AptarGroup Inc. (NYSE:ATR) announced impressive third-quarter 2018 results late last week. The dispensing systems company highlighted broad-based growth across each of its business segments, the early fruits of its ongoing business-transformation initiatives, and progress integrating its recently closed acquisition of packaging-technology leader CSP Technologies.

Now that the dust has settled, let's take a closer look at what AptarGroup accomplished over the past few months, and what investors should be watching in the coming quarters.

Aptar pharmaceutical products

IMAGE SOURCE: APTARGROUP.

AptarGroup results: The raw numbers

Metric

Q3 2018

Q3 2017

Year-Over-Year Growth

Net sales

$665.8 million

$624.3 million

6.6%

GAAP net income

$39.0 million

$53.5 million

(27.1%)

GAAP earnings per diluted share

$0.60

$0.83

(27.7%)

DATA SOURCE: APTAR GROUP, GAAP = GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. 

What happened with AptarGroup this quarter?

  • Excluding the impact of currencies and acquisitions, core sales increased 7% year over year.
  • Adjusted for restructuring and acquisition expenses, (non-GAAP) net income grew 21% year over year to $0.99 -- above the high end of AptarGroup's latest guidance for adjusted earnings per share of $0.90 to $0.95.
  • By business segment:
    • Beauty and home core sales grew 2% as reported, including 5% core sales growth, a 1% contribution from acquisitions, and a 4% currency headwind.
    • Pharma sales climbed 14% as reported, including 12% core sales growth, 5% from acquisitions, and a 3% currency headwind.
    • Food and beverage sales increased 7% as reported, including 7% core sales growth, 3% from acquisitions, and a 3% currency headwind.
  • Adjusted EBITDA grew 14% year over year to $134.2 million.
  • On Aug. 27, AptarGroup completed its previously announced $555 million acquisition of CSP Technologies -- earlier than its previously expected fourth-quarter close. The integration of CSP is under way.
  • Aptar confirmed that it "remains on track" with the progress of its three-year business transformation and restructuring, through which it aims "to become a more agile, competitive, and customer-centric business." Specifically, according to Aptar CEO Stephen Tanda, the company is "starting to see gradual incremental improvements" in its beauty and home segment.

What management had to say

Tanda added:

We reported another quarter of strong top-line core growth across each segment and geographic region. This reflects our ongoing focus on our customers and the ways in which we help them win in their markets. [...] In spite of our growth in the quarter, some operating leverage was offset by the negative effects of the challenging inflationary environment we are facing, especially in our Beauty + Home and Food + Beverage segments. Regarding the integration of CSP Technologies, we are very pleased with the progress thus far and remain enthusiastic about the future potential to leverage CSP's active packaging technologies across many areas of our business.

Looking forward

For the fourth quarter of 2018, AptarGroup expects continued core sales growth from each segment -- though inflation and higher raw material and transportation costs will still serve as margin headwinds. Aptar also believes it will see "weaker" beverage product volumes in China in the near term. As such, AptarGroup anticipates fourth-quarter adjusted earnings per share in the range of $0.81 to $0.86, good for slightly tempered 18% year-over-year growth at the midpoint.

All things considered, this was as solid a quarter as any investor could have asked as AptarGroup juggles its acquisition integration, restructuring efforts, and fostering consistent, profitable growth from each of its three primary business segments. And I think long-term shareholders should be more than pleased as Aptar operates from a position of strength today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.