AptarGroup (ATR) 26 Oct 232023 Q3 Earnings call transcript

Hello, and thank you for standing by. Welcome to Aptar's 2023 Third Quarter Conference Call. [Operator Instructions] Introducing today's conference call is Ms. Marry Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead.

you. Thank thanks us and being for everyone, today. with Hello,

are President Vice and me and on and Tanda, call today's Executive Joining CEO; Stephan Bob CFO. President Kuhn,

have website Our posted page. slide and press deck release on the under our Investor Relations accompanying been

will our call, certain discussing was refer yesterday. press are release, we These comparable GAAP to non-GAAP most Please release. to which the During directly measures. the financial measures be this financial reconciled measure press in disseminated

of this As on will always, a replay we website. call post our

I like Tanda. turn over Stephan, it over would to now to to Stephan you.

everyone. Thank Kuhn, appreciate remarks you, Marry, our additional details. CFO, third quarter. and good today. the begin for joining morning, call on will my provide I Later results will We the in Bob us call, our highlighting by you the

X. Starting on Slide

which has focus drug-delivery in cough the the quarter X-point therapeutics, our and systems well drug-delivery eye strong medicines, system our achieved margin Pharma. In has sales quarter, base OTC. therapies. a solutions, in been shareholder double-digit strong on medicine a XX%, as growth prior sales COPD across gone emergency well nasal driven across of In improvement cold X% Narcan to year, systems, experienced We of pharma of growth quarter Pharma per proprietary fragrance therapeutic sales Aptar dosing grew and demand EPS significant growth as continued and the share over and over the our as a and or rinse lot naloxone proprietary management company dispensing for due applications, counter, continues our emergency and delivered X, there of was $X.XX dispensing from this mix care technologies. saline adjusted asthma the better unidose from generic for an dispensing cost relatively on demand system allergic as the our multiple improvement about robust quarter. third increase of year's focus For EBITDA by nervous central core the The with margin rhinitis, as including margin faster for and last

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pipeline solution Additionally, America, said build. Beauty Having to FusionPKG, the especially North prior in with overall compared growth personal its XXXX our substantially in when to full continues quarter that, America in provider volumes, North care. sales had strong continuing year, packaging be below the to

weeks, pickup approach inventories we certain for some recent SKUs. for a end in to are in normal levels as orders see starting However, markets

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of innovative Now an In few technology push button by in turning to the intuitive spray I patented, and after like the would to Slide technology which quarter launched our its features and technology. Pharma, highlight products product, button dosing. push one shorter consumer-friendly with a X-year provides a of Lateral a System that spray. side featuring nasal launch X. Control means to to the more kind, a nozzle, the collaboration led comfort more while activate with more first using This accurate medications the Aptar, when Helion a

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sampling, expanded LVMH for top fragrance fragrance that sustainable include a paper portfolio our We've brand. to is sampling which material featuring now mono solutions. Turning

is Resin America. Recycled brand Finally, MAC our Estee North Lauder's in pump dispensing technology Post-Consumer the for foundation

repellant now snap in is spice For insect new for our dispensing lotion Off! for closures in America. and America, dispensing SC Johnson's featuring our providing closure on inverted is closure McCormick package North top Latin their packaging controlled

European to our footprint on with our focus closure to additional reduction and As a rationalization in labor we representatives our down recent around of started share mentioned end, French we Poincy, and that costs. at To facility we our second Investor manufacturing France. information have Day, shut process have

have take we As before, time. stated these processes

more mid- will closure with share from this late you plant XXXX and XXXX. and to by savings to we run as savings realizing expect can information start We in full rate

around Our of a sales be percentage to XXXX. on SG&A as is track full for year the XX%

recognized the Performance consecutive an third and Stakeholders Rights Human Media Climate touch and would I our ESG XBL Change, performance this we such by on by Finally, month, ISS as and were ESG to Society, year. transparency for Earlier categories update. in for and ESG like

