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Income
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57: R47 GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of HTML 44K
Goodwill (Details)
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Intangible Assets (Details)
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Amortization Expense (Details)
60: R50 Income Taxes (Details) HTML 32K
61: R51 DEBT - Short-term Debt Obligations (Details) HTML 40K
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Components of Net Periodic Benefit Cost (Details)
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Narrative (Details)
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Reclassifications From Accumulated Other
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Narrative (Details)
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Fair Value of Derivative Instruments in the
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Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading symbol(s)
Name of each exchange on which registered
iCommon Stock, $.01 par value
iATR
iNew
York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYesþ
No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYesþ No ◻
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
iLarge
accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
i☐
Emerging growth company
i☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No iþ
The
number of shares outstanding of common stock, as of October 21, 2022, was i65,284,008 shares.
Notes payable, revolving credit facility and overdrafts
$
i53,209
$
i147,276
Current
maturities of long-term obligations, net of unamortized debt issuance costs
i111,034
i142,351
Accounts
payable, accrued and other liabilities
i732,409
i692,865
Total
Current Liabilities
i896,652
i982,492
Long-Term
Obligations, net of unamortized debt issuance costs
i1,028,048
i907,024
Deferred
income taxes
i19,545
i27,547
Retirement
and deferred compensation plans
i105,947
i116,809
Operating
lease liabilities
i42,125
i48,010
Deferred
and other non-current liabilities
i46,030
i74,882
Commitments
and contingencies
i—
i—
Total
Deferred Liabilities and Other
i213,647
i267,248
AptarGroup, Inc.
stockholders’ equity
Common stock, $ii.01/
par value, ii199/ million shares authorized, i70.7
million and i70.4 million shares issued as of September 30, 2022 and December 31, 2021, respectively
Restricted cash included in the line item prepaid and other on the Condensed Consolidated Balance Sheets as shown below represents amounts held in escrow related to the Metaphase acquisition.
Notes to Condensed Consolidated Financial Statements
(Dollars in Thousands, Except per Share Amounts, or as Otherwise Indicated)
(Unaudited)
NOTE
1 – iSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i
BASIS OF PRESENTATION
The
accompanying unaudited Condensed Consolidated Financial Statements include the accounts of AptarGroup, Inc. and our subsidiaries. The terms “AptarGroup”, “Aptar”, “Company”, “we”, “us” or “our” as used herein refer to AptarGroup, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated.
In the opinion of management, the unaudited Condensed Consolidated Financial Statements (the “Condensed Consolidated Financial Statements”) include all normal recurring adjustments necessary for a fair statement of consolidated financial position, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. The accompanying
Condensed Consolidated Financial Statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. Also, certain financial position data included herein was derived from the audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 but does not include all disclosures required by U.S. GAAP. Accordingly, these Condensed
Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.
Beginning July 1, 2018, we have applied highly inflationary accounting for our Argentinian subsidiary pursuant to U.S. GAAP. We have changed the functional currency from the Argentinian peso to the U.S. dollar and remeasured our peso denominated assets and liabilities using the official rate. In September 2019, the President of Argentina reinstituted exchange controls restricting foreign currency purchases in an attempt to stabilize Argentina’s financial markets. As a result
of these currency controls, a legal mechanism known as the Blue Chip Swap emerged in Argentina for reporting entities to transfer U.S. dollars. The Blue Chip Swap rate has diverged significantly from Argentina’s “official rate” due to the economic environment. During the second quarter of 2020, we transferred U.S. dollars into Argentina through the Blue Chip Swap method. During the third quarter of 2021, we utilized the Blue Chip Swap and recognized a gain of $i1.4 million. Our Argentinian operations contributed less than
i1.5% of consolidated net assets and revenues as of and for the nine months ended September 30, 2022.
The COVID-19 pandemic resulted in disruptions to the global economy and supply chains. As the rates of transmission have slowed in many regions during 2022, we have seen several of our impacted applications return to more normal volume levels. We have seen improvement in sales of our products to our prescription, beauty, hair care and sun care customers as people return to more active lifestyles. However,
we have also seen more normal volumes in some of the applications which benefited from the pandemic, such as our personal cleansing and surface cleaner products, food applications, active material science solutions and injectables components. While some countries continue to experience disruptions due to efforts to eliminate the virus, we do not believe these impacts will be material to our business based on the current environment.
As of September 30, 2022, the war in Ukraine has not had a significant direct impact on our business, though the near-term visibility for this situation is expected to remain fluid and uncertain for the next several quarters. However, we have experienced some indirect impacts on our business, including higher energy and other input costs as well as certain supply chain disruptions.
/
i
ADOPTION
OF RECENT ACCOUNTING STANDARDS
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB’s Accounting Standards Codification.
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy including the nature of the transaction, the financial statement line items affected by the transaction and any significant terms and conditions associated with the transactions. We adopted this guidance in the fourth quarter of 2021 using the prospective approach.
In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments to this update apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 was further amended in January 2021 by ASU 2021-01 which clarified the applicability of certain provisions. Both standards are effective upon issuance and can be adopted any time prior to December 31, 2022. The guidance in
ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. During 2021, we amended the revolving credit facility to provide mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. We are evaluating any further impact this standard may have on our Condensed Consolidated Financial Statements and anticipate no further significant impacts.
Other accounting standards that have been issued by the FASB or other standards-setting bodies did not have a material impact on our Condensed Consolidated Financial Statements.
i
INCOME
TAXES
We compute taxes on income in accordance with the tax rules and regulations of the many taxing authorities where income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pre-tax income for financial accounting purposes. To the extent that these differences create timing differences between the tax basis of an asset or liability and our reported amount in the financial statements, an appropriate provision for deferred income taxes is made.
The tax rate for the three months ended September 30, 2022 reflects an out-of-period charge of $i7.2 million
for taxes due to a legal entity reorganization to enhance the Company's dividend and cash management capabilities. The tax charge contributed i8.5% to the impact on the effective tax rate for the three months ended September 30, 2022. The tax charge should have been recognized in the three months ended March 31, 2022. The impacts of
the error on the three months ended March 31, 2022 and the three months ended September 30, 2022 are not considered material to either period.
We maintain our assertion that the cash and distributable reserves at our non-U.S. affiliates are indefinitely reinvested. As of September 30, 2022, under currently enacted laws, we do not have a balance of foreign earnings that will be subject to U.S. taxation upon repatriation. We will provide for the necessary withholding and local income taxes when management decides that an affiliate should make a distribution. These decisions are made taking into consideration the financial requirements of the non-U.S. affiliates and our global cash management goals.
We provide a liability for the amount
of unrecognized tax benefits from uncertain tax positions. This liability is provided whenever we determine that a tax benefit will not meet a more-likely-than-not threshold for recognition.
We are subject to the examination of our returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. We believe that we have adequately provided a tax reserve for any adjustments that may result from tax examinations or uncertain tax positions. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner inconsistent with our expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. The resolution of each of these audits is not expected to be material to our Condensed Consolidated Financial Statements.
/
NOTE
2 – iREVENUE
i
Revenue
by segment and geography for the three and nine months ended September 30, 2022 and 2021 is as follows:
We
perform our obligations under a contract with a customer by transferring goods and/or services in exchange for consideration from the customer. The timing of performance will sometimes differ from the timing of the invoicing for the associated consideration from the customer, thus resulting in the recognition of a contract asset or a contract liability. We recognize a contract asset when we transfer control of goods or services to a customer prior to invoicing for the related performance obligation. The contract asset is
transferred to accounts receivable when the product is shipped and invoiced to the customer. We recognize a contract liability if the customer's payment of consideration precedes the entity's performance.
i
The opening and closing balances of our contract asset and contract liabilities are
as follows:
The
differences in the opening and closing balances of our contract asset and contract liabilities are primarily the result of timing differences between our performance and the invoicing. The total amount of revenue recognized during the current year against contract liabilities is $i96.1
million, including $i52.8 million relating to contract liabilities at the beginning of the year. Current contract assets and long-term contract assets are included within the Prepaid and Other and Miscellaneous assets, respectively, while current contract
liabilities and long-term contract liabilities are included within Accounts payable, accrued and other liabilities and deferred and other non-current liabilities, respectively, within our Condensed Consolidated Balance Sheets.
Determining the Transaction Price
In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), we include an estimate of the expected amount of consideration as revenue. We apply the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identify reasonable
estimates based on this information. We apply the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which we will be entitled.
We primarily manufacture and sell drug delivery, consumer product dispensing and active material science solutions. The amount of consideration is typically fixed for customers. At the time of delivery, the customer is invoiced at the agreed-upon price. Revenue from product sales is typically recognized upon
manufacture or shipment, when control of the goods transfers to the customer.
To determine when the control transfers, we typically assess, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. For a majority of product sales, control of the goods transfers to the customer at the time of shipment of the goods. Once the goods are shipped, we are precluded from redirecting the shipment to another customer. Therefore, our performance obligation is satisfied at the time of shipment. For sales in which control transfers upon delivery, shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs and revenue is recorded upon final delivery to the customer location. We
have elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. We do not have any material significant payment terms as payment is typically received shortly after the point of sale.
There also exist instances where we manufacture highly customized products that have no alternative use to us and for which we have an enforceable right to payment for performance completed to date. For these products, we transfer control and recognize revenue over time by measuring progress towards completion using the output method based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks. We believe this measurement provides a faithful depiction of the transfer of goods as the costs incurred reflect the value
of the products produced.
As a part of our customary business practice, we offer a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately, do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties.
Tooling Sales
We also build or contract for molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, we recognize revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to us and we have
an enforceable right to payment for performance completed to date, we transfer control and recognize revenue over time by measuring progress towards completion using the input method based on costs incurred relative to total estimated costs to completion. Otherwise, revenue for the tooling is recognized at the point in time when the customer approves the tool. We do not have any material significant payment terms as payment is typically either received during the mold-build process or shortly after completion.
In certain instances, we offer extended warranties on our tools above and beyond the normal standard warranties. We normally receive payment at the inception of the contract and recognize revenue over the term of the contract. We do not have
any material extended warranties as of September 30, 2022 or December 31, 2021.
