NYSE:ATR AptarGroup Q4 2024 Earnings Report $151.70 +3.65 (+2.47%) As of 03:59 PM Eastern Earnings HistoryForecast AptarGroup EPS ResultsActual EPS$1.52Consensus EPS $1.28Beat/MissBeat by +$0.24One Year Ago EPSN/AAptarGroup Revenue ResultsActual RevenueN/AExpected Revenue$852.26 millionBeat/MissN/AYoY Revenue GrowthN/AAptarGroup Announcement DetailsQuarterQ4 2024Date2/6/2025TimeAfter Market ClosesConference Call DateFriday, February 7, 2025Conference Call Time9:00AM ETUpcoming EarningsAptarGroup's Q1 2025 earnings is scheduled for Thursday, May 1, 2025, with a conference call scheduled on Friday, May 2, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by AptarGroup Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 7, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to Aptar's twenty twenty four Fourth Quarter and Annual Results Conference Call. At this time, all participants are in a listen only mode. Mary SkafidasSenior VP of IR & Corporate Communications at AptarGroup00:00:32Good morning. Hello, everyone, and thanks for being with us today. Joining us on today's call are Stephane Tanda, President and CFO and Vanessa Canoo, Executive Vice President and CFO. Our press release and accompanying slide deck have been posted on our website under the Investor Relations page. During this call, we will be discussing certain non GAAP financial measures. Mary SkafidasSenior VP of IR & Corporate Communications at AptarGroup00:00:59These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during the earnings call. As always, we will post a replay of this call on our website. I would like to now turn the conference call over to Stephan. Stephan, over to you. Stephan TandaPresident and CEO at AptarGroup00:01:26Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our fourth quarter results as well as our performance for the full year. Later in the call, Vanessa Kanu, our CFO, will provide additional details on key drivers for the quarter. Starting on Slide three for the fourth quarter, I'm pleased to report that Avtar achieved core sales growth of 2% and delivered adjusted earnings per share of $1.52 We exceeded the top end of our guidance range due to both better than expected operational performance and a lower than anticipated effective tax rate. Stephan TandaPresident and CEO at AptarGroup00:02:06The positive results in the quarter were driven by strong ongoing demand for our pharma proprietary drug delivery systems, especially for allergic rhinitis, emergency medicines and central nervous system therapeutics, as well as royalty revenues and increased demand for our food closure technologies. In addition, we benefited from productivity gains across the entire company. This quarter, Avtar's adjusted EBITDA margin was at the top end of our long term range at 23%. Vanessa will give you more details on the quarter, so now I will focus on the full year. Our Pharma segment achieved 8% core sales growth within its raised long term target range. Stephan TandaPresident and CEO at AptarGroup00:02:49Additionally, Pharma achieved an adjusted EBITDA margin for the year of approximately 35%, driven by increased sales of higher value products and royalties. Often when asked about Pharma's future growth potential, my answer is clearly that Pharma is a pipeline driven business. And the continued expansion of our pipeline over the last five years is a major reason why we raised our core sales long term target in 2023 to 7% to 11%, and we see the pipeline continuing to grow. Pharma performance this year was driven by continued growth in emergency medicines, allergic rhinitis and central nervous system therapeutics. Our proprietary drug delivery business is the core profit engine of our pharma segment, creating and manufacturing innovative, safe and highly reliable technologies that support our customers and improve the lives of patients around the world. Stephan TandaPresident and CEO at AptarGroup00:03:46We anticipate continued strength for this important franchise. For our injectables business, we saw growth in antithrombotics, GLP-one drugs, small molecules and vaccines. Injectable component sales grew 10% in 2024, but the growth was offset by lower cooling and service revenues. The team has done a tremendous job of completing a large capacity expansion project and industrializing our higher value offerings, boding well for the future. Active Material Science sales were up 13% for the full year 2024 due to increased demand for diabetes diagnostics, probiotics and oral solid dose solutions. Stephan TandaPresident and CEO at AptarGroup00:04:31Since we acquired CSP in 2018, the sales of that business have grown at the compound annual growth rate of almost 10%. Looking at our Beauty segment for the year, we had good growth across a number of end markets, including Personal Care, Mastige Beauty and Home Care. However, growth in these end markets could not offset the decline in Prestige Beauty. The Beauty segment saw unit growth in 2024 and sales of Personal Care Technologies grew nicely. Overall, core sales declined, however, due to the unfavorable mix. Stephan TandaPresident and CEO at AptarGroup00:05:08Beauty remains a highly regional business. Europe, our largest region, maintained its adjusted EBITDA margin within the segment's long term target range. North America continued to recover progressively with indie brands leading the growth. China remained challenged for most of the year. However, towards the end of the year, the country had a better than anticipated eleven eleven, which is China's equivalent to Black Friday, and we see some green shoots with local brands. Stephan TandaPresident and CEO at AptarGroup00:05:40We saw good growth in India, albeit from a low base. Looking ahead, new project activity is encouraging across most regions, and we anticipate progressive improvement for the segment in 2025. In the second half of the year, our closures segment returned to its core sales long term target range driven by increased demand around the world for food and beverage dispensing and food protection technologies. A focus on converting end markets to higher value dispensing closures and a reinvigoration of innovation globally helped to improve top line sales. The segment's increased margins were also positively affected by the higher value mix as well as a consistent focus on reducing costs and a steady improvement in plant utilization, supported in part by the mid year closing of a loss making plant in France. Stephan TandaPresident and CEO at AptarGroup00:06:33The segment improved its plant utilization by over 12% in 2024. Closures adjusted EBITDA margins were also within the long term target range in the second half of the year and improved by more than 110 basis points for the full year. Now turning to Slide four, we are very proud of our long record of returning capital to shareholders. Over the last five years, we have returned nearly 800,000,000 to shareholders through dividends and share repurchases. 