ranked XXX Corporate the the of We on Citizens. #XX list are Best

member, Honeywell Before with Glickman, in I executive is also as to added experience diverse the such Sarah more highlight that Novartis, highly deep of XX Criteo. want over in operational with CFO than years call the global, hand Bristol-Myers And financial to we new industries over accomplished with companies I Board of September, a a Bob, that, Sarah Squibb. and and Bob. to you,

to and X, everyone. Thank Stephan, you, the like good Slide morning, summarize Starting I quarter. on would

continued proprietary grew and while home care for due for we to increased our strong in for drug as challenging Our America technologies, demand the our quarter. in currencies environment delivery sales fragrance North solid core When acquisitions, X%. as third in part systems well X% personal dispensing and care the neutralize significant reported demand sales for

the ongoing we $X.XX. Slide from which quarter over increase XX% EPS. earnings XX% on This adjusted an of achieved reported third driven a strong third shown prior cost performance million, EBITDA X, adjusted and represents per of quarter, As was prior by increase adjusted operational share year of We management. $XXX year's

Turning the the of quarter. to details segment by some for

Our delivery volumes, systems. for Pharma continued growth the proprietary drug increased sales of segment's X% X%. core from our came increased especially Approximately

rhinitis, sales system and Care looking Pharma sales core and saline asthma and emergency cold care X%. When driven core increased strong XX%, solutions, dispensing increased for sales due segment injectables eye division, and rinse prescription technologies for COPD applications. our and higher at at primarily for therapies. Consumer cough the by Looking in medicine, demand nervous nasal Health central sales XX%, dosing core increased therapeutics to market, continued by allergic sales

division adjusted Turning the had quarter. Pharma's decrease rapid of in well due year's revenue XX% diabetes solutions. demand an our injectables EBITDA capacity used our decreased XX% for which science of This which costs XX%, was the tooling $X was of expansion for on period start-up used approximately includes a vials less same improvement the over our and as the decreased products in quarter, sales materials active to margin year. points products also prior Core active experienced growth in care about as sales for X to million. last probiotics, of

increased for saw the for to due fragrance. and long-term double Europe range prestige core prestige fragrance million to perform Beauty markets increased range demand the in to Asia a these We of slight North Latin expect America sales EBITDA in dispensing segment's our core challenges solutions well perform well with healthy also startup target for for in a the in saw margins and QX. Overall, quarter. Fragrance mass with the continues mass $X solutions, $X and sales our X% the solutions digits within costs quarter. the to demand ongoing adjusted growth to solidly growing continued due sales in America. million

as core had care both XX% sales increased market, in use XX% our America growth, in at applications. end persisted. Beauty which in sales segment Beauty Looking higher sales products core North due demand sales by in fragrance. Personal segment of Europe used as modest by prestige decreased sun and as care sales mass care hair sales tooling lower sales, and higher represents to well several categories Beauty primarily the of driven XX%,

sales is X% Closures the decreased disinfectants. categories improvement sales the core lower for year. The This the for including more costs. than quarter several the year's due was about care segment quarter. period XX%. resin in sales air lower compared across last a and core adjusted segment's quarter North care X.X-point prior to Approximately over the surface Home decreased is margin due of America This decrease to EBITDA current with same XX% X%

dispensing product care. decline the especially volumes in offset quarter, for While volumes fully the could in and they in and improved home beverage personal in food not care closures

sales primarily increased in sales of focus adjusted segment segment's sales sales, bottled decline which driven Looking accounted The over The largest In XX%, X% tooling due the EBITDA pass-throughs category, which Care our care resin in This America. Personal which and represents was improvement XX% global water lower we by to and on saw decrease market XX%. X% costs. Closures last at as the management increased is core demand strong and increased of home due care, the was core as Beverage tooling by sales the year, lower beverage mainly the North cost even a market. margin to to well sales health our X-point quarter, our in core decreased and sales. effects beauty, to sales core decline in concentrates. Europe, costs. includes Food period of lower for XX%. decreased demand. In due sales fourth due continued a resin same with passing lower on around for