Service Sales
We also provide services to our pharmaceutical customers. As with product sales, we recognize revenue based on completion of each performance obligation of the service contract. Milestone deliverables and upfront payments are tied to specific performance obligations and recognized upon satisfaction of the individual performance obligation.
We do not incur significant costs to obtain or fulfill revenue contracts.
Credit
Risk
We are exposed to credit losses primarily through our product sales, tooling sales and services to our customers. We assess each customer’s ability to pay for the products we sell by conducting a credit review. The credit review considers our expected billing exposure and timing for payment and the customer’s established credit rating or our assessment of the customer’s creditworthiness based on our analysis of their financial statements when a credit rating is not available. We also consider contract terms and conditions, country and political risks, and business strategy in our evaluation. A credit limit is established for each customer based on the outcome of this review.
We monitor our ongoing credit exposure through active review of customer balances against contract
terms and due dates. Our activities include timely account reconciliation, dispute resolution and payment confirmation. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.
Current uncertainty in credit and market conditions due to the COVID-19 pandemic, the war in Ukraine, rising interest rates and inflation may slow our collection efforts if customers experience significant difficulty accessing credit and paying their obligations. Imposed sanctions delay payment, which may lead to higher than normal accounts receivable and increased CECL charges.
NOTE
3 - iINVENTORIES
i
Inventories, by component net of reserves, consisted of:
Aggregate
amortization expense for the intangible assets above for the quarters ended September 30, 2022 and 2021 was $i10,678 and $i10,249,
respectively. Aggregate amortization expense for the intangible assets above for the nine months ended September 30, 2022 and 2021 was $i32,772 and $i29,871,
respectively.
Future estimated amortization expense for the years ending December 31 is as follows:
2022
$
i10,685
(remaining
estimated amortization for 2022)
2023
i42,362
2024
i39,151
2025
i37,702
2026
i35,611
Thereafter
i151,633
/
Future
amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of September 30, 2022.
NOTE 5 – iINCOME TAXES
The tax provision for interim periods is determined using the estimated annual effective consolidated
tax rate, based on the current estimate of full-year earnings and related estimated full year-taxes, adjusted for the impact of discrete quarterly items.
The effective tax rate for the three months ended September 30, 2022 and 2021, respectively, was i36.2% and i29.2%.
The effective tax rate for the nine months ended September 30, 2022 and 2021, respectively, was i31.0% and i22.9%.
The tax rate for the three months ended September 30, 2022 reflects an out-of-period charge of $i7.2 million for taxes related to a legal entity reorganization to enhance the Company's dividend and cash management capabilities. The tax charge contributed i8.5%
to the impact on the effective tax rate for the three months ended September 30, 2022. The tax charge should have been recognized in the three months ended March 31, 2022. The lower reported effective tax rate for the nine months ended September 30, 2021 reflects additional tax benefits from employee stock-based compensation. The impacts of the error on the three months ended March 31, 2022 and the three months ended September 30, 2022 are not considered material to either period.
NOTE 6 – iDEBT
Notes
Payable, Revolving Credit Facility and Overdrafts
On
June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") with a syndicate of banks to replace the then-existing facility maturing July 2022 (the "prior credit facility") and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility"). The revolving credit facility matures in June 2026, subject to a maximum of itwoione-year extensions in certain circumstances, and provides for unsecured financing of up to $i600 million available in the U.S. and to our wholly-owned UK subsidiary. The amended term facility
matured in July 2022 and was repaid in full. The revolving credit facility can be drawn in various currencies including USD, EUR, GBP, and CHF to the equivalent of $i600 million, which may be increased by up to $i300 million
subject to the satisfaction of certain conditions. As of September 30, 2022, ino balance was utilized under the revolving credit facility in the U.S. and €i50.0 million
(approximately $i49.0 million) was utilized by our wholly-owned UK subsidiary. As of December 31, 2021, $i133 million was utilized under the revolving credit facility
in the U.S., €i10 million (approximately $i11.4 million given the exchange rates at the end of 2021) was utilized by our wholly-owned UK subsidiary and $i56
million remained outstanding under the amended term facility.
There are ino compensating balance requirements associated with our revolving credit facility. Each borrowing under the revolving credit facility will bear interest at rates based on LIBOR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The revolving credit facility provides mechanics relating to a transition away from LIBOR (in the case of USD)
and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio.
In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $i30 million
that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, iino/
balance was utilized under this arrangement as of September 30, 2022 or December 31, 2021.
Long-Term Obligations
On March 7, 2022, we issued $i400 million aggregate principal amount of i3.60%
Senior Notes due March 2032 in an underwritten public offering. The form and terms of the notes were established pursuant to an Indenture, dated as of March 7, 2022, as amended and supplemented by a First Supplemental Indenture, dated as of March 7, 2022, each between the Company and U.S. Bank Trust Company, National Association, as trustee. Interest is payable semi-annually in arrears. The notes are unsecured obligations and rank equally in right of payment with all of our other existing and future senior, unsecured indebtedness.
We redeemed all $i75.0 million
of our i3.25% senior unsecured notes during the second quarter of 2022 at a price equal to the principal amount plus accrued interest and a $i0.4 million
make-whole payment.
We redeemed all $i125.0 million of our i3.49% senior unsecured notes during the third quarter of 2022 at a
price equal to the principal amount plus accrued interest.
Notes payable i0.00% – i14.42%,
due in monthly and annual installments through 2028
$
i24,032
$
i22,785
Senior
unsecured notes i3.2%, due in 2022
i—
i75,000
Senior
unsecured debts i2.19% USD floating swapped to i1.36% EUR fixed, due in 2022
i—
i56,000
Senior
unsecured notes i3.5%, due in 2023
i—
i125,000
Senior
unsecured notes i1.0%, due in 2023
i98,010
i113,830
Senior
unsecured notes i3.4%, due in 2024
i50,000
i50,000
Senior
unsecured notes i3.5%, due in 2024
i100,000
i100,000
Senior
unsecured notes i1.2%, due in 2024
i196,020
i227,660
Senior
unsecured notes i3.6%, due in 2025
i125,000
i125,000
Senior
unsecured notes i3.6%, due in 2026
i125,000
i125,000
Senior
unsecured notes i3.6%, due in 2032, net of discount of $i1.0 million
i399,024
i—
Finance
Lease Liabilities
i26,741
i30,185
Unamortized
debt issuance costs
(i4,745)
(i1,085)
$
i1,139,082
$
i1,049,375
Current
maturities of long-term obligations
(i111,034)
(i142,351)
Total
long-term obligations
$
i1,028,048
$
i907,024
/i
The
aggregate long-term maturities, excluding finance lease liabilities, which are disclosed in Note 7, due annually from the current balance sheet date for the next five years are:
(1)Definitions
of ratios are included as part of the revolving credit facility agreement and the private placement agreements.
NOTE 7 – iiLEASES/
We
lease certain warehouse, plant and office facilities as well as certain equipment under non-cancelable operating and finance leases expiring at various dates through the year 2034. Most of the operating leases contain renewal options and certain leases include options to purchase the related asset during or at the end of the lease term.
Amortization expense related to finance leases is included in depreciation expense, while rent expense related to operating leases is included within cost of sales and selling, research & development and administrative expenses (“SG&A”).
i
The
components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
i15,001
$
i17,310
Operating
cash flows from finance leases
i941
i1,052
Financing
cash flows from finance leases
i2,749
i3,392
Right-of-use
assets obtained in exchange for lease obligations:
Operating leases
$
i13,146
$
i6,890
Finance
leases
i919
i5,707
/
NOTE
8 – iRETIREMENT AND DEFERRED COMPENSATION PLANS
Effective January 1, 2021, our domestic noncontributory retirement plans were closed to new employees and employees who were rehired after December 31, 2020. These employees are instead eligible for additional contribution to their defined contribution 401(k) employee savings plan. All domestic employees with hire/rehire dates prior to January
1, 2021 are still eligible for the domestic pension plans and continue to accrue plan benefits after this date.
The
components of net periodic benefit cost, other than the service cost component, are included in the line Miscellaneous, net in the Condensed Consolidated Statements of Income.
Employer Contributions
We currently have ino minimum funding requirements for our domestic and foreign plans. We contributed $i15.0
million to our domestic defined benefit plans during the nine months ended September 30, 2022 and do not expect additional significant payments during 2022. We contributed $i1.3 million to our foreign defined benefit plans during the nine months ended September 30, 2022 and do not expect additional significant contributions during 2022.
NOTE
9 – iACCUMULATED OTHER COMPREHENSIVE INCOME
i
Changes in Accumulated Other Comprehensive (Loss) Income by Component:
Changes in cross currency swap: interest component
$
(i171)
$
(i16)
Interest
Expense
Changes in cross currency swap: foreign exchange component
i217
(i6,291)
Miscellaneous,
net
$
i46
$
(i6,307)
Net
of tax
Total reclassifications for the period
$
i4,827
$
i824
______________________________________________
(1)These
accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit costs, net of tax. See Note 8 – Retirement and Deferred Compensation Plans for additional details.
/
NOTE 10 – iDERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES
We maintain a foreign exchange risk management policy designed to establish a framework to protect the value of our non-functional currency denominated transactions from adverse changes in exchange rates. Sales of our products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales or intercompany loans can impact our results of operations. Our policy is not to engage in speculative foreign currency hedging activities, but to minimize our net foreign currency transaction exposure, defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. We may use foreign currency forward exchange contracts, options and cross
currency swaps to economically hedge these risks.
For derivative instruments designated as hedges, we formally document the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness at inception. Quarterly thereafter, we formally assess whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction,
the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur. All derivative financial instruments used as hedges are recorded at fair value in the Condensed Consolidated Balance Sheets (See Note 11 - Fair Value).