2025 is expected to mark our thirty second consecutive year of paying an annually increasing dividend. Stephan TandaPresident and CEO at AptarGroup00:07:09Now I would like to highlight our products and technologies on Slide five, which feature examples from both the year and the quarter that exemplify our focus on innovation and the value that we bring to our customers and their end users. In pharma, you've heard us talk about our nasal bi dose system for Johnson and Johnson's SPRAVATO medication to treat treatment resistant depression. Recently, the FDA approved SPRAVATO as a monomer treatment, meaning it can now be used alone and not requiring additional orate solid dose drugs. Also, as shared during our last earnings call, the FDA and European Medicines Agency approved nephi and Euronephy nasally delivered epinephrine, which is now in the market. In Consumer Healthcare, we continue to increase capacity for our previously highlighted patented lateral control system technology with a one push button dosage activation, providing convenience, efficient relief and ease of use for Halion's OTrivion nasal mist. Stephan TandaPresident and CEO at AptarGroup00:08:16We also continue to grow our pharma innovation pipeline. As previously mentioned, during the year, we acquired all technology assets from Zippnos, increasing our proprietary portfolio of intranasal delivery platforms. We also entered and joined an exclusive agreement with Cambridge Healthcare Innovations for its Quattri dry powder inhaler platform where we see opportunities for this platform in delivering larger amounts of medication to the lungs. In addition, our agreement regarding Pulmotri's Colibri non propellant liquid inhaler platform will further strengthen our leadership in the respiratory space. In Avtar Digital Health, the Migraine Body app continues to be the number one migraine app with a community of over 3,000,000 users. Stephan TandaPresident and CEO at AptarGroup00:09:05The latest release of the app optimizes the way users can share migraine reports with doctors including sleep records and more. Finally, in Active Material Sciences, our N SORP technology, which is part of the FDA's Emergency Technology Program, delivers an active packaging based solution to mitigate the risk of nitrosamine impurities. Our technology can enable pharma companies to meet the FDA's August twenty twenty five deadline for full compliance with nitrosamine regulations, while avoiding costly and time consuming reformulation processes. Turning to beauty highlights from the year. Our new Prestige Fragrance Dispensing Technology, INHONE, features a more lightweight design and gentle actuation and is the dispensing solution for Lancome's refillable version of Idole eau de parfum. Stephan TandaPresident and CEO at AptarGroup00:10:01We also adapted our pump technology to meet the growing demand for alcohol free fragrances. Alcohol free fragrances are typically oil and water based making the formulation more difficult to dispense. Our pump is highly compatible with these formulations providing consumers with the same optimal gentle mist fragrance experience and is now featured on Guerlain's first alcohol free fragrance. Also in 2024, our custom beauty plant in Olyona France supported the launch of a major beauty customer's reformulated facial serum product, which features our patented dual pump technology and locking feature using post consumer recycled resins. Fusion PKG, our beauty turnkey packaging solution business, supported indie brands, Sai and Anastasia with full pack solutions. Stephan TandaPresident and CEO at AptarGroup00:10:57In our fourth quarter, Hermes selected our Prestige Fragrance Pumps for its line of Bahrainia Perfence and the Avene brand, San Ker Mist is featuring our e commerce capable locking pump with components made from post consumer recycled resin where no overcap is required. Turning to closures, throughout the year, we continue to partner with a major dish care brand on their easy squeeze inverted packaging with flow control, allowing for single hand operation without any leakage. Positive consumer feedback has led to major category expansion due to this innovation. If you're planning to watch the big game in The U. S. Stephan TandaPresident and CEO at AptarGroup00:11:39This weekend, you will see commercials for condiments that feature AVTA solutions, including our Simply Squeeze valve enclosure as we continue to bring convenience and cleanliness to consumer products that line the grocery store shelves. During the quarter, our custom flip top was featured as the dispensing solution from McCormick's, Grill Maid spices and Holiday Sugars in The U. S. Finally, in Asia, Nestle introduced the new adult powered milk product featuring our lighter weight custom closure. Now turning to recognitions on Slide six, we recently received confirmation that we have secured a place on the prestigious Climate A List with the global environmental nonprofit CDP for our leadership in corporate sustainability, environmental transparency and efforts to tackle climate change based on our 2024 disclosures. Stephan TandaPresident and CEO at AptarGroup00:12:37Also during 2024, Avta was named World's Top Companies for Women by Forbes for the fourth consecutive year and is ranked 41 out of the 400 companies who were evaluated in three categories, including employer brand, public opinion and leadership. For the sixth consecutive year, we were named one of America's Most Responsible Companies by Newsweek, ranked number 71 out of 600 companies. We are proud to continuously raise the bar on sourcing renewable energy, certifying sites as landfill free through our internal program and developing products that are more recyclable, reusable, refillable and incorporate more sustainable materials. Now I would like to turn the call over to Vanessa. Vanessa KanuExecutive VP & CFO at AptarGroup00:13:24Thank you, Stefan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Starting on Slide seven, our reported sales increased 1%, which included a foreign currency translation headwind of approximately 1%. Therefore, core sales grew 2% primarily due to continued demand for pharma's proprietary drug delivery systems as well as healthy growth in closure technologies for both the food and beverage markets. We achieved adjusted EBITDA of $195,000,000 an increase of 9% from the prior year and adjusted EBITDA margin of 23% compared to 21.4% in the prior year, driven by expanding margins in the pharma and closures segments and the impact of cost mitigation measures executed across the business. Vanessa KanuExecutive VP & CFO at AptarGroup00:14:14These strong margins combined with a lower effective tax rate translated into adjusted diluted earnings per share of $1.52 as shown on Slide eight, a 27% increase over the prior year at comparable exchange rates. Effective tax rate for the fourth quarter was 13% compared to 23% in the prior year due primarily to the realization of deferred tax assets which were previously not recognized as well as increased tax benefits from stock based compensation. Now turning to some of the details by segments. Our pharma segment's core sales increased 4%. Breaking that down by market, starting with our proprietary drug delivery system, prescription core sales