AptarGroup(ATR) - 2024 Q2 - Quarterly Results

Financial Performance Overview Aptar reported strong financial results for Q2 and H1 2024, driven by robust Pharma segment growth and improved margins across the business Second Quarter 2024 Performance Aptar reported solid Q2 2024 results with a 2% increase in reported sales and a 3% rise in core sales, driven by strong performance in the Pharma segment and margin improvements. Net income grew 9% to $90 million, and adjusted EPS increased 12% to $1.37 Q2 2024 Financial Highlights | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | Reported Sales | $910 million | +2% | | Core Sales | - | +3% | | Net Income | $90 million | +9% | | Reported EPS | $1.34 | +8% | | Adjusted EPS | $1.37 | +12% | | Adjusted EBITDA | $193 million | +6% | Q2 2024 Segment Sales Growth | Segment | Reported Sales Growth | Core Sales Growth | | :--- | :--- | :--- | | Aptar Pharma | 6% | 7% | | Aptar Beauty | (2)% | (1)% | | Aptar Closures | (1)% | 0% | | Total AptarGroup | 2% | 3% | - Margins continued to improve over the prior year quarter, driven by sales of higher value products, improved operational performance, and cost management efforts[3] First Half 2024 Performance For the first six months of 2024, Aptar achieved 4% growth in both reported and core sales, reaching $1.83 billion. The company delivered double-digit EPS growth and a significant increase in cash flow, with net cash from operations rising to $236 million and free cash flow reaching $92 million H1 2024 Financial Highlights | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Reported Sales | $1.83 billion | $1.76 billion | | Reported EPS | $2.57 | $2.07 | | Adjusted EPS | $2.63 | $2.18 | | Net Cash from Operations | $236 million | $182 million | | Free Cash Flow | $92 million | $27 million | H1 2024 Segment Sales Growth | Segment | Reported Sales Growth | Core Sales Growth | | :--- | :--- | :--- | | Aptar Pharma | 10% | 10% | | Aptar Beauty | (1)% | (1)% | | Aptar Closures | 0% | 0% | | Total AptarGroup | 4% | 4% | Segment Performance Analysis The Pharma segment was the primary growth driver with 7% core sales growth in Q2, while the Beauty and Closures segments saw sales stabilize. Pharma's growth was led by proprietary drug delivery systems, Beauty saw volume improvements in North America offset by lower tooling sales, and Closures' volumes were offset by lower resin cost pass-throughs Aptar Pharma The Pharma segment's core sales grew 7% in Q2, driven by strong demand for proprietary drug delivery systems for various therapies. The Injectables division's sales normalized after a strong Q2 2023, but grew 14% in H1 2024. The Active Material Science division also returned to growth - Strong performance was driven by continued growth for proprietary drug delivery systems used for allergic rhinitis, central nervous system therapeutics, emergency and pain medicines, as well as eye care and nasal decongestants[7] - Sales in the Injectables division declined in Q2 compared to a strong prior year quarter but grew 14% for the first six months of the year[7] - The Active Material Science division returned to growth after a period of destocking due to COVID[7] Aptar Beauty The Beauty segment's core sales declined 1% in Q2. While volumes improved, particularly in North America, this was offset by higher tooling sales in the prior year. Margins improved despite softer sales due to operational performance and cost management - Volume growth in North America showed progressive improvement but was offset by higher tooling sales in the prior year period[8] - Margins improved year-over-year due to operational performance and ongoing cost management, even with softer sales[8] Aptar Closures The Closures segment reported flat core sales in Q2, as increased volumes were offset by the pass-through of lower resin costs. Margins were also flat compared to the prior year - Core sales were flat as increased volumes were offset by the pass-through of lower resin costs[8] - Margins were flat as cost containment and operational performance were offset by the timing of passing through lower resin costs[8] Outlook and Corporate Actions Aptar provides Q3 2024 adjusted EPS guidance, anticipating continued growth from proprietary drug delivery systems and North American consumer dispensing, alongside an increased quarterly dividend and share repurchases Third Quarter 2024 Outlook Aptar anticipates continued growth in Q3 2024, projecting adjusted EPS between $1.38 and $1.46. Growth is expected from proprietary drug delivery systems, particularly for CNS drugs and allergy therapies, and growing demand for elastomeric components for GLP-1 drugs. The company also sees progressive recovery in its consumer dispensing businesses in North America Q3 2024 Guidance | Metric | Q3 2024 Guidance | | :--- | :--- | | Adjusted