Cash Flow Hedge
For derivative instruments that are designated and qualify as cash flow hedges, the changes in fair values are recorded in accumulated other comprehensive loss and included in changes in derivative gain/loss. The changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive loss to net income when the underlying hedged item is recognized in earnings. Cash flows from the settlement of derivative contracts
designated as cash flow hedges offset cash flows from the underlying hedged items and are included in operating activities in the Condensed Consolidated Statements of Cash Flows.
In 2017, our wholly-owned UK subsidiary borrowed $i280 million in term loan borrowings under our prior credit facility. In order to mitigate the currency risk of U.S. dollar debt on a euro functional currency entity and to mitigate the risk of variability in interest rates, we entered into a EUR/USD floating-to-fixed cross currency swap on July
20, 2017 in the notional amount of $i280 million to effectively hedge the foreign exchange and interest rate exposure on the $i280 million term loan. This EUR/USD
swap agreement fixed our U.S. dollar floating-rate debt to i1.36% euro fixed-rate debt. The swap agreement expired on July 20, 2022.
Net Investment Hedge
On July 6, 2022, we entered into a iseven
year USD/EUR fixed-to-fixed cross currency interest rate swap to effectively hedge the interest rate exposure relating to $i203 million of the $i400 million i3.60%
Senior Notes due March 2032, which were issued by AptarGroup, Inc. on March 7, 2022. This USD/EUR swap agreement exchanged USD $i203 million of fixed-rate i3.60%
debt to €i200 million of fixed-rate i2.5224% euro debt. We pay semi-annual fixed rate interest payments on the euro notional amount of €i2.5 million
and receive semi-annual fixed rate interest payments on the USD notional amount of $i3.7 million. This swap has been designated as a net investment hedge to effectively hedge the foreign exchange risk associated with €i200 million
of our euro denominated net assets. We elected the spot method for recording the net investment hedge. Gains and losses resulting from the settlement of the excluded components are recorded in interest expense in the Condensed Consolidated Statements of Income. Gains and losses resulting from the fair value adjustments to the cross currency swap agreements are recorded in accumulated other comprehensive loss as the swaps are effective in hedging the designated risk. As of September 30, 2022, the fair value of the cross currency swap was a $i4.8 million
asset. The swap agreement will mature on September 15, 2029.
Hedge of Net Investments in Foreign Operations
A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our foreign subsidiaries. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we maintain debt in these subsidiaries to offset the net asset exposure. In
the event we plan on a full or partial liquidation of any of our foreign subsidiaries where our net investment is likely to be monetized, we will consider hedging the currency exposure associated with such a transaction.
Other
As of September 30, 2022, we have recorded the fair value of foreign currency forward exchange contracts of $i0.2
million in Prepaid and other and $i0.9 million in Accounts payable, accrued and other liabilities on the Condensed Consolidated Balance Sheets. All forward exchange contracts outstanding as of September 30, 2022 had an aggregate notional contract amount of $i56.9
million.
(1)This
cross currency swap agreement is composed of both an interest component and a foreign exchange component.
/
i
The
Effect of Derivatives Designated as Hedging Instruments on Accounting on Accumulated Other Comprehensive Income (Loss) for the Three Months Ended September 30, 2022 and 2021
Derivatives
Designated as Hedging Instruments
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative
Location of (Loss) Gain Recognized in Income on Derivatives
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income on Derivative
Total Amount of Affected Income Statement Line Item
2022
2021
2022
2021
Cross
currency swap agreement:
Interest component
$
(i30)
$
i228
Interest
expense
$
i33
$
(i2)
$
(i9,756)
Foreign
exchange component
(i1,238)
i3,052
Miscellaneous,
net
(i4,843)
i3,052
(i2,093)
$
(i1,268)
$
i3,280
$
(i4,810)
$
i3,050
The
Effect of Derivatives Designated as Hedging Instruments on Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2022 and 2021
Derivatives
Designated as Hedging Instruments
Amount of Gain Recognized in Other Comprehensive Income on Derivative
Location of Gain Recognized in Income on Derivatives
Amount of Gain Reclassified from Accumulated Other Comprehensive Income on Derivative
Total Amount of Affected Income Statement Line Item
The Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2022 and 2021
Derivatives Not Designated as
Hedging Instruments
Location of (Loss) Gain Recognized in Income on Derivatives
Amount of (Loss) Gain Recognized in Income on Derivatives
The
Effect of Derivatives Not Designated as Hedging Instruments on the Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2022 and 2021
Derivatives Not Designated as Hedging Instruments
Location of Loss Recognized in Income on Derivatives
Amount
of Loss Recognized in Income on Derivatives
Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
•Level
2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
(1)Investment
in PureCycle Technologies ("PCT" or "PureCycle"). See Note 18 - Investment in Equity Securities for discussion of this investment.
(2)Market approach valuation technique based on observable market transactions of spot and forward rates.
/
The carrying amounts of our other current financial instruments such as cash and equivalents, accounts and notes receivable, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instruments. We consider our long-term obligations a Level 2 liability and utilize the market approach valuation technique based on interest
rates that are currently available to us for issuance of debt with similar terms and maturities. The estimated fair value of our long-term obligations was $i0.9 billion as of September 30, 2022 and $i0.9
billion as of December 31, 2021.
During the first quarter of 2022, we invested $i5.0 million in a convertible note in Enable Injections, Inc. This investment is recorded at fair value and is a Level 3 fair value measurement.
During the second quarter of 2022, we invested $i1.0 million
in a convertible note in Siklus Refill Pte. Ltd. This investment is recorded at fair value and is a Level 3 fair value measurement.
As discussed in Note 12 - Fair Value of our Annual Report on Form 10-K for the year ended December 31, 2021, we have a contingent consideration obligation to the selling equity holders of:
–Fusion Packaging, Inc. ("Fusion") in connection with the acquisition of i100%
of the equity interests of Fusion (the "Fusion Acquisition") based on 2022 cumulative performance targets, and
–Noble International Holdings, Inc., Genia Medical, Inc. and JBCB Holdings, LLC (collectively referred to as "Noble") in connection with the acquisition of i100% of the equity interests of Noble (the "Noble Acquisition") based on 2024 cumulative performance targets.
We consider these obligations Level 3 liabilities and have estimated the aggregate fair value for these contingent consideration arrangements as follows:
Changes
in the fair value of these obligations are recorded within selling, research & development and administrative expenses in our Condensed Consolidated Statements of Income. Significant changes to the inputs, as noted above, can result in a significantly higher or lower fair value measurement. iThe following table provides a summary of changes in our Level 3 fair value measurements:
In the normal course of business, we are subject to a number of lawsuits and claims both actual and potential in nature. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on our financial position, our results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur and could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows.
Under our Certificate of Incorporation, we have agreed to indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have a directors and officers liability insurance policy that covers a portion of our exposure. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. We have iino/
liabilities recorded for these agreements as of September 30, 2022 and December 31, 2021.
A fire caused damage to our facility in Annecy, France in June 2016. We were insured for the damages caused by the fire, including business interruption insurance. During the second quarter of 2022, we filed a lawsuit against the insurance company to recover a part of our claim. iNo gain contingencies have been recognized as our ability
to realize those gains remains uncertain.
In March 2017, the Supreme Court of Brazil issued a decision that a certain state value added tax should not be included in the calculation of federal gross receipts taxes. We submitted our claim and on September 30, 2021, we received a formal decision statement from the Federal Regional Court of Brazil that the favorable court decisions are final. As a result, in September 2021, we recorded recoveries of $i2.7
million in cost of sales. We do not expect to receive any further amounts in future periods.
We are periodically subject to loss contingencies resulting from custom duties assessments. We accrue for anticipated costs when an assessment has indicated that a loss is probable and can be reasonably estimated. We have received claims worth approximately $i13 million in principal and $i5 million
to $i6 million for interest and penalties. We are currently defending our position with respect to these claims in the respected administrative procedures. Due to uncertainty in the amount of the assessment and the timing of our appeal, no liability is recorded as of September 30, 2022.
We will continue to evaluate these liabilities periodically based on available information, including the progress of remedial investigations, the status of discussions with
regulatory authorities regarding the methods and extent of remediation and the apportionment of costs and penalties among potentially responsible parties.
NOTE 13 – iSTOCK REPURCHASE PROGRAM
On April 18, 2019, we announced a share repurchase authorization of up to $i350
million of common stock. This authorization replaces previous authorizations and has no expiration date. We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.
During the three and nine months ended September 30, 2022, we repurchased approximately i181 thousand shares for $i19.2
million and i669 thousand shares for $i72.3 million, respectively.
During the three and nine months ended September 30, 2021, we repurchased approximately ii220/
thousand shares for $ii28.4/
million. As of September 30, 2022, there was $i128.1 million of authorized share repurchases remaining under the existing authorization.
We issue restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the
Company’s 2018 Equity Incentive Plan. RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over ithree years. Performance-based RSUs vest at the end of the specified performance period, generally ithree
years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: (1) based on our internal financial performance metrics and (2) based on our total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group. At the time of vesting, the vested shares of common stock are issued in the employee’s name. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). RSUs granted to directors are only time-based and generally vest over ione
year.
The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. iInputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed
over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.
Included
in the time-based RSUs activity for the nine months ended September 30, 2022 are i10,589 units granted to non-employee directors and i10,007
units vested related to non-employee directors.
The
actual tax benefit realized for the tax deduction from RSUs was approximately $i6.2 million in the nine months ended September 30, 2022. As of September 30, 2022, there was $i57.3
million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted-average period of i2.1 years.
Historically we issued stock options to our employees and non-employee directors. We have not issued any stock options since 2018. Stock options were awarded with the exercise price equal to the market price on the date of grant and generally vest over ithree
years and expire i10 years after grant. For stock option grants, we used historical data to estimate expected life and volatility.
The reduction in stock
option expense is due to our move to RSUs as discussed above. Cash received from option exercises for the nine months ended September 30, 2022 and 2021 was approximately $i18.4 million and $i54.0
million, respectively. The actual tax benefit realized for the tax deduction from option exercises was approximately $i2.8 million and $i15.4
million in the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, there is no remaining valuation of stock option awards to be expensed in future periods.