CapEx injectables projects up are winding quarter was our capacity million, spend the allocated quarter XXXX majority our for spend to total of of X the Pharma to third segment. down, going with making our $XX XX% for capital Our majority about The total the expansion. CapEx the with large

increased the will X our show expense was at exchange rates. to million ago, and X% cover and beginning the X% million, up Year-to-date year X% the were year $X.XX, be which for compared quarter up capacity performance of sales. Slide our $XXX year-to-date growth the including expansion from approximately per X from due million cash come XXXX. prior in earnings a commercialization phases earnings. reminder, flow and $XX adjusted ready operations injectables our online over XX% Reported and of core or depreciation to comparable sales in and improvements amortization $X.XX to a share, $XXX As

and quarter momentum summarizes excluding to fair continue The tax share. unrealized $X.XX range fourth be our expenses, per to Slide is Moving adjusted equity the restructuring value to We the XX%. and in share, per expect $X.XX for of to outlook fourth XX% quarter of acquisition anticipate X, to range for strong any changes in earnings which fourth investments costs our the the rate quarter. estimated

our expect to from a fourth reminder, impact in start-up quarter, $X.XX the have program. costs we to a in $X.XX injectables expansion As

are some to expecting we currency prior compared tailwinds the Additionally, year.

prior rate. the the for was For example, quarter coming for euro and the is X.XX rate guidance year quarter a assuming X.XX fourth our euro

$X.XX rate to We per share roughly full for in have every point equates for said the that X year. move the roughly euro that

to due expect and as million we quarter, currently movements. We the coming euro to to earnings be currency the looking amortization as well estimate million. compared for at $XXX the to currency year So XXXX $X.XX other rate on benefit be $XXX to approximately prior for a between depreciation

net drug delivery Our to a expansion capital government expenditures pharma proprietary be in around $XXX grants, of million, capacity estimated our XXXX, is investment systems. including any for

In balance to leverage strategic strong closing, continue end, and business, the return repurchases. to X.X shareholders at to sheet a continue in we continue with to ratio pursue have opportunities a of which of allows in the form us dividends quarter value to and invest share

shareholders, comments to in Stephan for addition the repurchased before totaled which $X.X In few move million Q&A. million. At provide to quarter, this approximately time, we to cash XX,XXX our dividend $XX.X payment a closing will we shares

X growth delivered X quarter quarter X. we XXXX, exceptional Thanks, the during Bob. and very strong In our of X quarters, results showed months and biggest first have

expect growth over adjusted prior period. continue of X We will year EPS quarter double-digit trend the our

While quarter demand to fragrance continue. we a strong. the quarter X our our proprietary delivery smaller In for drug we pharma to expect year to pharma quarter, franchises tends be finish us, expect the robust system for fourth and

our solutions were worst finished an be to as we note for forward high and for will the XXXX, personal solutions Our fragrance destocking the believe North America, environment improving a us. look we dispensing in care dispensing behind of on especially

ahead have our growth. seen drug look to we As delivery XXXX, significant systems proprietary

counter versions also can helped more due Some over Narcan the to our of distribution naloxone be generic channels levels COVID. to that following year. growth has going spurt this destocking refilling and normal to attributed

not launch of channel continues will drug the year, distribution this While life-saving expand. next new adoption repeat this of to

within sales target delivery X% long-term We XXXX to proprietary the our expect pharma systems drug to continue of XX%. core in to grow

Our the for new up injectables division end of through higher-value XXXX. will products be capacity ramping

launches has a year, COVID. years a to our year have been for catch-up seen the past that new tremendous for the also XXXX fragrance number industry of Over for devices fragrances dispensing growth. postponed due

expect Therefore, to core benefit the move environment X%. Both post unprecedented we an and our quarter sales target to in continue the as North Beauty range to COVID in America long-term We XXXX. for X% are fragrance fourth from will segments destocking. within grow of Beauty our and improving for we Closures energized

