AptarGroup(ATR) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for Q2 2025 reached $966.0 million, a 6% increase from $910.1 million in Q2 2024, with core sales growth of 3%[158] - Operating income increased by approximately $18.4 million to $144.4 million in Q2 2025, representing 15.0% of net sales, up from 13.8% in the prior year[175] - Net income attributable to AptarGroup, Inc. was $111.7 million for Q2 2025, compared to $90.5 million in Q2 2024, reflecting a significant year-over-year increase[186] - Reported net sales for the first six months of 2025 increased 2% to $1.85 billion compared to $1.83 billion in the same period of 2024, with core sales also up by 2%[158] - Reported net sales for Q2 2025 were $966.0 million, compared to $910.1 million in Q2 2024, reflecting a sales growth driven by operational improvements[224] - Reported net income for Q2 2025 was $111.7 million, an increase from $90.5 million in Q2 2024, resulting in a reported net income margin of 11.6%[224] - Reported net income for the first half of 2025 was $190.4 million, compared to $173.4 million in 2024, reflecting a year-over-year increase of 9.8%[230] Cost and Expenses - Cost of sales as a percentage of net sales decreased to 62.0% in Q2 2025 from 62.4% in Q2 2024, driven by a better mix of higher-margin Pharma product sales[163] - Selling, general and administrative expenses (SG&A) increased to $151.1 million in Q2 2025, but as a percentage of net sales, it decreased to 15.6% from 16.4% in Q2 2024[166] - Depreciation and amortization expenses rose to $69.9 million in Q2 2025, up from $65.0 million in Q2 2024, reflecting higher capital investments[169] - Interest expense increased to $10.9 million in Q2 2025 from $10.1 million in Q2 2024, due to refinancing of debt with higher interest rates[178] - Restructuring costs for Q2 2025 were $1.6 million, down from $2.3 million in Q2 2024, as the company continues to optimize its cost structure[172] Segment Performance - Net sales for the Aptar Pharma segment increased by 7% to $442.6 million in Q2 2025, with core sales growth of 3% after accounting for a 4% positive currency effect[189] - The Aptar Beauty segment reported a 4% increase in net sales to $334.8 million in Q2 2025, with core sales growth of 1%[197] - The Aptar Closures segment saw a reported net sales increase of approximately 8% to $188.6 million in Q2 2025, with core sales growth of 7%[205] - Core sales in the consumer health care market declined by 14% in Q2 2025, primarily due to lower volumes in nasal decongestants and cough and cold products[190] - Core sales of active material science solutions increased by 11% in Q2 2025, driven by strong demand for active film sales[189] Adjusted EBITDA - Adjusted EBITDA for Q2 2025 rose by 11% to $156.8 million, resulting in an Adjusted EBITDA margin improvement to 35.4% from 34.1% in Q2 2024[193] - Adjusted EBITDA for the consolidated segment in Q2 2025 was $218.4 million, with an Adjusted EBITDA margin of 22.6%[224] - Adjusted EBITDA for the Aptar Beauty segment in Q2 2025 increased by 5% to $47.1 million, leading to an Adjusted EBITDA margin of 14.1%[201] - Adjusted EBITDA for the Aptar Closures segment in Q2 2025 increased by 17% to $31.9 million, resulting in an Adjusted EBITDA margin of 16.9%[205] - Adjusted EBITDA for the first six months of 2025 rose by 9% to $59.1 million compared to $54.3 million in the same period of 2024, with the Adjusted EBITDA margin improving from 15.3% to 16.4%[211] Cash Flow and Capital Expenditures - Free cash flow was calculated as cash provided by operating activities less capital expenditures, highlighting the company's ability to generate cash for dividends and acquisitions[222] - Capital expenditures for the first half of 2025 were $120.3 million, compared to $143.9 million in 2024, reflecting a reduction of 16.4%[231] - The company reported a net debt of $10.9 million, indicating a strong financial leverage position[221] - Net cash provided by operations for the first six months of 2025 was $208.7 million, a decrease from $235.9 million in the same period of 2024[241] Debt and Financing - Net debt increased to $916.8 million as of June 30, 2025, from $800.2 million at December 31, 2024, resulting in a net debt to net capital ratio of 25.2%[240] - The consolidated leverage ratio was 1.19 to 1.00 as of June 30, 2025, well below the maximum requirement of 3.50 to 1.00, allowing for approximately $1.9 billion in additional borrowing[247][248] - The company has a revolving credit facility providing unsecured financing of up to $600 million, with a maturity date extended to July 2029[245] - The company utilized $141.1 million under the Term Loan facility as of June 30, 2025, which matures in July 2027[247] Foreign Exchange and Hedging - The company experienced a weaker U.S. dollar compared to most currencies, which had a positive translation effect on financial results during the second quarter of 2025[234] - The company plans to manage foreign exchange exposure primarily through forward exchange contracts to hedge recorded transactions[233] - As of June 30, 2025, the fair value of foreign currency forward exchange contracts was recorded at $0.9 million in prepaid and other assets and $0.9 million in accounts payable[265] - 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 fixed-rate USD debt[265] Dividends and Future Outlook - The Board of Directors declared a quarterly cash dividend of $0.45 per share, payable on August 14, 2025, to stockholders of record as of July 24, 2025[249] - Earnings per share for Q3 2025 are expected to be in the range of $1.53 to $1.61, based on an effective tax rate range of 20.5% to 22.5%[258] - Total estimated cash outlays for capital expenditures in 2025 are expected to be approximately $270 million to $290 million[258]