EPS | $1.38 to $1.46 | | Effective Tax Rate | 23.5% to 25.5% | - Key growth drivers for Q3 include: - Increased demand for nasally delivered central nervous system drugs and allergy therapies - Growing demand for elastomeric components used for GLP-1 - Progressive recovery in North American consumer dispensing technologies[13] - The guidance includes an estimated currency exchange rate headwind of approximately $0.02 per share compared to Q3 2023[14] Capital Allocation The company demonstrated confidence in its financial position by increasing its quarterly dividend by approximately 10% to $0.45 per share. During the second quarter, Aptar also repurchased 34 thousand shares for about $5 million - The Board of Directors increased the quarterly cash dividend by approximately 10% to $0.45 per share[15] - During Q2 2024, the company repurchased 34 thousand shares for approximately $5 million[15] Consolidated Financial Statements (Unaudited) This section presents Aptar's unaudited consolidated statements of income, balance sheets, and cash flow highlights for Q2 and H1 2024, detailing key financial positions and operational cash generation Consolidated Statements of Income For Q2 2024, Net Sales were $910.1 million, leading to an Operating Income of $126.0 million and Net Income Attributable to AptarGroup of $90.5 million. Diluted EPS was $1.34. For H1 2024, Net Sales reached $1.83 billion, with Operating Income of $238.1 million, Net Income of $173.6 million, and Diluted EPS of $2.57 Consolidated Statements of Income (In Thousands, Except Per Share) | (In Thousands, Except Per Share) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $910,063 | $895,906 | $1,825,511 | $1,755,973 | | Operating Income | $126,010 | $116,557 | $238,093 | $200,496 | | Net Income Attributable to AptarGroup | $90,454 | $83,072 | $173,558 | $137,836 | | Diluted EPS | $1.34 | $1.24 | $2.57 | $2.07 | Consolidated Balance Sheets As of June 30, 2024, Aptar's balance sheet remained strong with Total Assets of $4.45 billion, largely consistent with year-end 2023. Total Liabilities stood at $2.04 billion, and Total Stockholders' Equity was $2.41 billion Consolidated Balance Sheets (In Thousands) | (In Thousands) | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,593,650 | $1,549,279 | | Total Assets | $4,453,257 | $4,451,890 | | Total Current Liabilities | $1,168,109 | $1,251,309 | | Total Liabilities | $2,043,042 | $2,130,592 | | Total Stockholders' Equity | $2,410,215 | $2,321,298 | Cash Flow Statement Highlights The company generated significantly improved cash flow in the first half of 2024. Net cash provided by operations for H1 2024 was $235.9 million, up from $182.2 million in H1 2023. Free cash flow for H1 2024 increased to $92.0 million from $27.2 million in the prior year period Cash Flow Statement Highlights (In Thousands) | (In Thousands) | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Cash Provided by Operations | $143,579 | $83,897 | $235,912 | $182,201 | | Capital Expenditures | ($68,205) | ($77,187) | ($143,866) | ($155,012) | | Free Cash Flow | $75,374 | $6,710 | $92,046 | $27,189 | Non-GAAP Financial Reconciliations This section provides reconciliations for non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS, detailing adjustments made to reported figures for a clearer view of operational performance Reconciliation of Adjusted EBITDA In Q2 2024, Adjusted EBITDA increased 6% to $192.8 million, with an Adjusted EBITDA margin of 21.2%. The Pharma segment contributed the majority with $141.5 million. For H1 2024, total Adjusted EBITDA was $371.6 million, with a margin of 20.4% Adjusted EBITDA by Segment (In Thousands) | Adjusted EBITDA (In Thousands) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Aptar Pharma | $141,488 | $125,866 | | Aptar Beauty | $44,638 | $43,100 | | Aptar Closures | $27,118 | $27,772 | | Consolidated Total | $192,768 | $181,237 | Adjusted EBITDA Margin by Segment | Adjusted EBITDA Margin | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Aptar Pharma | 34.1% | 32.2% | | Aptar Beauty | 13.9% | 13.1% | | Aptar Closures | 15.6% | 15.8% | | Consolidated Total | 21.2% | 20.2% | Reconciliation of Adjusted EPS After adjusting for items like restructuring initiatives and net investment losses, Q2 2024 Adjusted EPS was $1.37, a 12% increase from $1.22 in the prior year. For H1 2024, Adjusted EPS was $2.63, up 21% from $2.18 in H1 2023 Reconciliation of Adjusted EPS (Per Diluted Share) | Per Diluted Share | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Reported EPS | $1.34 | $1.24 | $2.57 | $2.07 | | Restructuring initiatives | $0.03 | $0.02 | $0.06 | $0.15 | | Net investment loss (gain) | $0.00 | ($0.03) | $0.00 | ($0.04) | | Foreign currency effects | - | ($0.01) | - | $0.00 | | Adjusted EPS | $1.37 | $1.22 | $2.63 | $2.18 |