You in to would fixed improvement for next excited XXXX. our taking in our segments And I of quarter P&L. have leverage year, costs, reduction our growth to call and as With efforts percentage increased reduced X manufacturing SG&A now seen your operating of the which cost we a each advantage open expect into are as measurable become about the like in for of across the continue more that, visible questions. sales and opportunities we

question Instructions] first of [Operator Our from go Bank George ahead. comes Staphos America. Please from

should or there be can you Bob, first that excited that -- you expect the end range to The growing talk key that is, you in comments your one your you're early to have below and Stephan expect markets earnings 'XX. XXXX. we see it's extent mentioned recognizing any about Are from growth overall you that that will should long-term still target product take your of we to any lines visibility. And

perform The second relative for plus us how had, not and reduce in Where be have within Day, Analyst but third COGS. are fixed question updating to a your did be you on you your you going you SG&A only metric goal performance trying quarter during I costs to that cited, there? combined the SG&A, you'll to

when what me 'XX. energized questions. are But you you I for for mean that mean, say 'XX. just thanks think obviously, for them repeat. have dispensing give next George, I will don't to the guidance to heard within we the proprietary continue to devices, digit, but Injectable issue our year. grew ERP we double we range not grow the target it, expect yes, about

and or drag. we China washed at comparisons And For grow active we out, active quarter. a is and tougher, we rates of the some as -- to materials America shoots again Digital materials, slowly, the -- less will expect fourth the to And tough is continue was will progressing. but North a health green albeit growth. COVID fragrance, and albeit be in lower we to growing fully comparison is to see still get drag, expect China see normalize, and return

of up year. given without in our guidance yes, do, that result giving targets. And growth for leverage adds So next expectation growth all an operating all to the cost certainly earnings with growth in we work with -- solid a should line the that increased that

Now you board. margins, on fixed and factories, we have from cost question, margin gross comes course, far the are from EBITDA done. segments significant expansion. expansion across second that, All see not higher in EBITDA And seen the your of X by lower margin the

So things we into ago is now bleed started what you a that P&L. to see the starting year

actions previously, the discussed we we a of lead tranche, time. start half a France you year. year have the Poincy P&L is only will second implemented started ago As that site, shutdown only now. in we now which being things which next of are in long the the see the second These And

expect stronger So to and continue operating leads sure to line we work leverage top growth. line that certainly strong have and make we even bottom to growth good

percentage 'XX starting right kind about X just the that. now the of stand fixed you're I Analyst a that think follow-on, Day to deck, does sales, said all point? relative of 'XX. Where you I going and COGS points appreciate SG&A drop From to quick and as So from a that to ratio

to we out always the externally year ratio Quarter we expect in the quarter, given lower. the be have disclose year was metric. rewards we that combined tracking XX%. the at for for and Well, the equity for we externally. year. be this it the year-to-date expect not the QX, is to to we and But we averages we are finish X expected overall, time that XX% end think first something disclose say we XX% at SG&A But What XX.X% by George, I is be the we can that and to actually to where

from is question Securities. next Our Fargo Hajde Wells from Gabe

And that was we to also of dial away think Pharma growth start-up and you a anything then year? us, expect, maybe XXXX. we the about of? in -- the or the include all be should adjusting -- in I for we else $XX profitability should mix need Maybe costs just mile. just given Or we versus Pharma? we little injectables mindful get ERP in costs, think if give more then In million bit segment, there and can that little elements I in you Rx remind will in I saying ERP guess, moderation the, other go a to start-up take within this rich would Pharma, contribution of from those And guess, the assume how next Does bit other that? in of around, some a start-up

Yes. first ERP I on especially the especially in and X mean, first the not quarters in quarter, the the repeat. cost, question, will first clearly,