increased 15% primarily due to continued strong demand for dosing and dispensing technologies for allergic rhinitis, emergency medicines and central nervous system therapeutics. Vanessa KanuExecutive VP & CFO at AptarGroup00:15:09Consumer healthcare core sales decreased 17% driven by decreased demand for nasal decongestants, nasal saline wind solutions as well as cough and cold medicines due to a weaker 2023, '20 '20 '4 cold and flu season and inventory management at the customer level. The healthy growth in Q4 product sales for ophthalmic and dermal treatments could not offset this decline. Injectables core sales decreased 8% due to lower service revenue and tooling. Injectable component sales were up slightly led by healthy GLP-one growth. And for our active material science solutions, core sales increased 35% aided by a large tooling sale in the quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:15:54Demand for our products used on probiotics and diabetes diagnostics also contributed to the positive results. Pharma's adjusted EBITDA margin for the quarter was 35.7%, a 160 basis points improvement from the prior year. The margin improvement was driven by increased sales of higher value products and services, including royalties and cost efficiency initiatives executed. Moving to our Beauty segment, core sales decreased 3% in the quarter with lower tooling sales contributing about a third of the decrease. Looking at the beauty segment by market, fragrance, facial skincare and color cosmetics core sales decreased nine percent due largely to lower sales of higher value prestige products, particularly in EMEA, which more than offset increased demand for massaged products. Vanessa KanuExecutive VP & CFO at AptarGroup00:16:46Personal care core sales increased 3% with continued demand for body care and hair care applications across several regions. Home care core sales increased 15% primarily due to continued growth of air care applications in North America. This segment adjusted EBITDA margin for the quarter was 12.4%, a two thirty basis point decline primarily due to the top line shortfall particularly in higher priced prestige products. Additionally, you may recall that this segment received a one time insurance claim settlement that benefited the prior year's margin. The impact of this non recurring item from prior year Q4 overshadowed the impact of operational efficiencies executed successfully within this segment. Vanessa KanuExecutive VP & CFO at AptarGroup00:17:31Moving on to the closure segment, core sales increased by 7% compared with the prior year, driven by increased demand across a number of end markets and across all regions. When looking at the market field for closures, car food sales increased 9%. The increase in sales was driven by solid growth across all regions led by strong continued demand for sauces and condiments in North America, our largest food market. Beverage core sales increased 10% fueled by healthy demand for bottled water and sports drinks. Personal care core sales decreased 5% due to lower demand across several regions, while our other category, which includes beauty, home care and health care, core sales increased 12% driven by higher sales for dish care and laundry care solutions. Vanessa KanuExecutive VP & CFO at AptarGroup00:18:18This segment's adjusted EBITDA margin was 16.1% representing a two sixty basis points improvement over the same period last year primarily due to volume expansion and cost and productivity management. Our total CapEx spend for Q4 was $66,000,000 with the majority going to our Pharma segment. Now moving on to the full year results. Slides nine and ten cover our year to date performance and showed 3% core sales growth, which includes the impact of an $11,000,000 decline in Schulich. Our gross margins expanded by 160 basis points due to top line growth, favorable mix towards higher margin revenue streams as well as productivity and cost efficiency measures executed across the business. Vanessa KanuExecutive VP & CFO at AptarGroup00:19:03These cost efficiency measures benefited both cost of sales and SG and A. Offsetting the cost reductions in SG and A were increased investments in R and D, particularly for pharma to support our innovation and higher non cash share based compensation expense. As a result, SG and A as a percentage of net sales remained relatively consistent year on year. Adjusted EBITDA margins expanded by 130 basis points to 21.6%. Indeed, all of our segments expanded EBITDA margins on a full year basis, including our Beauty segment. Vanessa KanuExecutive VP & CFO at AptarGroup00:19:40While our adjusted earnings per share, which were $5.64 were up 18% compared to $4.79 a year ago, including comparable exchange rates. Turning to Slide 11, we ended 2024 with a 12.5% return on invested capital, which was our second consecutive year of increased ROIC, driven by our increased earnings and realization of returns on our capital investments. Cash flow from operations was $643,000,000 up from $575,000,000 in the year ago period. Capital expenditures for the year were $276,000,000 down from $312,000,000 in the prior year. The reduction in capital expenditures signifies the completion of our large capital projects. Vanessa KanuExecutive VP & CFO at AptarGroup00:20:27Slide 12 shows our capital allocation over the last several years with the majority going to pharma. Free cash flow was $367,000,000 for the year, up from $263,000,000 in 2023 due largely to our increased earnings. Our strong cash flow has allowed us to neutralize any impact of our interest expense coming from rising interest rates by paying down a portion of our debts that have come due and increase the amounts we returned to shareholders. Speaking of which, in 2024, we returned $183,000,000 to shareholders in the form of $114,000,000 in dividends and $69,000,000 in share repurchases, up in combined total by 20% from 2023. Finally, we ended the year with a strong balance sheet reflecting a cash balance of $224,000,000 as of December 31, net debt of $800,000,000 which was down $116,000,000 from the prior year and a leverage ratio of 1.08. Vanessa KanuExecutive VP & CFO at AptarGroup00:21:30Now moving on to outlook. Slide 13 summarizes our outlook for the first quarter. We anticipate first quarter adjusted earnings per share, which as a reminder excludes any restructuring expenses, acquisition costs and changes in the unrealized fair value of equity investments to be in the range of $1.11 to $1.19 per share, which includes approximately a $0.07 headwind for currency effects compared to the prior year quarter. Our effective tax rate range for the first quarter is 25% to 27% due in part to an anticipated increase in the French corporate tax rate, which is an $0.08 headwind compared to the prior year quarter. At this point in time, we expect to have an approximately $0.15 impact due to currency and tax compared with the prior year quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:22:19Currency impacts are driving a larger headwind in the first quarter than typical because of the U. S. Dollar's renewed strength against