AptarGroup(US:ATR)2025-10-31 13:33Financial Performance - Net sales for Q3 2025 reached $961.1 million, a 6% increase from $909.3 million in Q3 2024, with core sales growth of 1% after excluding acquisitions and currency effects [182]. - The effective tax rate decreased to 17.1% in Q3 2025 from 23.8% in Q3 2024, contributing to a net income of $128.5 million, up from $100.0 million in the prior year [200]. - Operating income for the first nine months of 2025 increased by approximately $18.4 million to $394.8 million, with an operating income margin of 14.0% compared to 13.8% in the same period of 2024 [201]. - Net income attributable to AptarGroup, Inc. for the three months ended September 30, 2025, was $127.9 million, up from $100.0 million in the same period of 2024, representing a 28% increase [211]. - Reported net income for the same period was $318,227, with a reported net income margin of 11.3% [252]. - The company reported a net income of $127.8 million for the quarter ended September 30, 2025 [248]. Segment Performance - Net sales for the Aptar Pharma segment increased by 6% in Q3 2025 to $445.4 million compared to $420.6 million in Q3 2024, with core sales growth of 2% [214]. - Adjusted EBITDA for the Aptar Pharma segment in Q3 2025 increased by 9% to $165.8 million, resulting in an Adjusted EBITDA margin of 37.2%, up from 36.0% in Q3 2024 [218]. - Reported net sales for the Aptar Beauty segment increased by 8% to $327.8 million in Q3 2025 compared to $302.9 million in Q3 2024, with core sales remaining flat [224]. - Adjusted EBITDA for the Aptar Beauty segment in Q3 2025 decreased by 1% to $39.7 million, leading to a decline in Adjusted EBITDA margin from 13.3% in Q3 2024 to 12.1% in Q3 2025 [227]. - Net sales for the Aptar Closures segment increased approximately 1% to $188.0 million in Q3 2025 compared to $185.8 million in Q3 2024, with core sales decreasing by about 1% [232]. Expenses and Costs - Selling, general and administrative expenses (SG&A) rose to $148.8 million in Q3 2025, up from $141.6 million in Q3 2024, but as a percentage of net sales, it decreased to 15.5% [190]. - Cost of sales as a percentage of net sales increased to 62.2% in Q3 2025 from 61.4% in Q3 2024, primarily due to lower margin applications in the Pharma segment [187]. - Depreciation and amortization expenses increased to $75.2 million in Q3 2025, up from $67.0 million in Q3 2024, reflecting higher capital investments and recent acquisitions [193]. - Interest expense increased to $13.5 million in Q3 2025, up from $12.3 million in Q3 2024, due to higher rates on current borrowings [203]. - The company recognized $2.2 million in restructuring costs for Q3 2025, down from $3.9 million in Q3 2024, with cumulative restructuring expenses totaling $70.5 million as of September 30, 2025 [197]. Cash Flow and Debt - Free Cash Flow for the nine months ended September 30, 2025, was $206.0 million, down from $254.8 million for the same period in 2024 [268]. - Net Debt increased to $935.8 million as of September 30, 2025, from $800.2 million at December 31, 2024, resulting in a Net Debt to Net Capital ratio of 25.1% [267]. - Total Debt rose to $1.2 billion at September 30, 2025, compared to $1.03 billion at December 31, 2024 [267]. - The company utilized $141.1 million under its Term Loan facility as of September 30, 2025 [273]. - The Consolidated Leverage Ratio was 1.22 to 1.00 as of September 30, 2025, well below the maximum requirement of 3.50 to 1.00 [273]. Tax and Future Projections - The effective tax rate for the fourth quarter of 2025 is expected to range from 19.5% to 21.5% [282]. - The company expects adjusted earnings per share for Q4 2025 to be in the range of $1.20 to $1.28 [282]. Foreign Exchange and Hedging - The company has a significant foreign exchange exposure primarily to the euro, with additional exposure to currencies such as the Chinese yuan and Brazilian real [288]. - A weakening U.S. dollar relative to foreign currencies has a positive translation effect on the company's financial statements, while a strengthening dollar has a negative effect [288]. - The company entered into a seven-year USD/EUR fixed-to-fixed cross currency interest rate swap to hedge interest rate exposure related to $203 million of debt [290]. - The fair value of the net investment hedge from the USD/EUR swap agreement is reported at $33.8 million in liabilities [290]. - The company has recorded $0.1 million in prepaid and other assets and $0.9 million in liabilities related to foreign currency forward exchange contracts [290]. - The company’s foreign currency contracts primarily expire before the end of the fourth quarter of 2025 [289]. General Remarks - The company continues to focus on strategic acquisitions and restructuring initiatives to enhance operational efficiency and market presence [252]. - The company cautions that actual results may differ materially from forward-looking statements due to various risks and uncertainties [286].