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APTARGROUP, INC. (ATR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered top-line growth and material margin expansion: net sales $0.85B (+1% YoY), adjusted EBITDA $195M (+9% YoY; margin 23.0%), diluted EPS $1.49 (+60% YoY) and adjusted EPS $1.52 (+27% YoY). Management exceeded the top end of its prior Q4 adjusted EPS guidance ($1.22–$1.30). The quarter also benefited from a 13% effective tax rate versus 23% last year .
  • Segment mix drove results: Pharma core sales +4% (proprietary drug delivery strength; adjusted EBITDA margin 35.7%), Closures core sales +7% (food/beverage demand; +260 bps margin YoY), Beauty core sales −3% (prestige mix/tooling headwinds; margin −230 bps YoY) .
  • FY 2024 context: adjusted EBITDA margin reached mid-range of long-term target; net cash from operations +12% and free cash flow +40% YoY; capex stepped down with large projects completed .
  • Outlook: Q1 2025 adjusted EPS guided to $1.11–$1.19 with headwinds from stronger USD (~$0.07) and higher ETR (25–27%), plus softer demand in select end markets. Management expects Pharma to remain the main growth driver in 2025; normalized for FX/tax, they are “cautiously optimistic” on potential double-digit EPS growth for 2025 .
  • Stock reaction catalysts: beat vs company guidance, continued Pharma momentum and Closures margin gains vs cautious near-term guide on FX/tax and beauty/cough & cold softness .

What Went Well and What Went Wrong

  • What Went Well

    • Pharma franchise strength: proprietary drug delivery systems for allergic rhinitis, emergency medicines and CNS therapeutics continued to drive growth and margins. “We exceeded the top end of our guidance range due to better-than-expected operational performance and a lower-than-anticipated effective tax rate” .
    • Closures momentum and margin improvement: core sales +7%; margin +260 bps YoY on higher sales and cost containment; innovation (e.g., Easy Squeeze, SimpliSqueeze) supporting demand in food/beverage .
    • Cash generation and capital allocation: net cash from operations $178M in Q4; free cash flow $112M; refreshed $500M buyback authorization and $0.45 dividend; 218k shares repurchased for ~$37M in Q4 .

  • What Went Wrong

    • Beauty softness and mix: core sales −3% on lower tooling and prestige skincare/fragrance; adjusted EBITDA margin fell to 12.4% (−230 bps YoY), partly reflecting nonrecurring insurance benefit in prior year .
    • Consumer Healthcare (cough & cold) destocking: weaker 2023–2024 season led customers to adjust inventories; nasal decongestants/saline declines impacted Pharma’s CH subsegment .
    • Near-term FX/tax headwinds cloud Q1: stronger USD (~$0.07 EPS headwind) and higher ETR (25–27%) drive ~$0.15 EPS headwind vs prior year quarter; softer demand in select prestige beauty and nasal categories .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$910.1 $909.3 $848.1
Reported Diluted EPS ($)$1.34 $1.48 $1.49
Adjusted Diluted EPS ($)$1.37 $1.49 $1.52
Adjusted EBITDA ($USD Millions)$192.8 $208.4 $194.9
Adjusted EBITDA Margin (%)21.2% 22.9% 23.0%
Net Income Margin (%)9.9% 11.0% 11.9%
Effective Tax Rate (%)—24% 13%
YoY Change IndicatorsQ2 2024 YoYQ3 2024 YoYQ4 2024 YoY
Reported Sales Growth (%)+2% +2% +1%
Reported Diluted EPS Growth (%)+8% +17% +60%
Adjusted EPS Growth (%)+12% +6% +27%