many currencies, which for us includes the euro, the Brazilian real, the Mexican and Colombian pesos, amongst others. While our rule of thumb on currency impact is that for every $0.01 movement in the euro, there is a $0.02 annualized impact on earnings per share. Please keep in mind that we are subject to other currencies besides the euro, some of which I just highlighted. Vanessa KanuExecutive VP & CFO at AptarGroup00:22:48In closing, we're pleased with our strong operational performance for 2024 and are looking forward to the ample opportunities that 2025 will bring. As I mentioned earlier, we ended the year with a very strong balance sheet and a leverage ratio that will provide us with significant optionality. At this time, Stefan will provide a few closing comments before we move to Q and A. Stephan TandaPresident and CEO at AptarGroup00:23:09Thank you, Vanessa. We fully anticipate 2025 to be another strong year for Aptar. Having said that, for the first quarter, we expect softer demand in certain end markets such as dispensing technologies for prestige fragrance and skincare as well as for nasal, saline and decongestions. Results in the first quarter will also be negatively impacted by significant foreign currency effects and a higher effective tax rate compared to the prior year quarter. As Vanessa stated, the impact in Q1 will be about a $0.15 headwind on EPS. Stephan TandaPresident and CEO at AptarGroup00:23:46Additionally, we are seeing healthy demand for our higher value elastomeric components, but anticipate a more gradual beginning to the year, especially as the new capacity comes online and is being validated. Looking ahead, pharma will continue to be the main driver of growth with our proprietary drug delivery systems and emergency medicines and central nervous systems therapeutics leading the way. We expect demand for our injectables division's higher value products to continue to grow throughout the year and are seeing strong interest for our premium coat and ready to fill solutions. Injectables has a strong pipeline and order book and we are ramping up new capacity for our higher value products cautiously to ensure the quality of our products continue to meet the stringent regulatory requirements. The Active Material Science business has returned to growth and is poised for solid 2025. Stephan TandaPresident and CEO at AptarGroup00:24:41We anticipate that Beauty's top line will improve as the year progresses. Beauty has a nicely built in project pipeline and has made significant structural improvements. Over the last four years, Beauty has reduced its plant count by 10 and over the last two years has reduced its workforce by 11%. Managing costs is an ongoing effort and while there is always more work to be done, these changes should continue to positively impact the bottom line as the top line improves. Closures has made great progress on several fronts, including reigniting its innovation engine, improving plant utilization rates and ongoing cost management efforts. Stephan TandaPresident and CEO at AptarGroup00:25:21Our innovations help customers win market share and there is tremendous interest in the dispensing technologies that we are developing. When adjusting for currency effects and tax impacts, we anticipate 2025 will continue to deliver solid earnings growth and increase shareholder value. With that, I would like to open up the call for questions. Operator00:25:45Thank you, Mr. Tanda. We will now begin the question and answer session. The first question we have on the phone lines comes from George Staphos with Bank of America. Your line is open. George StaphosManaging Director at Bank of America Merrill Lynch00:26:37Hi, everyone. Good morning. Hope you can hear me okay. Stefan, Mary, good morning. Vanessa, welcome. George StaphosManaging Director at Bank of America Merrill Lynch00:26:44My two questions. First of all, can you talk a little bit about the green shoots that you are seeing in China and what momentum, what impact that might be able to have to generate for 2025? The second question, recognizing it's tough to call, if you held currency rates where they're at and taxes do what you expect them, Do you expect that earnings per share will grow in 2025 off a very tough comparison in 2024? Would that be too difficult? Maybe a different way to handle the question. George StaphosManaging Director at Bank of America Merrill Lynch00:27:26If we exclude those effects, what how would you define solid earnings per share growth? Thanks guys. Good luck in the quarter. Stephan TandaPresident and CEO at AptarGroup00:27:37Hi, George. We could hear you great. Let me take the first one, the higher math of the second one. I'll let Vanessa handle. Look, as you know, the beauty market in China in general is still the largest country market for beauty with a particular emphasis on skincare. Stephan TandaPresident and CEO at AptarGroup00:28:02And all our customers have waited for that market to show additional or renewed vitality. And some of our larger customers have been struggling with that. What we see is that clearly local brands gain share and continue to gain share versus the multinationals. You all know the story of a one U. S. Stephan TandaPresident and CEO at AptarGroup00:28:30Based large multinational. But in general, 11.11 was pretty solid. The beginning of the year was pretty solid. So but it's more with local brands. And of course, ultimately, who serves the consumer, we are neutral to that. Stephan TandaPresident and CEO at AptarGroup00:28:51So I'm quite hopeful that we will see China building over the year and that will benefit, particularly, our skincare business. Fragrance is also growing, but it's still very small in China, but growing. I think that's about it. As a reminder, we serve in region, for region. So all this speculation about the tariffs for us is not that meaningful. Stephan TandaPresident and CEO at AptarGroup00:29:22And what we're really looking for is where is the Chinese consumer at. Anecdotally, we also see the Chinese consumer traveling more internationally again at the high end, and I think that should also bode well for the beauty business in general. Stephan TandaPresident and CEO at AptarGroup00:29:37And I'll Stephan TandaPresident and CEO at AptarGroup00:29:37hand over to Vanessa. Vanessa KanuExecutive VP & CFO at AptarGroup00:29:39Hey, George. It's right that you called out the tax and FX headwinds. We haven't seen these kind of headwinds in the recent past. The tax headwinds being driven by a lot of what we talked about about the French tax legislation that just came or is in the process of coming into effect as we speak. Look, when you normalize for FX and you normalize for tax, we are cautiously optimistic that we will have another potential double digit EPS growth for 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:10A lot of the drivers, Stefan talked about in his prepared remarks, you're aware that we've done a lot of work around cost reductions. Those cost reductions will accrete to EBITDA and EPS in 2025. So we are cautiously optimistic that once we normalize for consistency in FX and tax, we'll have another strong EPS growth here. George StaphosManaging Director at Bank of America Merrill Lynch00:30:31Vanessa, does the tax, is it only a 1Q effect or does it impact the whole of the year? Thank you. Sorry for that. And again, good luck in the quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:38Yes. No, that's okay. It impacts the whole year. It impacts the whole year. So really what happened in the last so you may recall, George, this is we thought this was going to happen in Q4 because it was heavily reported by the French media. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:50It didn't happen in Q4. It's just it's happening now. It passed both the lower and upper chambers of parliament and we think it's going to be an asset in the coming days. It will be a full year impact. And so we've built the Q1 effect into our Q1 guidance. George StaphosManaging Director at Bank of America Merrill Lynch00:31:08All right. Thanks so George StaphosManaging Director at Bank of America Merrill Lynch00:31:09much and congrats on the Stephan TandaPresident and CEO at AptarGroup00:31:09operating improvements across the segment as well. Awesome. Thank you, George. We'll take it. Operator00:31:20Thank Operator00:31:24you. We now have the next question from Gautam Panjabi with Baird. You may proceed. Ghansham PanjabiSenior Research Analyst at Baird00:31:33Yes, thanks. Good morning, everyone. Vanessa, just following up on George's question on the EPS bridge items. So if currency holds at current levels, what sort of year over year headwind would that be on EPS? The same with tax. Ghansham PanjabiSenior Research Analyst at Baird00:31:47And then in corporate, 4Q was quite a bit lower than the trend line from previous quarters. How should we think about that as a variance for '25 versus '24? Vanessa KanuExecutive VP & CFO at AptarGroup00:31:59So in 4Q, there are a couple of things. If we talk year over year or we talk versus guidance. So year over year, we did get some tax benefits from our tax planning. I called out in my prepared remarks that we were able to recognize some deferred tax assets from some loss carry forwards that we had not previously been able to recognize as a result of some of our ongoing tax planning. So that did result in sort of the wins that you're seeing in Q4 year over year. Vanessa KanuExecutive VP & CFO at AptarGroup00:32:25Separate from that, there is the delta to guidance. And so that wind was actually built into our guidance. The delta to guidance was really the French tax impact that we had built into our guide in Q4 that did not materialize. And now we're seeing that come into effect in Q1 of this year. You asked what is the impact in Q1. Vanessa KanuExecutive VP & CFO at AptarGroup00:32:43We called it out. It's $0.15 for the two factors combined. So I'm not clear on what incremental impact you might be looking for. Yes. Ghansham PanjabiSenior Research Analyst at Baird00:32:50So I meant for 2025 versus 2024. If twenty twenty four's baseline EPS is $5.64 the variances for FX, Max and Corporate? Vanessa KanuExecutive VP & CFO at AptarGroup00:33:01Yes. So we're not guiding for the full year. We're not I find it hard to give guidance on ETR, for example, independence of guiding on income just because we know that the jurisdiction mix of earnings can be a pretty significant impact. What I will say is at this point in time, given what we know, especially with what's happening on the French taxes, we expect ETR to be higher in 2025 versus 2024. We haven't gotten into exactly what the number will be. Vanessa KanuExecutive VP & CFO at AptarGroup00:33:28We'll guide as the quarters progress. And then the FX headwinds, I mean, it's pretty significant in Q1 with the 0.07 I expect that to continue for the rest of the year. Now depending on which forecast you're watching, we are seeing or hearing some commentary around perhaps the FX environment improving as the year progresses. But based on what we see now, we expect this double digit impact to continue. Ghansham PanjabiSenior Research Analyst at Baird00:33:54Okay. And then the corporate below trend line for 4Q, what was that due to? Vanessa KanuExecutive VP & CFO at AptarGroup00:34:02So there weren't any sort of unusual items there in Q4. What I will call out is typically as you get to the end of the year, you typically have your year end true up, which includes adjustment for bonuses and short term incentive accruals. But if you have pockets of the business where we didn't hit our target, some of those accruals got reversed. So that's probably what you're seeing. That's mainly what you're seeing in the corporate line in Q4, nothing more unusual than that. Vanessa KanuExecutive VP & CFO at AptarGroup00:34:29Primary driver. Ghansham PanjabiSenior Research Analyst at Baird00:34:30Got it. Thank you for that. And in terms of just second question, I guess, in terms of the destocking that you're seeing in cold and flu and the timeline for that to sort of normalize? And then also in Prestige, you call that weakness, I think, in the EMEA region as well. Just based on some of the customers that are reported, it seems like volumes seem relatively stable across the board from a customer level standpoint. Ghansham PanjabiSenior Research Analyst at Baird00:34:56So what do you think is going on there specific to Avtar? Stephan TandaPresident and CEO at AptarGroup00:35:01Yes. So let's take consumer healthcare first. We see some bottoming out. And in fact, the last two months, we saw sequential increases again. A lot will depend again on how the flu season unwinds. Stephan TandaPresident and CEO at AptarGroup00:35:20Just heard this morning that we might have another peak in The U. S. And so sequentially, I think it will start to go up again, but we still face tough comparables in quarter one into quarter two. Now on the beauty side, we I pointed out that unit volume actually was up in beauty slightly. So what you're really seeing is the mix effect is Masdiige, fragrances picked up significantly and the high end luxury prestige launches did not repeat. Stephan TandaPresident and CEO at AptarGroup00:35:56So that it's more of a mix effect as opposed to an underlying volume effect. Ghansham PanjabiSenior Research Analyst at Baird00:36:04So much. Operator00:36:09Your next question comes from Matt Roberts with Raymond James. Please go ahead. Matthew RobertsEquity Research Analyst at Raymond James Financial00:36:19Hi, Stefan, Vanessa. Good morning. Stefan, you noted that you're expecting a more gradual ramp up in injectables. I believe last quarter you said that that business could potentially be high single digits to low single digits based on GLP and biologics growth, albeit stopping short of any official guide there. But based on the new ramp up expectations, do you have better visibility or comfort in firming what that injectables core sales growth number could look like in 2025? Matthew RobertsEquity Research Analyst at Raymond James Financial00:36:51Or given strong underlying growth rates in those drugs, what factors could dictate either coming in above or below any expectation? Stephan