Now factory X Granville and and equipment that trial no that. labor revenue the have will we presence build for continue out to and and productions

the much that -- less, obviously track, It we have do to smaller. QX. it we But We'll it's but will compared probably there give don't a if ERP quantify year. be next start-up continue still bit something when will cost, to So be yet. will want we you

to yes, and mix Rx you grow and a your negative faster much CHC, active injectables will on mix question, Then effect. have compared if materials

you other ERP costs side, with away just go the have we said, that the system. On as will

end I it here the out, we if anything. across add again want the work to of to don't know, as So to we're you board going Bob, do. that plus cost not advance you plays in have result give

of our probably say is mentioned $X of thing Yes. million, start-up is, I number QX and million for on closer million million $X and the this year. costs Gabe, to million I the The $XX and pennies only or you think, have we'll in injectables, ERP think to $X another would I couple $XX year

then redeployment I gears, guess, cash switching to And and/or generation.

kind look migrate back as of talked X.Xx terms year. -- 'XX dividend you this shaking we starting levered preferred repo and avenue you end at the just confirm Or M&A I beyond. And D&A. X.X, has be model in CapEx the Anything be pipeline mean, into been should about? look closer about of the I think as that. to to of thinking and kind want I out then would our to around of that across we

bit we're a So still above, CapEx. little the Gabe, on

we runout amount quarter, projects, the of of $XX spent million. D&A expansion. the coming the primarily about is million the the big above for is in really X Most which quarter from $XX So about the injectables the

in in see will we And especially growth I Pharma. that we would the sure medicines. are not available, -- have Those we to say, that life-saving obviously, make have you continue capacity

especially get We will not at double these areas expand capacity certain that to go numbers, moment. CapEx to the in digit

your the comment free by that's deleveraging cash And were, Yes. cash generation about from $XX take and on -- to on year-end, really then to primarily in I strong third quarter. the so quarter, we it in the down the think X.X, which about able X.X last million was were that million so due we're compared year generation to flow $XX a we

focus as the you've about as year-to-date, we're working $XXX improvement we're QX. seen again, well continuing that and margin So on in to capital million

Now have opportunities technologies, look opportunities, along the done pipeline with active geographic lines to have continue an before; we M&A respect to we and M&A type your at that investments. question, venturing

M&A our continue activity we unabatedly. So

work leverage at us the pause happens. little bit we or X which these rates every a sponsors maybe on, a never deals high look study ratios. For interest gives you XX help high the Clearly, because may

interest higher cost has On up with that rates. the other capital we also hand, recognize our gone of the

player be to game. this a continue we in So disciplined

comes Baird. from Panjabi next Ghansham Our from question

do products Rx in build XXXX? from seems that material this part Or as inventory headwind as of comparisons not at to OTC On a cycle through least for growth XX% as by thinking that and volume dimensionalize of you of products point? driven you new be the potential help XX% inventory and us build standpoint at see Can the the after XQ, related you such Narcan.

we keep rates. these Well, certainly, see to that growing at don't

we other it's day goes the communities, whether it's whether don't there of continuing to channels that fire up department. reports where it's pick personally hand, On school, by the whether is nontraditional not a expand,

increasingly the and some see yes, fill. as delivery attractive there, OTC has the fill. the if we So shortcut that pipeline pervasive continue given growth see route is also channel seen want, to the continue Narcan to plus pipeline added an increasingly But that brain, nasal you we is

course, also not with those of like So double-digit Pharma continue, anything significant or but or in high growth but double-digit will decline that growth rates more a our see we don't line rates.