Segment breakdown

SegmentNet Sales ($USD Millions)Adjusted EBITDA Margin (%)Q2 2024Q3 2024Q4 2024
PharmaNet Sales—$414.5 $420.6 $400.7
PharmaAdjusted EBITDA Margin—34.1% 36.0% 35.7%
BeautyNet Sales—$321.5 $302.9 $274.1
BeautyAdjusted EBITDA Margin—13.9% 13.3% 12.4%
ClosuresNet Sales—$174.0 $185.8 $173.3
ClosuresAdjusted EBITDA Margin—15.6% 17.2% 16.1%

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash from Operations ($USD Millions)$143.6 $229.3 $178.2
Capital Expenditures ($USD Millions)$68.2 $66.6 $66.1
Free Cash Flow ($USD Millions)$75.4 $162.7 $112.2
Dividend per Share ($)$0.45 $0.45 $0.45
Shares Repurchased (000s)34 95 218

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($)Q4 2024$1.22–$1.30 Actual: $1.52 Beat vs guidance (company)
Adjusted EPS ($)Q1 2025—$1.11–$1.19 New guidance (cautious)
Effective Tax Rate (%)Q1 2025—25–27% Higher vs FY 2024 run-rate
FX Headwind ($/share)Q1 2025—~$0.07 headwind New headwind commentary
Dividend ($/share)Ongoing$0.45 (authorized Q3/Q4) $0.45 declared for Feb 26, 2025 Maintained
Share Repurchase AuthorizationOngoing$500M authorization (Oct 2024) [24 not read; reflected in PR]$500M active; 218k shares repurchased in Q4 (~$37M) Ongoing execution

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Pharma proprietary drug deliveryContinued healthy demand; CNS and allergy; injectables normalizing; Active Material Science returning to growth Double-digit growth in proprietary; AMS double-digit; margins ~36% Proprietary systems drove results; royalties supported margins; CH destocking offset; Pharma adj. EBITDA margin 35.7% Strength sustained, mix favorable; CH soft near-term
Closures demand/efficiencyVolumes improving; margins flat due to resin pass-through Food-led growth; margins up ~200 bps on utilization/cost Core sales +7%; margin +260 bps YoY; innovation pipeline reignited; plant count/productivity improved Improving utilization and innovation supporting margins
Beauty market/mixVolumes up in NA; tooling comps weighed; margins improved Core −6%; prestige/fragrance comps weighed; margins up YoY Core −3%; prestige/tooling weakness; margin −230 bps YoY; unit volume slightly up; China local brands showing green shoots Mix still unfavorable; early signals of recovery in China
FX & taxFX headwind modest in Q3 guide (~$0.02) Q4 guide implied FX/tax assumptions; ETR ~20–22% Q1 2025 guide: FX ~−$0.07; ETR 25–27%; ~−$0.15 EPS impact vs PY; French tax change noted Headwinds elevated near-term
Regulatory/approvalsneffy nasal epinephrine highlighted earlier in 2024 [30 not read; alluded]—FDA/EMA approvals for neffy; J&J SPRAVATO updates; Digital Health migraine app growth Pipeline expanding; supportive to Pharma
Capital allocationDividend increase to $0.45; modest buybacks $500M buyback authorization; dividend $0.45 Active buybacks in Q4; continued dividend; cautious M&A evaluation; Pharma-heavy capex Ongoing balanced allocation

Management Commentary

  • CEO framing on performance and momentum: “We exceeded the top end of our guidance range due to both, better-than-expected operational performance and a lower-than-anticipated effective tax rate” .
  • Segment strategy and pipeline: “Pharma… achieved an adjusted EBITDA margin for the year of approximately 35% driven by increased sales of higher by products and royalties… Pharma is a pipeline-driven business… we see the pipeline continuing to grow” .
  • Closures operational progress: “Improving utilization rates and ongoing cost management efforts… our innovations help customers win market share” .
  • Beauty restructuring and cost focus: “Beauty… reduced its plant count by 10 and… reduced its workforce by 11%… changes should continue to positively impact the bottom line as the top line improves” .
  • 2025 posture: “When adjusting for currency fluctuations and tax impacts in 2025, we anticipate to deliver solid earnings growth and increase shareholder value” .