TandaPresident and CEO at AptarGroup00:37:01Yes. I wouldn't change my answer there. The pipeline looks good. The order buildup looks good. There will be quarter to quarter variance also in terms of our ramp up and when we get certain pieces of equipment validated. Stephan TandaPresident and CEO at AptarGroup00:37:17It's always after you the moment customers want it, they want it now and they'll need to get this test done or this thing done. So overall, the demand picture is good. All we're being is a bit cautious in able to exactly match that in the first quarter, but I'm quite bullish about that business. Matthew RobertsEquity Research Analyst at Raymond James Financial00:37:41Okay. That's helpful. Thank you. And then maybe on the proprietary delivery system side, so 2024 had continued strong performance and you noted that category will lead the pharma segment. So as we look to '25, what type of growth do you think is achievable there? Matthew RobertsEquity Research Analyst at Raymond James Financial00:37:57And as we've heard positive commentary on some of the newer drugs you've had, whether that's SPRAVATO broadening or neffy coming out of the gate in 4Q, would you say that 2025 growth in proprietary is more so dependent on further new drugs coming to the market or more so underlying secular trends for nasal delivery and drugs that are already on the market? Thanks again for taking the questions. Stephan TandaPresident and CEO at AptarGroup00:38:21Sure, Matt. Look, fundamentally, that core engine of pharma is fully humming. We feel very good about the continued growth there. We were at JPMorgan earlier in January and also the J and J CO called out SPRAVATO ARS was there. So we see continued good growth in the emerging treatment, the central nervous system drugs as well as the underlying allergic rhinitis franchise continuing. Stephan TandaPresident and CEO at AptarGroup00:39:00As we just discussed, the cold and cough is a little wobbly, but I think we're at the other end of the trough. Matthew RobertsEquity Research Analyst at Raymond James Financial00:39:12Great. Thank you again. Operator00:39:16Thank you. We now have a question from Daniel Withow with Jefferies. You may proceed. Daniel RizzoAnalyst at Jefferies00:39:24Good morning, everyone. Thank you for taking my question. Well, the first thing I wanted to ask about is tariffs. Obviously, it's a very fluid situation and I don't expect you to have any answer to what's going to happen. But I was wondering what happened last time, there were tariffs on Chinese products, if it had any effect to you guys at all or not necessarily you directly, but also on your customer demand or customer order trends? Stephan TandaPresident and CEO at AptarGroup00:39:49Yes. Look, obviously, it's not in our guidance. For the most part, we produce in region for the region and as I said about China. So there are, of course, some special situations in those cases. We passed it on or will pass it on and have passed it on. Stephan TandaPresident and CEO at AptarGroup00:40:15Of course, it's a commercial negotiation. But out of all the things you could worry about, the tariffs is not the one that I worry terribly about. Daniel RizzoAnalyst at Jefferies00:40:26Okay. And then you had a pretty solid improvement in ROIC over the last couple of years. I was wondering what and maybe you've mentioned this in October or something and I forgot, but what the goal is if you can get this up to, I don't know, 15% or if there is a gold for that metric? Stephan TandaPresident and CEO at AptarGroup00:40:45Yes. We're not in the habit of changing long term targets on the quarterly calls. We have an Investor Day coming up, I think, in September. If we revise it, we would do it then. But clearly, the increased operational performance, the more distant acquisition of CSP and continued discipline in CapEx is helping ROIC. Stephan TandaPresident and CEO at AptarGroup00:41:11And we'll take a look at that as we get into September, and we'll update you then. Daniel RizzoAnalyst at Jefferies00:41:18Thank you very much. Operator00:41:22Thank you. And we now have Matt LaRue with William Blair. Please go ahead. Matt LarewResearch Analyst - Healthcare at William Blair00:41:37Hi, good morning. Yes, you talked a little bit about the cough and cold side and injectable side of pharma. I wanted to ask about royalties. Obviously, that's something that you've been mentioning more on the call in the last year or so. And I presume it was a driver of some of the margin improvement in 2024. Matt LarewResearch Analyst - Healthcare at William Blair00:41:53Was there anything you sort of long time in nature in either the quarter or the year? Or are they all structured as royalties rather than milestones? And then how should we think about the contribution moving forward in 'twenty five and beyond? Stephan TandaPresident and CEO at AptarGroup00:42:08Sure. Yes. Look, first and foremost, those are recognition of the value we add during the development process of a drug product that can be a decade or longer. Sometimes if we're dealing with really small companies and they bulk it out service fees, then we get something on the back end. And what we call out royalties is indeed that, as there might be some smaller milestone payments, but it's fundamentally royalties on finished product sales. Stephan TandaPresident and CEO at AptarGroup00:42:43They are lumpy, but they make a bigger part of our overall revenue base, but still you're talking a few tens of millions for the company. Matt LarewResearch Analyst - Healthcare at William Blair00:43:00Okay. And then I did want to just follow-up on injectables. Obviously, that was up significantly in Q1 twenty twenty four, so a tough comp and then was down the last three quarters. When you say a slower end to the year, I guess we should think about that being maybe down in the first quarter and then growing from there? Stephan TandaPresident and CEO at AptarGroup00:43:19Yes. We're not guiding by the individual business line, but it's too far away from the commentary we gave. Matt LarewResearch Analyst - Healthcare at William Blair00:43:32Okay, thanks. Stephan TandaPresident and CEO at AptarGroup00:43:33But having said that, unit volume continued to grow throughout the year. Those are some other things in the injectables that we report like service revenue that is more lumpy. Matt LarewResearch Analyst - Healthcare at William Blair00:43:49Okay. Thanks, Stefan. Operator00:43:52Thank you. We now have Gabe Haley with Wells Fargo. Please go ahead. Gabe HajdeAnalyst at Wells Fargo00:44:03Stefan, good morning, Vanessa. Welcome. I wanted to focus on the capital allocation side of the business. You talked about wrapping up a couple of big investments as we know to add capacity and injectables. And I think it's a good thing, but it still seems you guys are kind of guiding $280,000,000 to $300,000,000 for capital. Gabe HajdeAnalyst at Wells Fargo00:44:23You also gave us a slide where you're showing a lot of your internal investments are directed at your pharma segment. So I think all in we interpret that as a positive signal. But just any color