AptarGroup(US:ATR)2025-05-02 14:29Financial Performance - Reported net sales for Q1 2025 decreased by 3% to $887.3 million compared to $915.4 million in Q1 2024, with core sales remaining flat [155]. - Operating income rose by approximately $1.4 million to $113.4 million in Q1 2025, with an operating income margin of 12.8%, up from 12.2% in the prior year [167]. - Adjusted EBITDA for Q1 2025 increased by 8% to $142.5 million, with an adjusted EBITDA margin of 34.8%, compared to 32.5% in Q1 2024 [180]. - Reported net income for Q1 2025 was $78.7 million, with reported income before income taxes at $106.0 million [205]. - Reported net income for the first quarter of 2025 was $82.9 million, resulting in a reported net income margin of 9.1% [206]. - Adjusted EBITDA for the first quarter of 2025 was $178.8 million, with an adjusted EBITDA margin of 19.5% [206]. - Free cash flow increased to $25.9 million in Q1 2025 from $16.7 million in Q1 2024, indicating improved cash generation [209]. Segment Performance - The Pharma segment reported net sales of $409.5 million, a 1% increase, with core sales growth of 3% driven by strong demand in prescription drugs [178]. - The Beauty segment experienced a 7% decline in net sales to $305.7 million, with core sales down 3% due to lower European demand [184]. - Net sales for Q1 2025 decreased approximately 5% to $172.1 million compared to $180.8 million in Q1 2024, with core sales down approximately 2% [191]. - Core sales to food and beverage markets each increased by 6%, but overall core sales remained flat due to lower tooling sales compared to Q1 2024 [191]. - Personal care sales declined by 18%, while other markets improved by 7% driven by strong laundry and dish care product sales [192]. - The overall reported net sales growth for the food market was down 2%, while the beverage market reported a 3% decline [192]. Expenses and Costs - SG&A expenses increased to $155.3 million in Q1 2025, representing 17.5% of net sales, up from 16.7% in Q1 2024 [161]. - Interest expense rose to $11.4 million in Q1 2025, reflecting refinancing activities and new term loan arrangements [169]. - Restructuring costs for Q1 2025 were $2.0 million, down from $3.5 million in Q1 2024, with a cumulative expense of $66.7 million as of March 31, 2025 [165]. - Corporate & Other costs increased to $23.5 million in Q1 2025 from $21.6 million in Q1 2024, primarily due to higher incentive compensation costs [197]. Tax and Financial Ratios - The effective tax rate increased to 25.8% in Q1 2025 from 20.5% in Q1 2024, primarily due to a temporary surtax in France and lower tax benefits from share-based compensation [173]. - The company has a consolidated leverage ratio of 1.16 to 1.00, well below the maximum requirement of 3.50 to 1.00 [226]. - Earnings per share for Q2 2025 is expected to be in the range of $1.56 to $1.64, based on an effective tax rate of 19% to 21% due to a one-time tax benefit [237]. Cash and Debt Management - Net debt increased to $869.7 million as of March 31, 2025, compared to $800.2 million at December 31, 2024, resulting in a net debt to net capital ratio of 25.4% [218]. - Cash and equivalents decreased to $125.8 million at March 31, 2025, down from $223.8 million at December 31, 2024 [218]. - Total debt decreased slightly to $1.01 billion as of March 31, 2025, from $1.03 billion at December 31, 2024 [218]. - The company utilized $134.8 million in cash for financing activities in Q1 2025, primarily due to increased treasury stock purchases [221]. Dividends and Capital Expenditures - The company declared a quarterly cash dividend of $0.45 per share, payable on May 22, 2025 [228]. - Total estimated cash outlays for capital expenditures in 2025 are projected to be approximately $280 million to $300 million [237]. Risk Management and Strategic Focus - The company faces various risks including economic conditions, geopolitical conflicts, and supply chain disruptions that may impact future performance [239]. - The company has significant foreign exchange exposure primarily to the euro, with additional exposure to currencies such as the Chinese yuan and Brazilian real [242]. - The company is focused on optimizing fixed cost reduction initiatives and successfully implementing facility expansions [241]. - The company emphasizes the importance of managing worldwide customer launches of complex technical products, particularly in developing markets [241]. Currency and Hedging Activities - Currency rates negatively impacted net sales by 3%, highlighting the importance of constant currency analysis for performance evaluation [191]. - The company recorded the fair value of foreign currency forward exchange contracts of $0.6 million in prepaid and other and $0.2 million in accounts payable, accrued and other liabilities [244]. - A seven-year USD/EUR fixed-to-fixed cross currency interest rate swap was entered into to hedge interest rate exposure relating to $203 million of the $400 million 3.60% Senior Notes due March 2032 [244]. - The fair value of the net investment hedge from the interest rate swap is reported as $17.0 million in accounts payable, accrued and other liabilities [244]. - The company anticipates that certain accounting standards issued by the FASB will not have a material impact on its financial statements upon adoption [235].