Q&A Highlights

  • FX and tax impact: Management quantified ~$0.07 FX and higher ETR headwinds (25–27%), totaling ~−$0.15 EPS vs PY in Q1; normalized for FX/tax, they are “cautiously optimistic” for potential double-digit EPS growth in 2025 .
  • China beauty “green shoots”: Local brands gaining share, solid 11/11, early signs of recovery especially in skincare; Aptar’s in-region supply chain reduces tariff risk .
  • Injectables ramp: Strong pipeline/order book; gradual start as new capacity is validated; unit volumes continued to grow with some lumpy service/tooling revenues .
  • Royalties contribution: Lumpy but growing; “still… a few tens of millions for the company,” reflecting value in long drug development cycles .
  • Corporate/opex dynamics: Q4 corporate line benefited from year-end true-ups (bonus/STI accrual reversals) and tax planning benefits (recognition of deferred tax assets) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and Revenue was unavailable at the time of this analysis due to S&P Global request limits. As a proxy, the company’s own Q4 guidance of $1.22–$1.30 adjusted EPS was exceeded by the reported $1.52 adjusted EPS, indicating a significant beat vs internal guidance .
  • Expect estimates to adjust upward for Pharma and Closures margin trajectories, while near-term FX and tax headwinds, and Beauty/Consumer Healthcare softness, may temper Q1 expectations .
  • Note: Consensus estimates were unavailable from S&P Global at the time of request; values not shown.

Key Takeaways for Investors

  • Pharma remains the core earnings engine with durable demand in allergy, emergency medicine, CNS therapeutics and expanding pipelines; adjusted EBITDA margin ~36% underscores quality of mix .
  • Closures is on a positive margin trajectory driven by utilization and innovation across food/beverage; sustained performance should support consolidated margins .
  • Beauty softness is principally mix-related (prestige/tooling); restructuring and operational improvements should leverage any top-line recovery (China “green shoots”). Watch project pipeline conversion in 2025 .
  • Near-term caution: Q1 guide embeds sizable FX/tax headwinds (~$0.15 EPS vs PY). Monitor EUR and other key currencies; French tax rate change impacts full-year ETR .
  • Capital returns intact: $0.45 dividend and active buybacks under $500M authorization; strong free cash flow generation supports allocation flexibility .
  • Trading lens: Strong Q4 execution and beat vs guidance are positives; however, the conservative Q1 outlook could cap near-term multiples. Focus on margin resilience and Pharma order flow as catalysts through 2025 .

Appendix: Additional Data Points (YoY comparisons)

Q4 Consolidated YoYQ4 2023Q4 2024
Net Sales ($USD Millions)$838.5 $848.1
Diluted EPS ($)$0.93 $1.49
Adjusted EPS ($)$1.20 $1.52
Adjusted EBITDA ($USD Millions)$179.4 $194.9
Adjusted EBITDA Margin (%)21.4% 23.0%
Net Income Margin (%)7.4% 11.9%
Q3 Consolidated YoYQ3 2023Q3 2024
Net Sales ($USD Millions)$893.0 $909.3
Diluted EPS ($)$1.26 $1.48
Adjusted EPS ($)$1.40 $1.49
Adjusted EBITDA ($USD Millions)$193.4 $208.4
Adjusted EBITDA Margin (%)21.7% 22.9%
Net Income Margin (%)9.4% 11.0%
Q2 Consolidated YoYQ2 2023Q2 2024
Net Sales ($USD Millions)$895.9 $910.1
Diluted EPS ($)$1.24 $1.34
Adjusted EPS ($)$1.22 $1.37
Adjusted EBITDA ($USD Millions)$181.2 $192.8
Adjusted EBITDA Margin (%)20.2% 21.2%
Net Income Margin (%)9.3% 9.9%