that you can provide in terms of what options you're seeing for investment internally? Vanessa KanuExecutive VP & CFO at AptarGroup00:44:45Sure, Gabe. Why don't I take that and Stefan please add any incremental color. So Gabe, the capital allocation policy, as you know, has been a pretty healthy balance of organic capital, which as you call out has been largely geared towards pharma, not exclusively, but largely so M and A, dividends and share buybacks. And I think as we get into 2025, you'll see a level of continuation of that. And you did call out our CapEx expected investments in 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:45:13Pharma will once again get a big piece of that. From an M and A perspective, I'm not foreshadowing anything imminent, but we do regularly evaluate potential M and A candidates where we see strong strategic fit and accretion potential. And you've heard Stephan talk about that in the past. And that again, more geared so towards pharma, but not exclusively so. So I think that would continue in terms of the evaluation process. Vanessa KanuExecutive VP & CFO at AptarGroup00:45:36And then from a dividend perspective, we just ended our thirty first year, as Stephan called out in his prepared remarks of increasing dividends. So I would expect that also to continue in 2025. And then lastly, just on the share buybacks, you know that the board approved a refreshed $500,000,000 buyback program in October, and that is the more discretionary component of our capital allocation. We're already active in the market with the repurchases, and it's a lever that we have. And I would expect that to also continue in 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:46:11Anything you want to add, Stefan? No, perfect. Gabe HajdeAnalyst at Wells Fargo00:46:15And any particular projects or discrete things that are in that capital that you guys would want to call out? Stephan TandaPresident and CEO at AptarGroup00:46:26Not really. As we discussed, we built these three disrespectfully called boxes, the one in France and Oyama, the state of the art facility in China and the injectables. Now we're really creeping investment and gradually growing capacity, not only in those three locations, but everywhere. And I think the single largest investment for us is $5,000,000 in that $300,000,000 to $300,000,000 envelope. So it's a lot of just good organic growth investments, maintenance investments, capacity creep investments across the company. Gabe HajdeAnalyst at Wells Fargo00:47:04Okay. And then I guess switching gears a little bit, you guys have been pretty active. I think you called out closing and I apologize if I misheard 10 facilities in Beauty, but just we're kind of on the other end of what was a multi year kind of efficiency initiative across the organization. Again, I know you're not done, you're always trying to get better. But as we look forward, do you see anything else that you need to do from a footprint standpoint or cost reduction? Stephan TandaPresident and CEO at AptarGroup00:47:42Yes. Just to clarify what we said, Beauty reduced its plant count or its site count by 10, Not that we built 10, but we reduced by 10. And also over the last two years, reduced the test count by 11%. And as you rightly said, you're never done. We have some ideas. Stephan TandaPresident and CEO at AptarGroup00:48:03Nothing where is imminent here. And productivity is increasingly coded in our DNA, and I'm very encouraged with the productivity plans. All three businesses have brought to the table for this year and we're tracking that closely. But beyond that, really nothing to report at the moment. Gabe HajdeAnalyst at Wells Fargo00:48:29Thank you. Operator00:48:33Thank you. I would now like to conclude the question and answer session and hand it back to Mr. Tanda for some closing comments. Stephan TandaPresident and CEO at AptarGroup00:48:42Wonderful. Thank you. So let me end by zooming out. As usual, quarter four was a solid finish to a very strong year 2024. And on top of a very strong year 2023, we delivered back to back double digit earnings per share growth for both years and followed through on our raised margin targets. Stephan TandaPresident and CEO at AptarGroup00:49:04Driving productivity, as I just said, is increasingly firmly coded into the DNA of the company in addition to innovation and sustainability that remain alive and well. Looking at '25, we are excited to continue the journey. Our customers are taking very much note of our increased focus on competitiveness and on meeting their needs more rapidly and flexibly with our much upgraded footprint. We are back on the front foot. Our project pipelines across the company are in very good shape and the pipelines continue to grow. Stephan TandaPresident and CEO at AptarGroup00:49:38Having said all that, as we discussed, we are operating against the more challenging macro especially with foreign exchange and the anticipated higher French corporate income tax rate. It doesn't mean that our tax planning activities are done. You always look for ways to abate impacts like that. We had a good start of the year, but faced some spots of tough comparables that we discussed in Fragrance Consumer Healthcare, but both of these are fully expected to be transitory. Gentle reminder, I know we're all focused on the quarter, but several of you were able to look under the hood, so to speak, just a few four months ago when you visited some of our facilities, we're still the same company that you saw four months ago. Stephan TandaPresident and CEO at AptarGroup00:50:24And indeed in the slowing economy, we are confident in our future trajectory given the resilience of our product portfolio and the strength of our pipeline. We discussed the balance sheet. We're on track for a thirty second year of paying an annually increasing dividend and our balance sheet affords us a lot of strategic flexibility. Thanks for joining the call and we look forward to discuss more on the road. Operator00:50:50Thank you all for joining the Aptiles twenty twenty four fourth quarter and annual results conference call. For time confirmed, today's call has now concluded. Thank you for your participation and you may enjoy the rest of your day.Read moreParticipantsExecutivesMary SkafidasSenior VP of IR & Corporate CommunicationsStephan TandaPresident and CEOVanessa KanuExecutive VP & CFOAnalystsGeorge StaphosManaging Director at Bank of America Merrill LynchGhansham PanjabiSenior Research Analyst at BairdMatthew RobertsEquity Research Analyst at Raymond James FinancialDaniel RizzoAnalyst at JefferiesMatt LarewResearch Analyst - Healthcare at William BlairGabe HajdeAnalyst at Wells FargoPowered by Conference Call Audio Live Call not available Earnings Conference CallAptarGroup Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) AptarGroup Earnings HeadlinesAptarGroup (ATR) Projected to Post Earnings on ThursdayApril 24 at 1:09 AM | americanbankingnews.comAptarGroup price target lowered to $175 from $190 at Raymond JamesApril 23 at 11:42 PM | markets.businessinsider.