| REVENUE | REVENUE Segment financial information for the prior periods has been recast to conform to the current presentation. Refer to Note 16 - Segment Information. Revenue by segment and geography based on shipped from locations for the three and six months ended June 30, 2023 and 2022 is as follows: For the Three Months Ended June 30, 2023 Segment Europe Domestic Latin Asia Total Aptar Pharma $ 254,459 $ 100,868 $ 12,358 $ 23,015 $ 390,700 Aptar Beauty 213,559 58,473 38,067 19,488 329,587 Aptar Closures 57,065 85,192 21,031 12,331 175,619 Total $ 525,083 $ 244,533 $ 71,456 $ 54,834 $ 895,906 For the Three Months Ended June 30, 2022 Segment Europe Domestic Latin Asia Total Aptar Pharma $ 209,118 $ 108,414 $ 6,339 $ 16,360 $ 340,231 Aptar Beauty 182,934 79,819 32,452 22,462 317,667 Aptar Closures 52,913 100,569 20,351 12,812 186,645 Total $ 444,965 $ 288,802 $ 59,142 $ 51,634 $ 844,543 For the Six Months Ended June 30, 2023 Segment Europe Domestic Latin Asia Total Aptar Pharma $ 481,575 $ 203,142 $ 19,581 $ 42,448 $ 746,746 Aptar Beauty 425,569 117,761 73,319 39,327 655,976 Aptar Closures 114,405 172,108 41,172 25,566 353,251 Total $ 1,021,549 $ 493,011 $ 134,072 $ 107,341 $ 1,755,973 For the Six Months Ended June 30, 2022 Segment Europe Domestic Latin Asia Total Aptar Pharma $ 420,125 $ 214,755 $ 14,194 $ 33,619 $ 682,693 Aptar Beauty 370,693 149,199 62,142 44,713 626,747 Aptar Closures 109,278 204,853 40,550 25,354 380,035 Total $ 900,096 $ 568,807 $ 116,886 $ 103,686 $ 1,689,475 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. The opening and closing balances of our contract asset and contract liabilities are as follows: Balance as of December 31, 2022 Balance as of June 30, 2023 Increase/ Contract asset (current) $ 16,736 $ 21,196 $ 4,460 Contract liability (current) 80,241 87,117 6,876 Contract liability (long-term) 25,361 28,824 3,463 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 $71.8 million, including $45.8 million relating to contract liabilities at the beginning of the year. Current 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. Product Sales We primarily manufacture and sell drug and consumer product dosing, dispensing and protection technologies. 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 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 June 30, 2023 or December 31, 2022. Service Sales We also provide services to our 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. Contract Costs 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. |