NOTE 15 – iEARNINGS PER SHARE
Basic net income per
share is calculated by dividing net income attributable to Aptar by the weighted-average number of common shares outstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to Aptar by the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to stock-based compensation awards. Stock-based compensation awards for which total employee proceeds exceed the average market price over the applicable period would have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. iThe
reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 is as follows:
We are organized into ithree reporting segments. Operations that sell dispensing systems, drug
delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the beauty, personal care and home care markets form the Beauty + Home segment. Operations that sell dispensing systems, sealing solutions and food service trays to the food and beverage markets form the Food + Beverage segment.
The accounting policies of the segments are the same as those described in Part II, Item 8, Note 1 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2021. We evaluate performance of our reporting segments and allocate resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation,
amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
(1)We
evaluate performance of our reporting segments and allocate resources based upon Adjusted EBITDA. Adjusted EBITDA is defined as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
(2)Acquisition-related costs include transaction costs related to acquisitions (see Note 17 – Acquisitions for further details).
(3)iRestructuring
Initiatives includes expense items for the three and nine months ended September 30, 2022 and 2021 as follows (see Note 19 – Restructuring Initiatives for further details):
(4)Net
unrealized investment gain (loss) represents the change in fair value of our investment in PCT (see Note 18 – Investment in Equity Securities for further details).
On August 31, 2022, we completed the acquisition of all the outstanding capital stock of Metaphase Design Group Inc. ("Metaphase"). Metaphase, located in St. Louis, Missouri, is a leading expert in ergonomic and industrial design of handheld devices including medical devices. The purchase price was approximately $i5.1 million (net of $i0.1 million
cash acquired) and was funded with cash on hand. As of the acquisition date, $i1.0 million was held in restricted cash for an indemnity escrow. The results of Metaphase have been included in the consolidated financial statements within our Pharma segment since the date of acquisition.
On September 2, 2021, following the signature of a share purchase agreement on July 22, 2021 and the approval of the French Ministry of Economy
under the foreign investment clearance regulations, we completed the acquisition of i64.3% of the share capital of Voluntis S.A. (“Voluntis”). Voluntis, based in Paris, France and Boston, MA, is a pioneer in digital therapeutics. We acquired from certain members of the management and certain shareholders the entirety of their shares representing approximately i64.3%
of the share capital of Voluntis (on a non-diluted basis) at a price of €i8.70 per share for €i50.8 million (approximately $i60.4 million)
funded with available cash on hand. This values the full company equity (on a fully diluted basis) at €i79.1 million (approximately $i93.9 million).
Aptar launched a mandatory cash simplified tender offer to acquire Voluntis's remaining shares for the same price of €i8.70 per share. During September 2021, Aptar acquired €i8.4 million
(approximately $i9.9 million) of additional shares from the tender offer, bringing the total investment as of September 30, 2021 to €i59.2 million
(approximately $i70.3 million) representing i74.9% of the total share capital, which implied a non-controlling interest valued at €i19.9 million
(approximately $i23.6 million). Following completion of the tender offer, Aptar implemented a mandatory squeeze-out on the remaining outstanding shares of Voluntis on the same financial terms as those of the tender offer. During the fourth quarter of 2021, the tender offer and squeeze-out were completed and funded with available cash on hand and we acquired the remaining i25.1%
of the share capital for €i19.5 million (approximately $i22.6 million), resulting in Aptar owning i100.0%
of the share capital of Voluntis.
The fair value of the Voluntis assets acquired include a technology intangible asset of $i27.9 million and other intangible assets of $i8.4 million.
The technology intangible asset was valued using the Multi-Period Excess Earnings Method ("MPEEM") valuation approach. Judgment was applied with respect to determining the fair value of the acquired technology, which involved the use of significant estimates and assumptions with respect to the revenue growth rate, technology obsolescence rate and discount rate.
On August 17, 2021, we completed the acquisition of i80% of the equity interests of Weihai
Hengyu Medical Products Co., Ltd. ("Hengyu"). Hengyu, a leading Chinese manufacturer of elastomeric and plastic components used in injectable drug delivery, is based in Weihai, China. Under the terms of the agreement, i90% of the estimated purchase price for i80%
ownership, RMB i347.7 million (approximately $i53.6 million), was paid to the sellers in August 2021 with available cash on hand. A final
purchase price adjustment of RMB i1.5 million (approximately $i0.2 million) was recorded to Accounts payable, accrued and other liabilities and was
paid in the fourth quarter of 2021. The remaining i10% of the acquisition price for i80% ownership,
RMB i38.7 million (approximately $i6.0 million), is payable to the sellers ieighteen
months after closing plus simple interest of i4% and is expected to be funded with available cash on hand. This values the full company equity (on a fully diluted basis) at RMB i484.9 million
(approximately $i74.8 million) and implies a non-controlling interest valued at RMB i97.0 million
(approximately $ii15.0/ million)
as of the acquisition date. Pursuant to the agreement, we have the option to acquire the remaining i20% of the equity of Hengyu upon the fifth anniversary of the closing date.
The fair value of the Hengyu assets acquired include a customer relationship intangible asset of $i24.1 million
and other intangible assets of $i5.6 million. The customer relationship intangible asset was valued using the MPEEM valuation approach. Judgment was applied with respect to determining the fair value of the customer relationships, which involved the use of significant estimates and assumptions with respect to the revenue growth rates, customer attrition rates, Adjusted EBIT margins and discount rate.
The following table summarizes the assets acquired and liabilities assumed for the Voluntis and Hengyu acquisitions as of the acquisition dates at estimated fair value.
2021
Assets
Cash
and equivalents
$
i3,852
Accounts receivable
i5,208
Inventories
i606
Other
Receivable
i286
Prepaid and other
i1,863
Property,
plant and equipment
i14,081
Goodwill
i104,433
Intangible
assets
i65,981
Operating lease right-of-use assets
i2,309
Other
miscellaneous assets
i78
Liabilities
Current maturities of long-term obligations, net of unamortized debt issuance costs
i1,410
Accounts
payable, accrued and other liabilities
i9,663
Deferred income taxes
i16,792
Operating
lease liabilities
i2,306
Deferred and other non-current liabilities
i5,770
Net
assets acquired
$
i162,756
/i
The
following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives for the Voluntis and Hengyu acquisitions as of the acquisition dates:
2021
Weighted-Average
Useful Life (in Years)
Estimated Fair Value of Assets
Acquired technology
i10
$
i34,322
Customer
relationships
i11.6
i30,258
License
agreements and other
i0.25
i1,401
Total
$
i65,981
/
Goodwill
in the amount of $i104.4 million was recorded related to the Voluntis and Hengyu acquisitions, which is included in the Pharma segment. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill acquired in the Voluntis and Hengyu acquisitions largely consists of expansion into the digital health solutions market, by adding digital therapeutic solutions and broadening our digital health services provided to customers;
as well as strengthening our capabilities in high-growth economies by enhancing the ability to respond to changing local market needs in the injectables market. Goodwill will not be amortized, but will be tested for impairment at least annually. For the Voluntis and Hengyu acquisitions, ino goodwill will be deductible for tax purposes.
On January 1, 2020, we acquired i49% of the equity interests in 3 related companies: Suzhou Hsing Kwang, Suqian Hsing Kwang and Suzhou BTY (collectively referred to as “BTY”) for an approximate purchase price of $i32.0
million. We have a call option to acquire an additional i26% to i31% of BTY’s equity interests following the initial lock-up period of i5
years based on a predetermined formula. Subsequent to the second lock-up period, which ends i3 years after the initial lock-up period, we have a call option to acquire the remaining equity interests of BTY based on a predetermined formula. Additionally, the selling shareholders of BTY have a put option for the remaining equity interest to be acquired by Aptar based on a predetermined formula. The BTY entities are leading Chinese manufacturers of high quality, decorative metal components, metal-plastic sub-assemblies, and complete color cosmetics packaging solutions for the beauty industry.
Sonmol
On
April 1, 2020, we invested $i5.0 million to acquire i30% of the equity interests in Healthcare, Inc., Shanghai Sonmol Internet
Technology Co., Ltd. and its subsidiary, Shanghai Sonmol Medical Equipment Co., Ltd. (collectively referred to as “Sonmol”), a pharmaceutical and leading Chinese company that provides consumer electric devices and connected devices for asthma control.
Desotec GmbH
During 2009, we invested €i574 thousand to acquire i23%
of the equity interests in Desotec GmbH, a leading manufacturer of special assembly machines for bulk processing for the pharmaceutical, beauty and home and food and beverages markets.
Other investments
During August 2019, we invested an aggregate amount of $i3.5 million in itwo
preferred equity investments in sustainability companies Loop and PureCycle that were accounted for at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. During 2020, we invested an additional $i1.4 million in these itwo
equity investments and also received $i333 thousand of equity in PureCycle in exchange for our resource dedication for technological partnership and support. In November 2020, we increased the value of the PureCycle investment by $i3.1 million
based on observable price changes.
In March 2021, PureCycle was purchased by a special purpose acquisition company and was subsequently listed on Nasdaq under the ticker PCT. At that time, our investment in PureCycle was converted into shares of PCT resulting in less than a i1% ownership interest. This investment is now recorded at fair value based on observable market prices for identical assets and the change in fair value is recorded as a net investment gain or loss in the Condensed Consolidated Statements of Income. In September 2021, we received $i333 thousand
of shares of PCT in exchange for our resource dedication for technological partnership and support and exercised an option to purchase $i1.0 million of additional shares in connection with an FDA milestone.
iWe
have sold the following PCT shares related to the PureCycle investment:
On
July 7, 2021, we invested approximately $i5.9 million to acquire i10% of the equity interests in YAT, a multi-functional,
science-driven online skincare solutions company.
Other than the expected credit loss reserve against the outstanding Kali Care note receivable, there were ino indications of impairment noted in the nine months ended September 30, 2022 related to these investments.
