AptarGroup, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Pharma Performance: Growth driven by CNS, asthma, COPD, ophthalmic, and injectables (GLP-1, Annex 1). Acquired Sommaplast in Brazil. Innovations include Unidose liquid system, partnership with Dianosic, HeroTracker Sense FDA clearance, and an expanded R&D center in France.
• Beauty Performance: Revenue growth in Asia, Latin America, and certain N America regions; Europe was flat. Personal Care growth balanced softness in Prestige fragrance and facial skin care.
• Closures Performance: Product volumes increased, but lower tooling sales and resin pricing impacted core sales.
• Innovation: Highlighting technology launches like Unidose in Pharma, award-winning technology in Beauty, and poor spout closure in Closures.
• Shareholder Returns: 2025 has been a strong year for share repurchases, with a dividend increase and $279 million returned to shareholders over 9 months.

Segment Performance

• Pharma Segment: Core sales increased 2%. Proprietary drug delivery systems: Prescription core sales up 3% (driven by CNS, asthma, COPD; emergency medicine slower growth). Consumer Healthcare core sales down 11% (nasal decongestant, saline). Injectables core sales up 18% (elastomeric components for biologics, GLP-1). Active Materials Science core sales up 3%. Adjusted EBITDA margin 37.2%, a 120 basis point improvement.
• Beauty Segment: Core sales flat. Fragrance, facial skin care, color cosmetics down 5%. Personal Care up 13%. Home Care down 18%. Adjusted EBITDA margin 12.1%, a 120 basis point decline.
• Closures Segment: Core sales down 1%. Product sales up 2%, offset by lower tooling sales and resin pricing. Food core sales down 4%, Beverage up 9%, Personal Care down 8%. Adjusted EBITDA margin 16.1%, a 110 basis point decline.

Guidance

• Q4 Outlook: Expected strength in Pharma injectables, offset by emergency medicine softness. Beauty core sales positive, Closures product sales growth. Adjusted EPS range $1.20-$1.28; effective tax rate 19.5%-21.5%; D&A expense $75M-$80M.
• Emergency Medicine: Near-term headwinds in Q4 and H1 2026; 2026 revenues expected 35% lower than 2025.
• Long-Term: Confidence in sustainable growth with innovation, operational discipline, and strategic investments, including bolt-on acquisitions like the Brazilian Pharma Packaging deal.

Risks

• Emergency Medicine: Inventory normalization impacting revenues and margins; dependence on government funding levels for continued growth.
• Litigation: Atypical litigation costs of ~$4 million impacted net income in Q3, but excluded from adjusted EBITDA and EPS.

Question and Answer

Q: Comments on '26 Pharma, cough/cold in Europe, litigation cost A: Stephan and Vanessa discuss Pharma growth expectations, cough/cold recovery in Europe, and litigation being atypical and excluded from adjusted metrics.

Q: GLP-1, Annex 1 contribution to growth A: Stephan mentions GLP-1 as a strong growth driver, with Annex 1 close behind in contributing to growth.

Q: Beauty margin improvement, Pharma product activity A: Stephan talks about Beauty volume, regional performance, and Pharma's various product formats including Unidose and other drug delivery systems.

Q: NARCAN margin, pricing in Pharma A: Vanessa notes NARCAN has high margins due to its high-value nature; Pharma uses value-based pricing rather than cost-related pricing.

Q: Emergency medicine margin, inventory, future growth A: Vanessa and Stephan discuss NARCAN's high margin, inventory normalization impact, and future growth expectations post-2026 assuming normal government funding