awfully And fragrance, for has many categories? called And for care, then in on consumer sustainable segment there we're is weighing it Is second a uneven across do this board. issue customer the ecosystem which as then in chain so strong, the personal Okay. which seeing out you you? -- my other that mix for or how weak supply a seems that question on category seems whole spending of context this think is

we and next God, this past the we and week, of it out That hasn't item, they really personal need oh and then different is its in call the leave they I customers for anecdotes my now. tomorrow. see are, In issue. It's please, destocking still out we're U.S. few happened we that fine, quarters, running it's us are, course. And say, stock care, where it predominantly have "Hey, dynamics. several the alone" completely happening are

seems return. things will that to So me it

personal some certainly, before, loss. we've closures, care said share I had care in closures, home think we

And we hand, from driven what other a the launches everything other it's the eager to the accounted franchises continue is other by for clearly, year. On run share a then dynamic. flankers. out its On had in Fragrance whether closures, fragrance, course completely And and will gains. But by us. different we brands are get care care see have has North America, really challenge care their in hand, it's there. that personal signaling that's we're Beauty to certainly, end still of personal the been home home for on categories,

we into have also share really We And direction, also back some that's see without happening gained there. and China now. that getting

normalization not the way. So see going a other again, growth we but of

Our of next question is Jefferies. Daniel Rizzo from

in less not the was exposure that's if significant have is? I beauty or well and prestige exposure up prestige fragrances. doing strength as to well as mentioned or if You it's holding wondering it's you fragrance just

If but the grow some we you had prestige skin sales quarter, overall very we there, tooling very, care, came our majority there in were growth from sales to good. referred of the still did that the but product

whenever plant wonder, once then mentioned you I is 'XX or And annual know Okay. And or basis France. process, to complete, quantified working that at of a end it's close but process you're the an be you I kind what will in savings 'XX complete? on that it's the have of the

process. No, for we have not. negotiation the to that, And the simple reason that will be detrimental

and way know, on different the When only and process the I it's to and not future state you only steps the you process get unique take state answer voluntary The future is So both plant, you we previous the and demanding process once give how where get we'll much done comfort and -- be would everybody there and there negotiate in close the the that as negotiated. agreed world, the signed. to the treatment compared as very is to process the again, so and to this in need a a far on. is can the as is is, I and you

we That's we facility say think mid see the that more have France. closure. it's treat will of you're next by in year, you we benefits to the only employees. going of how But So closures that why it's the

back wrap will to we it I questions As Instructions] have no hand up. the [Operator Tanda further call, on to Mr.

Great. Thanks for questions. your

progressively not we execution, to starting least, fruition, innovation XXXX. past about see focus. the not whether if efficient Let taken very are to and the me our multiyear returning, modernized customers coming well over base, them stronger systematic vigorous very Many and are much we years Gap] the much have [Audio you and are are measures growing capable cost our results, reiterate, of now the as just last in as capability. being for the who more and exciting asset And pipeline it's and

the are All growth improvements see of and you the leverage EPS these double-digit that improved behind operating trajectory.

pipeline but running, So story, a our and strong when is for knowledge. active of and COVID drug in as remain growth. business about all drag you look a takes, will digital into to comparison becoming difficult double-digit of we've see course, health the systems puts them, some material best period after will talked to growth injectables. of dispensing And time. of is -- returning ERP not business The you targets capacity a out inside the repeat, Injectable we about the future, over proprietary the less our continue up lastly, growth, to the growing overall Pharma grow think that's will that in the and we see a washing and business, and Pharma, COVID of

double as both for will but you. of global I everyone a Fragrance drag course, in else, good for And abate on line not season, to you across And the taking and and at a activities said and North differentials. Having the Beauty a China, a good let's in is America rest of additional the the the centers actions. you holiday continue SG&A cost Beauty in the our care wish year digit, of all down boosting same our time, and are that from growth see not we grow, all and with -- Thanksgiving, Closures. targets, that, recovering view Thank the road. on overall will further of revenue and the there and especially largest relaxing we give and ongoing, At talent percentage the everybody forget for is Beauty, is market coming coming back. U.S.,

today's for concludes much conference call. all very you This Thank joining.

disconnect You your may now lines.