NOTE
19 – iRESTRUCTURING INITIATIVES
In late 2017, we began a business transformation to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan was the Beauty + Home segment; however, certain global general and administrative functions were also addressed. As of the end of 2021, we had successfully completed the vast majority of our planned initiatives related to our transformation plan
and do not expect significant additional restructuring expenses related to this plan going forward. For the three and nine months ended September 30, 2022, we recognized $i16 thousand and $i0.7
million of restructuring costs related to this plan, respectively. For the three and nine months ended September 30, 2021, we recognized $i10.2 million and $i18.8
million of restructuring costs related to this plan, respectively. The cumulative expense incurred as of September 30, 2022 was $i137.0 million.
i
As
of September 30, 2022 we have recorded the following activity associated with the business transformation:
Beginning Reserve at 12/31/2021
Net Charges
for the Nine Months Ended 9/30/2022
Cash Paid
Interest and FX Impact
Ending Reserve at 9/30/2022
Employee severance
$
i3,535
$
i660
$
(i2,747)
$
(i152)
$
i1,296
Professional
fees and other costs
i260
i75
(i314)
(i10)
i11
Totals
$
i3,795
$
i735
$
(i3,061)
$
(i162)
$
i1,307
During
the third quarter of 2022, we began an initiative to optimize our operations and SG&A expenses. For the three months ended September 30, 2022, we recognized $i2.3 million of restructuring costs related to this plan.
As of September 30, 2022, we have recorded the following activity associated with our optimization plan:
Cost
of sales (exclusive of depreciation and amortization shown below)
65.3
65.1
64.9
64.2
Selling, research & development and administrative
16.2
16.5
16.5
17.0
Depreciation
and amortization
6.9
7.2
6.9
7.2
Restructuring initiatives
0.2
1.2
0.1
0.8
Operating
income
11.4
10.0
11.6
10.8
Other income (expense)
(1.2)
(2.0)
(1.3)
(0.8)
Income
before income taxes
10.2
8.0
10.3
10.0
Net Income
6.5
5.7
7.1
7.7
Effective
tax rate
36.2
%
29.2
%
31.0
%
22.9
%
Adjusted EBITDA margin (1)
18.4
%
18.7
%
18.6
%
18.8
%
________________________________________________
(1)Adjusted
EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
SIGNIFICANT DEVELOPMENTS
The COVID-19 pandemic resulted in disruptions to the global economy and supply chains. As the rates of transmission have slowed in many regions during 2022, we have seen several of our impacted applications return to more normal volume levels. We have seen improvement in sales of our products to our prescription, beauty, hair care and sun care customers as people return to more active lifestyles. However, we have also seen more normal volumes in some of the applications which benefited from the pandemic, such as our personal cleansing and surface cleaner products, food applications, active material science solutions and injectables components. While some countries continue to experience disruptions due to efforts to eliminate
the virus, we do not believe these impacts will be material to our business based on the current environment.
As of September 30, 2022, the war in Ukraine has not had a significant direct impact on our business though the near-term visibility for this situation is expected to remain fluid and uncertain for the next several quarters. However, we have experienced some indirect impacts on our business, including higher energy and other input costs as well as certain supply chain disruptions.
NET SALES
We reported net sales of $836.9 million for the quarter ended September 30, 2022, which represents a 1% increase compared to $825.4 million reported during the third quarter of 2021. The U.S. dollar strengthened compared to the euro and other major
currencies in which we operate, resulting in a negative currency translation impact of 8%. There was no significant impact from our acquisitions of Voluntis S.A. ("Voluntis"), Weihai Hengyu Medical Products Co., Ltd. ("Hengyu") and Metaphase Design Group Inc. ("Metaphase") on our consolidated net sales during the third quarter of 2022. Therefore, core sales, which excludes acquisitions and changes in foreign currency rates, increased by 9% in the third quarter of 2022 compared to the same period in 2021. Of our 9% core sales increase, approximately 5% is related to improved volumes with our Pharma segment driving the majority of this increase. Price adjustments related to the passing through of higher resin and other input costs accounted for the remaining 4% of the core sales increase.
Third
Quarter 2022 Net Sales Change over Prior Year
Reported net sales for the first nine months of 2022 increased 5% to $2.53 billion compared to $2.41 billion for the first nine months of 2021. The average U.S. dollar exchange rate strengthened compared to the euro and other major currencies in which we operate, resulting in a negative currency translation impact of 6%. There was no significant impact from our acquisitions of Voluntis, Hengyu and Metaphase on our consolidated results during the first nine months of 2022. Therefore, core sales, which excludes acquisitions and changes in foreign currency rates, increased by 11% in the first nine months of 2022 compared to the same period in 2021. Price increases to recover inflationary cost increases continue to have a strong impact on our core sales. Of our 11% core sales increase, approximately 5% is due to price adjustments related to the passing through of higher resin and other input costs while improved
volumes and product mix represented the remaining 6% of the increase.
For
further discussion on net sales by reporting segment, please refer to the analysis of segment net sales and segment Adjusted EBITDA on the following pages.
COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)
Cost of sales (“COS”) as a percent of net sales increased to 65.3% in the third quarter of 2022 compared to 65.1% in the third quarter of 2021. While our COS percentage was positively impacted by an improved mix of our higher-margin Pharma product sales compared to the same period in 2021, this positive impact was more than offset by inflationary cost increases, higher tooling sales which typically carry lower margins than our normal product sales, and under-absorption at certain Beauty + Home and Food + Beverage sites due to lower production volumes. During the third quarter, we experienced increases in several input costs including utilities, metals,
freight and labor, including a $4.5 million one-time payment to certain European employees to mitigate higher inflationary costs. While we maintain our normal pass-through of resin cost increases and have implemented general price increases to offset other cost increases, there is no margin on resin pass-through costs, which increases our COS as a percentage of sales.
For the first nine months of 2022, COS as a percent of net sales increased to 64.9% compared to 64.2% in the same period in 2021 due to the same inflationary cost increases discussed above.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE
Selling, research & development and administrative expenses (“SG&A”) decreased by approximately $0.5 million to $135.4 million in the third quarter of 2022 compared to $135.9 million during the same period in 2021. Excluding
changes in foreign currency rates, SG&A increased by approximately $9.3 million in the quarter. This increase is mainly due to higher compensation costs along with higher professional fees for internal projects and higher travel costs compared to 2021. SG&A as a percentage of net sales decreased to 16.2% in the third quarter of 2022 compared to 16.5% in the same period in 2021.
SG&A increased by $5.2 million to $416.4 million in the first nine months of 2022 compared to $411.2 million during the same period in 2021. Excluding changes in foreign currency rates, SG&A increased by approximately $27.0 million in the first nine months of 2022 compared
to the first nine months of 2021. Of this increase, $3.0 million relates to incremental SG&A costs in 2022 due to our acquisitions of Hengyu and Voluntis which were completed during the third quarter of 2021. The remaining increase is partially related to higher compensation costs, including accruals related to our current short-term incentive compensation programs and the timing of certain equity compensation arrangement expense recognition. We also experienced an increase in information systems costs due to an upgrade of our enterprise reporting system along with higher professional fees for internal projects and higher travel costs compared to 2021. Also, in March 2022 we recorded a $1.4 million expected net credit loss reserve against the outstanding note receivable from one of our venture investments (Kali Care). SG&A as a percentage of net sales decreased to 16.5% in the first nine months of 2022 compared to 17.0% during the same period in 2021.
DEPRECIATION
AND AMORTIZATION
Reported depreciation and amortization expenses decreased by approximately $1.7 million to $57.6 million in the third quarter of 2022 compared to $59.3 million during the same period in 2021. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $3.1 million in the third quarter compared to the third quarter of 2021. Approximately $1.1 million of this increase is due to incremental depreciation and amortization associated with our acquisitions of Voluntis and Hengyu, each of which closed during the third quarter of 2021. We also increased our capital spending during the current and prior year to support our growth strategy. Depreciation and amortization as a percentage of net sales decreased to 6.9% in the third quarter of 2022 compared to 7.2% in the same period of the prior year.
Reported depreciation and amortization
expenses increased by approximately $0.3 million to $174.8 million in the first nine months of 2022 compared to $174.5 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $10.7 million in the first nine months of 2022 compared to the same period a year ago. As mentioned above, approximately $4.1 million of this increase is due to our acquisitions of Voluntis and Hengyu completed during the third quarter of 2021 and the remaining increase relates to higher capital spending during the current and prior year to support our growth strategy. Depreciation and amortization as a percentage of net sales decreased to 6.9% in the first nine months of 2022 compared to 7.2% in the same period of the prior year.
RESTRUCTURING INITIATIVES
In late 2017, we began a business transformation plan to drive profitable
sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan was the Beauty + Home segment; however, certain global general and administrative functions were also addressed. As of the end of 2021, we had successfully completed the vast majority of our planned initiatives related to our transformation plan, including implementing new commercial strategies, reducing costs and adding capabilities in Asia and in fast growing application fields that we believe will position the segment for future growth and profitability. The cumulative expense incurred for this transformation plan as of September 30, 2022 was $137.0 million, of which $0.7 million was recognized in the first nine months of 2022.
We continue to look at our operating structure and are continuing to identify actions to further
reduce cost and improve our competitiveness. During the third quarter, we recognized $2.3 million in charges.
Restructuring costs for the three and nine months ended September 30, 2022 and 2021 are as follows:
Operating income increased approximately $12.3 million to $95.2 million in the third quarter of 2022 compared to $82.9 million in the same period a year ago. Excluding changes in foreign currency rates, operating income increased by approximately $22.2 million in the quarter compared to the same period a year ago. Strong sales growth, along with lower restructuring costs, during the current quarter drove this improvement. Operating income as a percentage of net sales increased to 11.4% in the third quarter of 2022 compared to 10.0% in the prior year period.
For the first nine months of 2022, operating income
increased approximately $34.1 million to $294.1 million compared to $259.9 million in the same period of the prior year. Excluding changes in foreign currency rates, operating income increased by approximately $56.3 million in the first nine months of 2022 compared to the same period a year ago. As mentioned above, the combination of strong sales and lower restructuring costs led to this improvement. Operating income as a percentage of net sales increased to 11.6% in the first nine months of 2022 compared to 10.8% for the same period in the prior year.
