Aptar Group (NYSE:ATR) outlined the company's strategy as the company looks past the recent recession and business downturn. The company articulated this strategy and detailed its outstanding financial condition at an analyst meeting held in early September 2010. We'll look at what came out of that meeting.
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Aptar Group operates in the packaging sector, within the niche of dispensing systems. This refers to the part of a product that allows the user to get access to what is inside a product's packaging, including aerosol valves, pump systems and other items. The company also sells dispensing closures that provide a seal to products. The dispensing systems market has a higher growth rate than the overall packaging business.
Aptar Group estimates the total size of the dispensing market at $7 billion, and the closures market at $30 billion. In 2009, the company had 49% of its revenues from pumps, 15% from valves and 25% from dispensing closures.
Aptar Group has most of its revenues outside the United States, with $1.1 billion (58%) of its revenues in Europe compared to $500 million (28%) in the United States. The company also has small but growing businesses in Latin America and Asia.
Aptar Group, like many companies, experienced a slight interruption in growth during the recent recession. The company saw a decline in earnings in 2009 over 2008 as customers reduced orders and drew down inventory. Aptar Group has seen an increase in business in 2010, and consensus estimates have the company earning $2.50 per share in 2010.
Other packaging companies have seen a rebound in business as well. Greif (NYSE:GEF) just raised its earnings outlook for 2010 to a range of $4.15 to $4.35 per share compared to the previous range of $4.05 to $4.30 per share. (For related reading, take a look at Can Earnings Guidance Predict The Future?)
One part of the company's strategy is to maintain a diversified business model through offering a wide range of products in the dispensing and closures market. The company serves a wide range of end markets including beauty, fragrance, cosmetic, food and beverage, household and pharmaceutical. Aptar Group also seeks to be diversified geographically and within its customer base. In 2009, the largest customer represented 6% of total sales.
Aptar Group is in the midst of a realignment announced in February 2010, that will consolidate the company's existing business segments into three market based segments: Aptar Beauty and Home, Aptar Food and Beverage and Aptar Pharma. The company expects the realignment to be completed by 2011.
The company has an unleveraged balance sheet and reported a debt to capitalization ratio of 4%. The company also has cash and cash equivalents worth $247 million as of June 30, 2010. Aptar Group felt confident enough to raise its quarterly dividend by 20% to $0.18 per share after releasing its second quarter of 2010 earnings.
Aptar Group competes with many private companies in its business segments, and in the public universe competes with MeadWestvaco (NYSE:MWV) and 3M Co. (NYSE:MMM).
Aptar Group is realigning its business segments as part of its strategy as the global economy emerges from the recession. The company also has a solid balance sheet to help it contend with any renewed economic contraction.
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