0.12 and $0.16 per share beginning in the fourth quarter.” european operations optimization plan aptargroup today announced a plan to optimize certain capacity in europe. due to increased production efficiencies and to better position the company for future growth in europe, aptargroup will transfer and consolidate production capacity involving twelve facilities. two of the related facilities are expected to close and this would impact approximately 170 employees. the locations involved in the operations optimization plan are facilities that are serving the beauty, personal care, food, beverage, and consumer health care markets. the total costs associated with the plan are estimated to be approximately €14 million (approximately $18 million using current exchange rates) of which approximately €4 million (approximately $5 million using current exchange rates) relates to non-cash expenses. the charges will be recorded in the quarter in which they are recognized for accounting purposes. annual savings are estimated to be approximately €9 million (approximately $12 million using current exchange rates) beginning in late 2013. commenting on the operations optimization plan, hagge stated, “these actions are part of our long-term strategy intended to prepare us for future growth. we are benefiting from our continual investment in efficient production equipment and our ability to adapt to the changing needs of the markets we serve. in this instance, we looked at product lines, supply chains, and production capacity. we identified ways to streamline certain product technologies, reduce complexity for our people and our customers, and optimize our production footprint. this allows for a more efficient deployment of capital to support our growth in europe.” outlook regarding the company’s outlook, hagge stated, “we continue to be encouraged by the level of new project dialogue we are having with our customers. we are also optimistic that our market-focused approach will yield new applications for our innovative dispensing technologies. nevertheless, we expect further challenges in the fourth quarter, including continued currency exchange rate headwinds, ongoing softness in certain markets driven by economic uncertainties, and decreased demand for our prescription nasal spray pumps, mainly due to the generic allergy market having a high level of inventory at this time. it appears that the inventory management issue affecting our prescription nasal spray pumps is isolated to the fourth quarter.” hagge continued, “our fourth quarter earnings per share guidance does not include any potential impact from our european operations optimization plan. currently, we anticipate earnings per share for the fourth quarter, including approximately $0.03 per share from the results of aptar stelmi, to be in the range of $0.53 to $0.58 compared to $0.57 per share a year ago. had today’s currency exchange rates been in place a year ago, we estimate that the prior year’s fourth quarter earnings per share would have been approximately $0.54 per share.” open conference call there will be a conference call on friday, november 2, 2012 at 8:00 a.m. cdt to discuss the company’s third quarter results for 2012. 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 web site. aptargroup, inc. is a leading global supplier of a broad range of innovative dispensing systems for the beauty, personal care, pharmaceutical, home care, 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; our ability to successfully integrate the stelmi acquisition; 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. 2012 2011 2012 2011 2012 2011 2012 2011 net sales segment income (1) segment income as % of net sales