TOTAL OTHER INCOME (EXPENSE)
Net other expense in the third quarter of 2022 decreased $6.4 million to $10.3 million from $16.7 million in the same period of the prior year. This reduction is due to the change in the fair value of our PureCycle investment. As discussed in Note 18 - Investment in Equity Securities of the Condensed Consolidated
Financial Statements, our investment in PureCycle was converted into shares of PCT, a publicly traded entity, during the first quarter of 2021. This investment is recorded at fair value based on observable market prices for identical assets with the change in fair value being recorded as a net investment gain or loss in the Condensed Consolidated Statements of Income. During the third quarter, we recognized a $0.6 million gain on this investment while we reported a $9.0 million loss during the third quarter of 2021. Interest expense increased by $1.7 million in the third quarter of 2022, primarily as a result of our $400 million 3.60% Senior Notes due March 2032, which were issued on March 7, 2022. See Note 6 - Debt of the Condensed Consolidated Financial Statements for further details. During the prior year, we also recognized a $1.4 million foreign currency gain on an Argentina Blue Chip Swap agreement, which negatively
impacts the current year comparison.
Net other expense increased $14.6 million to $33.1 million of expense for the nine months ended September 30, 2022 from $18.5 million of expense in the same period of the prior year. Of this increase, $7.3 million is due to the change in fair value of our investment in PureCycle as discussed above. Interest expense also increased by $8.1 million in the first nine months of 2022 as a result of approximately seven months of interest expense on our $400 million 3.60% Senior Notes as discussed above.
PROVISION FOR INCOME TAXES
The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings and related estimated full year-taxes, adjusted for the impact of discrete
quarterly items. The effective tax rate for the three months ended September 30, 2022 and 2021, respectively, was 36.2% and 29.2%. The effective tax rate for the nine months ended September 30, 2022 and 2021, respectively, was 31.0% and 22.9%. The tax rate for the three months ended September 30, 2022 reflects an out-of-period charge of $7.2 million for taxes related to a legal entity reorganization to enhance the Company's dividend and cash management capabilities. The charge contributed 8.5% to the impact on the effective tax rate for the three months ended September
30, 2022. The tax charge should have been recognized in the three months ended March 31, 2022. The lower reported effective tax rate for the nine months ended September 30, 2021 reflects additional tax benefits from employee stock-based compensation. The impacts of the error on the three months ended March 31, 2022 and the three months ended September 30, 2022 are not considered material to either period.
NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.
We reported net income attributable to AptarGroup of $54.2 million and $180.3 million in the three and nine months ended September 30, 2022, respectively, compared to $47.3 million and $186.5
million for the same periods in the prior year.
PHARMA SEGMENT
Operations that sell dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form our Pharma segment.
(1)Adjusted
EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization,unallocated corporate expenses,restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
Net sales for the Pharma segment increased 10% in the third quarter of 2022 to $343.4 million compared to $313.2
million in the third quarter of 2021. Changes in currencies negatively affected net sales by 11%, while the acquisitions of Voluntis, Hengyu and Metaphase had a positive impact of 1% during the third quarter of 2022. Therefore, core sales increased by 20% in the third quarter of 2022 compared to the third quarter of 2021. The majority of the sale growth is due to higher volumes and tooling sales. Core sales of our products to the prescription drug market increased 17% on strong demand for our allergic rhinitis and asthma devices as many regions continue to experience post-pandemic re-openings. We also realized strong sales of our products on emergency medical applications for existing and new solutions in the prescription drug market. The 26% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant and saline rinse solutions. Core sales of our elastomeric components to the injectables market increased 5% due to continued
strong demand for our vaccine and biologic components, even as demand for COVID-19 vaccines began to decline. Core sales of our active material science solutions increased 33% on higher tooling sales and demand for our oral dose and other diagnostic products.
Third
Quarter 2022 Net Sales Change over Prior Year
Prescription Drug
Consumer Health Care
Injectables
Active Material Science Solutions
Digital Health (2)
Total
Core Sales Growth
17
%
26
%
5
%
33
%
—
%
20
%
Acquisitions
—
%
—
%
2
%
—
%
100
%
1
%
Currency
Effects (1)
(11)
%
(13)
%
(12)
%
(6)
%
—
%
(11)
%
Total Reported Net Sales Growth
6
%
13
%
(5)
%
27
%
100
%
10
%
Net
sales for the first nine months of 2022 increased by 8% to $1.03 billion compared to $952.4 million in the first nine months of 2021. Changes in currency rates negatively impacted net sales by 8%, while the acquisitions of Voluntis, Hengyu and Metaphase had a positive impact of 1% during the first nine months of 2022. Therefore, core sales increased by 15% in the first nine months of 2022 compared to the same period in the prior year. All legacy markets showed core sales growth during the first nine months of 2022. Core sales to the prescription drug market increased 12% on solid demand for our allergic rhinitis, asthma and emergency medical devices due to post-pandemic re-openings and product launches as discussed above. The 17% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinses and cough and cold solutions. Core sales of our elastomeric components for COVID-19 and other vaccines drove the 7% core
sales growth in our injectables market. Similarly, core sales of our active material science solutions increased 31% mainly on strong demand for our oral solid dose solutions and Activ-Film products used with at-home COVID-19 test kits.
(1)Currency
effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
(2)Core sales for the comparable period not deemed significant.
Adjusted EBITDA in the third quarter of 2022 increased 6% to $107.2 million compared to $100.7 million in the same period of the prior year. Strong product sales growth more than compensated for a $10.6 million negative impact from the translation of our foreign currency results into U.S. dollars and a $2.2 million one-time inflation payment made to certain European employees. Our Adjusted EBITDA margin declined to 31.2% in the third quarter of 2022 from 32.2% in the third quarter of 2021 due to the lack of margin on the pass-through of higher input costs, along with higher SG&A costs and the one-time inflation payment made to certain European employees.
Adjusted
EBITDA in the first nine months of 2022 increased 6% to $333.8 million compared to $315.2 million in the same period of the prior year. This increase is mainly driven by our strong core sales growth which was able to compensate for a negative $24.2 million impact from the translation of our foreign currency results into U.S. dollars and the $2.2 million one-time inflation payment mentioned above. However, the lack of margin on the pass-through of higher input costs and incremental startup costs for our digital health investments and elastomeric component capacity expansion led to a lower Adjusted EBITDA margin of 32.5% in the first nine months of 2022 compared to 33.1% in the first nine months of 2021.
(1)Adjusted
EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
Reported net sales for the quarter ended September 30, 2022 decreased 4% to $359.8 million compared to $374.1 million in the third quarter of the prior year. Changes in currency rates negatively impacted net sales by 8% in the third quarter of 2022. Therefore, core sales increased 4% in the third quarter of 2022 compared to the same quarter of the prior year. The current quarter core sales growth was driven by our price pass-through
initiatives. Core sales of our products to the beauty market increased 6% as consumer demand for fragrance and color cosmetic applications increased. Personal care core sales increased 5% due to higher sales to the hair care and sun care markets. Core sales to the home care markets decreased 6% on strong prior year comparisons for household cleaner and laundry care products.
Third Quarter 2022 Net Sales Change
over Prior Year
Personal Care
Beauty
Home Care
Total
Core Sales Growth
5
%
6
%
(6)
%
4
%
Currency
Effects (1)
(7)
%
(10)
%
(5)
%
(8)
%
Total Reported Net Sales Growth
(2)
%
(4)
%
(11)
%
(4)
%
For
the first nine months of 2022, net sales increased 2% to $1.10 billion compared to $1.08 billion in the first nine months of the prior year. Changes in currency rates negatively impacted net sales by approximately 6%. Therefore, core sales increased by 8% in the first nine months of 2022 compared to the same period in the prior year. Approximately 7% of this growth came from the pass-through of higher input costs while the remaining increase is due to higher product volumes and mix. Core sales of our products to the beauty market increased 13% during the first nine months of 2022 as we experienced growth across the majority of our applications. Personal care core sales increased 6% on higher sales of our hair care and sun care applications. Core sales of our home care market products declined 12% mainly due to lower tooling sales and normalizing demand for our dish care, industrial and household cleaner applications as rates of COVID-19 transmission have slowed in certain
regions.
(1)Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Adjusted EBITDA in the third quarter of 2022 decreased 6% to $41.2 million
compared to $43.8 million in the same period in the prior year. The decrease is mainly due to a negative $3.7 million impact from the translation of our foreign currency results into U.S. dollars and a $1.9 million one-time inflation payment made to certain European employees. During the prior year, we reported a $2.7 million favorable value added tax ruling in Brazil, which also negatively impacts the current year comparison.
Adjusted EBITDA in the first nine months of 2022 increased 7% to $125.6 million compared to $117.1 million reported in the same period in the prior year on product sales growth and operational improvements, mainly during the first half of 2022. These improvements were more than able to compensate for a negative $8.1 million impact from the translation of our foreign currency results and the one-time inflation payment made to certain European employees mentioned above. During the prior year, we reported
a $2.7 million favorable value added tax ruling in Brazil, which negatively impacts the current year comparison.
(1)Adjusted
EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization,unallocated corporate expenses,restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
Reported sales for the quarter ended September 30, 2022 decreased approximately 3% to $133.6 million compared to $138.1 million in the third quarter of the prior year. Changes in currency rates negatively impacted net sales by 3%. Therefore, core sales for the third quarter of 2022 were flat compared to the same
quarter of the prior year. Higher tooling sales and an increase in the passing through of higher input costs offset slightly lower product sales volumes during the third quarter of 2022. Our food market volumes increased mainly on higher tooling sales along with strong growth in our food service packaging applications. The decrease in beverage market sales is mostly related to lower tooling sales leaving product sales relatively flat compared with prior year levels.
Third Quarter 2022 Net Sales Change over Prior Year
Food
Beverage
Total
Core
Sales Growth
7
%
(16)
%
—
%
Currency Effects (1)
(3)
%
(4)
%
(3)
%
Total
Reported Net Sales Growth
4
%
(20)
%
(3)
%
Net sales for the first nine months of 2022 increased by 6% to $400.9 million compared to $379.5 million in the first nine months of 2021. Changes in currency rates negatively impacted net sales by 2%. Therefore, core sales increased by 8% in the first nine months of 2022 compared to the same period in the prior year. Increased product and tooling sales, along with the pass-through of higher material costs, positively impacted the first nine months of 2022. Approximately 6% of the 8% core sales increase
is due to passing through higher resin and other input costs. Core sales to the food market increased 10%, while core sales to the beverage market increased 2% in the first nine months of 2022 compared to the same period of the prior year. For the food market, we realized growth in sauces and condiments and our food service packaging products. The beverage market also reported growth due to pricing pass-throughs and improving sales of our premium bottled water products as the market continues to recover from the lower COVID-19 pandemic levels last year.
(1)Currency
effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Adjusted EBITDA in the third quarter of 2022 decreased 16% to $18.8 million compared to $22.4 million reported in the same period of the prior year. Lower product sales along with some operational inefficiencies, specifically under-absorption in certain North American sites, negatively impacted results. We also reported a negative $0.5 million impact from the translation of our foreign currency results into U.S. dollars and a $0.3 million one-time inflation payment made to certain European employees. As mentioned above, lower product sales were mostly offset by higher tooling sales. Historically, our tooling sales carry lower margins than our product sales. This change in sales mix also negatively impacted our current quarter adjusted EBITDA margin.
Adjusted EBITDA in the first nine months of 2022 decreased 10% to $55.8 million compared to $62.0 million reported in the same period of the prior year. As discussed above, we experienced increased product and tooling sales growth during the first nine months of 2022. However, our profitability was negatively impacted by unfavorable product mix and some operational inefficiencies in North America. We also reported a negative $0.8 million impact from the translation of our foreign currency results into U.S. dollars and a $0.3 million one-time inflation payment made to certain European employees. These issues, along with the lack of margin on the pass-through of higher input costs, had a negative impact on our Adjusted EBITDA margin during the first nine months of 2022.
CORPORATE & OTHER
In addition to our three reporting
segments, we assign certain costs to “Corporate & Other,” which is presented separately in Note 16 – Segment Information of the Notes to the Condensed Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items) primarily includes certain professional fees, compensation and information system costs which are not allocated directly to our reporting segments. For the quarter ended September 30, 2022, Corporate & Other Adjusted EBITDA increased to $13.5 million from $12.7 million in the third quarter of 2021. This increase is partially related to higher compensation and travel costs compared to 2021. We also wrote off $0.5 million of assets associated
with an office space lease which was not renewed.
Corporate & Other Adjusted EBITDA in the first nine months of 2022 increased to $45.2 million compared to $40.3 million reported in the same period of the prior year. This increase is partially related to higher compensation costs, including accruals related to our current short-term incentive compensation programs and the timing of equity compensation expense recognition including substantive vesting conditions for retirement eligible employees. We also reported higher professional fees and travel costs as restrictions on travel eased as compared to the prior year.
NON-U.S. GAAP MEASURES
In addition to the information presented herein that conforms to accounting principles generally accepted in the United States of America ("U.S. GAAP"), we also present financial information that
does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period over period comparison of operating results by removing the impact of items that, in management’s view, do not reflect our core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the unaudited Condensed Consolidated Statements of Income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measure to arrive at these
non-U.S. GAAP financial measures.
In our Management’s Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales and other information, which we define as “constant currency.” Changes in net sales excluding the impact of foreign currency translation is a non-U.S. GAAP financial measure. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current period foreign currency exchange rates. As a result, our management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of material acquisitions when
comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.
We present earnings before net interest and taxes (“EBIT”) and earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude restructuring initiatives, acquisition-related costs, purchase accounting adjustments related to acquisitions and investments and net unrealized investment gains and losses related to observable market price changes on equity securities. Our Outlook is also provided
on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as exchange rates and changes in the fair value of equity investments, or reliably predicted because they are not part of our routine activities, such as restructuring and acquisition costs.
We provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. “Net Debt” is calculated as interest bearing debt less cash and equivalents and short-term investments while “Net Capital” is calculated as stockholders’ equity plus Net Debt. Net Debt to Net Capital measures a company’s financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents and short-term investments when
evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.
Finally, we provide a reconciliation of free cash flow as a non-U.S. GAAP measure. Free cash flow is calculated as cash provided by operating activities less capital expenditures plus proceeds from government grants related to capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives.
Because of our international presence, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign subsidiaries.
Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales could materially impact our results of operations. During the third quarter and for the first nine months of 2022, the U.S. dollar strengthened compared to the major European currencies. This resulted in a dilutive impact on our translated results during the third quarter of 2022 when compared to the third quarter of 2021.
QUARTERLY TRENDS
Our
results of operations in the last quarter of the year typically are negatively impacted by customer plant shutdowns in December. Several of the markets we serve are impacted by the seasonality of underlying consumer products. This, in turn, may have an impact on our net sales and results of operations for those markets. The diversification of our product portfolio minimizes fluctuations in our overall quarterly financial statements and results in an immaterial seasonality impact on our Condensed Consolidated Financial Statements when viewed quarter over quarter.
LIQUIDITY AND CAPITAL RESOURCES
Given our current low level of leverage relative to others in our industry and our ability to generate strong levels of cash flow from operations, we believe we are in a strong financial position and have the financial resources to meet our business requirements in the foreseeable future.
We have historically used cash flow from operations, our revolving and other credit facilities, proceeds from stock options and debt, as needed, as our primary sources of liquidity. Our primary uses of cash are to invest in equipment and facilities that are necessary to support our growth, pay quarterly dividends to stockholders, repurchase shares of our common stock and to make acquisitions that will contribute to the achievement of our strategic objectives. Due to uncertainties amid the war in Ukraine, potential new COVID-19 variants across the globe and the inflationary environment, in the event that customer demand decreases significantly for a prolonged period of time and adversely impacts our cash flows from operations, we would have the ability to restrict and significantly reduce capital expenditure levels and share repurchases, as well as evaluate our acquisition strategy. A prolonged and significant reduction in capital expenditure levels could increase future
repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.
Cash and equivalents and restricted cash increased to $125.8 million at September 30, 2022 from $122.9 million at December 31, 2021. Total short and long-term interest bearing debt of $1.2 billion at September 30, 2022 was consistent with the $1.2 billion at December 31, 2021. The ratio of our Net Debt (interest bearing debt less cash and equivalents) to Net Capital (stockholders’ equity plus Net Debt) increased to 36.1% at September 30, 2022 compared to 35.1% at December 31, 2021 primarily
driven by the lower stockholders equity driven by currency translation adjustments. See the reconciliation under "Non-U.S. GAAP Measures".
In the first nine months of 2022, our operations provided approximately $306.3 million in net cash flow compared to $259.4 million for the same period a year ago. In both periods, cash flow from operations was primarily derived from earnings before depreciation and amortization. The increase in cash provided by operating activities during the first nine months of 2022 is primarily attributable to improved working capital management and lower restructuring costs. Partially offsetting other increases in cash provided by operations was a $16.3 million contribution to our domestic and foreign benefit plans during the first nine months of 2022.
We used $222.4 million in cash for investing activities during the first nine months of 2022 compared
to $343.4 million during the same period a year ago. Our investment in capital projects increased $9.4 million during the first nine months of 2022 compared to the first nine months of 2021, which is primarily related to additional investments in capacity for our injectables division, offset by $17.1 million received by government grant proceeds primarily for our active material science solution division. Our 2022 estimated cash outlays for capital expenditures net of government grant proceeds are expected to be in the range of approximately $300 million to $320 million.
Financing activities used $80.1 million in cash during the first nine months of 2022 compared
to $98.9 million in cash used by financing activities during the same period a year ago. During the first nine months of 2022, we received proceeds from long-term obligations of $406.6 million primarily from the issuance of $400 million of our 3.60% Senior Notes due March 2032 during the first quarter of 2022. As part of our bond offering, we paid $4.0 million in debt issuance costs. Additionally, we repaid $93.5 million related to our revolving credit facility, paid $56 million related to our term loan that matured in July 2022, paid $74.7 million of dividends and purchased $72.3 million of treasury stock. We redeemed all $75.0 million of our 3.25% senior unsecured notes during the second quarter of 2022 at a price equal to the principal amount plus accrued interest and a $0.4 million make-whole premium. Additionally, we redeemed all $125.0 million of our 3.49% senior unsecured notes during the third quarter at a price equal to the principal amount plus accrued interest.
On
June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") to replace the then existing facility maturing July 2022 (the "prior credit facility") and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility"). The revolving credit facility matures in June 2026, subject to a maximum of two one-year extensions in certain circumstances, and provides for unsecured financing of up to $600 million available in the U.S. and to our wholly-owned UK subsidiary. The amended term facility matured in July 2022 and was paid in full. The revolving credit facility can be drawn in various currencies including USD, EUR, GBP and CHF to the equivalent of $600 million, which may be increased by up to $300 million subject to the satisfaction
of certain conditions. Each borrowing under the revolving credit facility will bear interest at rates based on LIBOR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The revolving credit facility provides mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. As of September 30,
2022, no balance was utilized under the revolving credit facility in the U.S. and €50.0 million (approximately $49.0 million) was utilized by our wholly-owned UK subsidiary. As of December 31, 2021, $133 million was utilized under the revolving credit facility in the U.S., €10 million (approximately $11.4 million) was utilized by our wholly-owned UK subsidiary and $56 million remained outstanding under the amended term facility. Credit facility balances are included in notes payable, revolving credit facility and overdrafts on the Condensed Consolidated Balance Sheets.
Our revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:
(1)Definitions of ratios are included as part of the revolving credit facility and note purchase agreements.
Based upon the above consolidated
leverage ratio covenant, we have the ability to borrow approximately an additional $1.1 billion before the 3.50 to 1.00 maximum ratio requirement is exceeded.
In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $30 million that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, no balance was utilized under this arrangement as of September 30, 2022.
Our foreign operations have historically met cash requirements with the use of internally generated cash or uncommitted short-term borrowings. We also have committed financing arrangements in both the U.S. and the UK as detailed above. We manage our global cash requirements considering (i) available funds among the many subsidiaries
through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.
We facilitate a supply chain finance program ("SCF") across Europe and the U.S. that is administered by a third-party platform. Eligible suppliers can elect to receive early payment of invoices, less an interest deduction, and negotiate their receivable sales arrangements through the third-party platform on behalf of the respective SCF bank. We are not a party to those agreements, and the terms of our payment obligations are not impacted by a supplier's participation in the SCF. Accordingly, we have concluded that this program continues to be a trade payable program and is not indicative of a borrowing arrangement.
All outstanding amounts related to suppliers participating in the SCF are recorded within Accounts payable, accrued and
other liabilities in our Condensed Consolidated Balance Sheets, and associated payments are included in operating activities within our Condensed Consolidated Statements of Cash Flows. As of September 30, 2022 and December 31, 2021, the amounts payable related to the SCF program were approximately $35 million and $30 million, respectively.
Collection and payment periods tend to be longer for our operations located outside the United States due to local business practices. We have also seen an increasing trend in pressure from certain customers to lengthen their
payment terms. As the majority of our products are made to order, we have not needed to keep significant amounts of finished goods inventory to meet customer requirements. However, some of our contracts specify an amount of finished goods safety stock we are required to maintain.
To the extent our financial position allows and there is a clear financial benefit, we from time-to-time benefit from early payment discounts with some suppliers. We are also lengthening the payment terms with our suppliers to be in line with customer trends. While we have offered third party alternatives for our suppliers to receive payments sooner, we generally do not utilize these offerings from our customers as the economic conditions currently are not beneficial for us.
On July
6, 2022, we entered into an agreement to swap approximately $200 million of our fixed USD debt to fixed EUR debt which should generate interest savings of approximately $0.5 million per quarter based upon current exchange rates.
The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Please refer to Note 12 - Commitments and Contingencies of the
Notes to Condensed Consolidated Financial Statements for a discussion of contingencies affecting our business.
RECENTLY ISSUED ACCOUNTING STANDARDS
We have reviewed the recently issued accounting standards updates to the FASB’s Accounting Standards Codification that have future effective dates. Standards that have been adopted during 2022 are discussed in Note 1 – Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments to this update apply only to contracts,
hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 was further amended in January 2021 by ASU 2021-01 which clarified the applicability of certain provisions. Both standards are effective upon issuance and can be adopted any time prior to December 31, 2022. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. During 2021, we amended the revolving credit facility to provide mechanics relating to a transition away from LIBOR (in the case of USD) and the designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. We are evaluating any further impact this standard may have on our Condensed
Consolidated Financial Statements and anticipate no further significant impacts.
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption.
OUTLOOK
Looking forward to the fourth quarter, our Pharma segment is expected to continue to grow at more normalized levels, however, we do not expect to repeat last year’s strong sales of active material solutions for at-home COVID-19 test kits. We anticipate the softening in demand in markets such as personal care, food and beverage to continue. We remain focused on managing the inflationary environment through price initiatives and energy surcharges, as well as controlling expenses. We will continue to allocate
capital selectively while maintaining our strong balance sheet.
We expect earnings per share for the fourth quarter of 2022, excluding any restructuring expenses, changes in the fair value of equity investments and acquisition costs, to be in the range of $0.73 to $0.83 and this guidance is based on an effective tax rate range of 28% to 30%.
Certain statements in Management’s Discussion and Analysis and other sections of this Form 10-Q are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in
the Significant Developments, Restructuring Initiatives, Quarterly Trends, Liquidity and Capital Resources, Contingencies and Outlook sections of this Form 10-Q. Words such as “expects,”“anticipates,”“believes,”“estimates,”“future,”“potential”, "are optimistic" and other similar expressions or future or conditional verbs such as “will,”“should,”“would” and “could” are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results or other events may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist
in our operations and business environment including, but not limited to:
•geopolitical conflicts worldwide including the invasion of Ukraine by the Russian military and the resulting indirect impact on demand from our customers selling their products into these countries, as well as rising input costs and certain supply chain disruptions;
•lower demand and asset utilization due to an economic recession either globally or in key markets we operate within;
•the impact of COVID-19 and its variants on our global supply chain and our global customers, employees and operations, which has elevated and will continue to elevate many of the risks and uncertainties discussed below;
•economic conditions worldwide,
including inflationary conditions and potential deflationary conditions in other regions we rely on for growth;
•the availability of direct labor workers and the increase in direct labor costs, especially in North America;
•our ability to preserve organizational culture and maintain employee productivity in the work-from-home environment caused by the current pandemic;
•the availability of raw materials and components (particularly from sole sourced suppliers) as well as the financial viability of these suppliers;
•fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs (particularly resin, metal, anodization
costs and energy costs);
•significant fluctuations in foreign currency exchange rates or our effective tax rate;
•the impact of tax reform legislation, changes in tax rates and other tax-related events or transactions that could impact our effective tax rate;
•financial conditions of customers and suppliers;
•consolidations within our customer or supplier bases;
•changes in customer and/or consumer spending levels;
•loss of one or more key accounts;
•our ability to successfully implement facility expansions
and new facility projects;
•our ability to offset inflationary impacts with cost containment, productivity initiatives and price increases;
•changes in capital availability or cost, including rising interest rates;
•volatility of global credit markets;
•our ability to identify potential new acquisitions and to successfully acquire and integrate such operations, including the successful integration of the businesses we have acquired, including contingent consideration valuation;
•our ability to build out acquired businesses and integrate the product/service offerings of the acquired entities into our existing product/service portfolio;
•direct
or indirect consequences of acts of war, terrorism or social unrest;
•cybersecurity threats that could impact our networks and reporting systems;
•the impact of natural disasters and other weather-related occurrences;
•fiscal and monetary policies and other regulations;
•changes or difficulties in complying with government regulation;
•changing regulations or market conditions regarding environmental sustainability;
•work stoppages due to labor disputes;
•competition, including technological advances;
•our
ability to protect and defend our intellectual property rights, as well as litigation involving intellectual property rights;
•the outcome of any legal proceeding that has been or may be instituted against us and others;
•our ability to meet future cash flow estimates to support our goodwill impairment testing;
•the demand for existing and new products;
•the success of our customers’ products, particularly in the pharmaceutical industry;
•our ability to manage worldwide customer launches of complex technical products, particularly in developing markets;
•difficulties
in product development and uncertainties related to the timing or outcome of product development;
Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned
not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please refer to Item 1A (Risk Factors) of Part I included in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional risks and uncertainties that may cause our actual results or other events to differ materially from those expressed or implied in such forward-looking statements.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our subsidiaries. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and South American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Additionally, in
some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.
The table below provides information as of September 30, 2022 about our forward currency exchange contracts. The majority of the contracts expire before the end of the fourth quarter of 2022.
As
of September 30, 2022, we have recorded the fair value of foreign currency forward exchange contracts of $0.2 million in prepaid and other and $0.9 million in accounts payable, accrued and other liabilities on the Condensed Consolidated Balance Sheets. On July 6, 2022, we entered into a seven year USD/EUR fixed-to-fixed cross currency interest rate swap to effectively hedge the interest rate exposure relating to $203 million of the $400 million 3.60% Senior Notes due March 2032 which were issued by AptarGroup, Inc. on March 7, 2022. This USD/EUR swap agreement exchanged USD $203 million of fixed-rate 3.60% USD debt to €200 million of fixed-rate 2.5224% euro debt. The fair value of this net investment hedge
is $4.8 million reported in prepaid and other assets on the Condensed Consolidated Balance Sheets.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2022. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures
were effective as of such date.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the fiscal quarter ended September 30, 2022, we implemented enterprise resource planning ("ERP") systems at one operating facility. Consequently, the control environments have been modified at this location to incorporate the controls contained within the new ERP systems. Except for the foregoing, no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our fiscal quarter ended September 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 2. UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
Certain French employees are eligible to participate in the FCP Aptar Savings Plan (the “Plan”). An independent agent purchases shares of common stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of common stock under the Plan. The agent under the Plan is BNP Paribas Fund Services. No underwriters are used under the Plan. All shares
are sold in reliance upon the exemption from registration under the Securities Act of 1933 provided by Regulation S promulgated under that Act. During the quarter ended September 30, 2022, the Plan purchased 4,447 shares of our common stock on behalf of the participants at an average price of $98.09, for an aggregate amount of $0.4 million, and sold 6,569 shares of our common stock on behalf of the participants at an average price of $165.43, for an aggregate amount of $1.1 million. At September 30, 2022, the Plan owned 123,253 shares of our common stock.
ISSUER PURCHASES OF EQUITY SECURITIES
On April 18, 2019, we announced a share purchase authorization of up to $350 million of common stock. This authorization replaced previous authorizations
and has no expiration date. We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.
During the three and nine months ended September 30, 2022, we repurchased approximately 181 thousand shares for $19.2 million and 669 thousand shares for $72.3 million, respectively. As of September 30, 2022, there was $128.1 million of authorized share repurchases remaining under the existing authorization.
The following table summarizes our purchases of our securities for the quarter ended September 30, 2022:
Period
Total
Number Of Shares Purchased
Average Price Paid Per Share
Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs
Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs (in millions)
The following information from our Quarterly Report on Form 10-Q for the third quarter of fiscal 2022, filed with the SEC on October 28, 2022, formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Cover Page, (ii) the Condensed Consolidated Statements of Income – Three and Nine Months Ended September 30, 2022 and 2021, (iii) the Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended
September 30, 2022 and 2021, (iv) the Condensed Consolidated Balance Sheets – September 30, 2022 and December 31, 2021, (v) the Condensed Consolidated Statements of Changes in Equity – Three and Nine Months Ended September 30, 2022 and 2021, (vi) the Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and 2021 and (vii) the Notes to Condensed Consolidated Financial Statements.
Exhibit 104
Cover
Page Interactive Data File (embedded within the Inline XBRL document).
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