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. April 24, 2025 | Golden Portfolio (Ad)Here’s Why Upslope Capital Management Exited its Stake in AptarGroup (ATR)April 22 at 1:14 PM | msn.comAptarGroup commences clinical study to validate SmartTrack platformApril 18, 2025 | markets.businessinsider.comAptarGroup declares $0.45 dividendApril 17, 2025 | seekingalpha.comSee More AptarGroup Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like AptarGroup? Sign up for Earnings360's daily newsletter to receive timely earnings updates on AptarGroup and other key companies, straight to your email. Email Address About AptarGroupAptarGroup (NYSE:ATR) designs and manufactures a range of drug delivery, consumer product dispensing, and active material science solutions and services for the pharmaceutical, beauty, personal care, home care, and food and beverage markets. The company operates through Aptar Pharma, Aptar Beauty, and Aptar Closures segments. It also provides pumps for nasal allergy treatments; and metered dose inhaler valves for respiratory ailments, such as asthma and chronic obstructive pulmonary diseases; elastomer for injectable primary packaging components; and active material science solutions. In addition, the company offers dispensing pumps, closures, elastomeric components, and aerosol valves to the digital health solutions. It primarily sells its products and services in Asia, Europe, Latin America, and North America. AptarGroup, Inc. was incorporated in 1992 and is headquartered in Crystal Lake, Illinois.View AptarGroup ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step InWhy It May Be Time to Buy CrowdStrike Stock Heading Into EarningsCan IBM’s Q1 Earnings Spark a Breakout for the Stock? 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PresentationSkip to Participants Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to Aptar's twenty twenty four Fourth Quarter and Annual Results Conference Call. At this time, all participants are in a listen only mode. Mary SkafidasSenior VP of IR & Corporate Communications at AptarGroup00:00:32Good morning. Hello, everyone, and thanks for being with us today. Joining us on today's call are Stephane Tanda, President and CFO and Vanessa Canoo, Executive Vice President and CFO. Our press release and accompanying slide deck have been posted on our website under the Investor Relations page. During this call, we will be discussing certain non GAAP financial measures. Mary SkafidasSenior VP of IR & Corporate Communications at AptarGroup00:00:59These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for reconciliations of non GAAP measures to the most comparable GAAP measures discussed during the earnings call. As always, we will post a replay of this call on our website. I would like to now turn the conference call over to Stephan. Stephan, over to you. Stephan TandaPresident and CEO at AptarGroup00:01:26Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our fourth quarter results as well as our performance for the full year. Later in the call, Vanessa Kanu, our CFO, will provide additional details on key drivers for the quarter. Starting on Slide three for the fourth quarter, I'm pleased to report that Avtar achieved core sales growth of 2% and delivered adjusted earnings per share of $1.52 We exceeded the top end of our guidance range due to both better than expected operational performance and a lower than anticipated effective tax rate. Stephan TandaPresident and CEO at AptarGroup00:02:06The positive results in the quarter were driven by strong ongoing demand for our pharma proprietary drug delivery systems, especially for allergic rhinitis, emergency medicines and central nervous system therapeutics, as well as royalty revenues and increased demand for our food closure technologies. In addition, we benefited from productivity gains across the entire company. This quarter, Avtar's adjusted EBITDA margin was at the top end of our long term range at 23%. Vanessa will give you more details on the quarter, so now I will focus on the full year. Our Pharma segment achieved 8% core sales growth within its raised long term target range. Stephan TandaPresident and CEO at AptarGroup00:02:49Additionally, Pharma achieved an adjusted EBITDA margin for the year of approximately 35%, driven by increased sales of higher value products and royalties. Often when asked about Pharma's future growth potential, my answer is clearly that Pharma is a pipeline driven business. And the continued expansion of our pipeline over the last five years is a major reason why we raised our core sales long term target in 2023 to 7% to 11%, and we see the pipeline continuing to grow. Pharma performance this year was driven by continued growth in emergency medicines, allergic rhinitis and central nervous system therapeutics. Our proprietary drug delivery business is the core profit engine of our pharma segment, creating and manufacturing innovative, safe and highly reliable technologies that support our customers and improve the lives of patients around the world. Stephan TandaPresident and CEO at AptarGroup00:03:46We anticipate continued strength for this important franchise. For our injectables business, we saw growth in antithrombotics, GLP-one drugs, small molecules and vaccines. Injectable component sales grew 10% in 2024, but the growth was offset by lower cooling and service revenues. The team has done a tremendous job of completing a large capacity expansion project and industrializing our higher value offerings, boding well for the future. Active Material Science sales were up 13% for the full year 2024 due to increased demand for diabetes diagnostics, probiotics and oral solid dose solutions. Stephan TandaPresident and CEO at AptarGroup00:04:31Since we acquired CSP in 2018, the sales of that business have grown at the compound annual growth rate of almost 10%. Looking at our Beauty segment for the year, we had good growth across a number of end markets, including Personal Care, Mastige Beauty and Home Care. However, growth in these end markets could not offset the decline in Prestige Beauty. The Beauty segment saw unit growth in 2024 and sales of Personal Care Technologies grew nicely. Overall, core sales declined, however, due to the unfavorable mix. Stephan TandaPresident and CEO at AptarGroup00:05:08Beauty remains a highly regional business. Europe, our largest region, maintained its adjusted EBITDA margin within the segment's long term target range. North America continued to recover progressively with indie brands leading the growth. China remained challenged for most of the year. However, towards the end of the year, the country had a better than anticipated eleven eleven, which is China's equivalent to Black Friday, and we see some green shoots with local brands. Stephan TandaPresident and CEO at AptarGroup00:05:40We saw good growth in India, albeit from a low base. Looking ahead, new project activity is encouraging across most regions, and we anticipate progressive improvement for the segment in 2025. In the second half of the year, our closures segment returned to its core sales long term target range driven by increased demand around the world for food and beverage dispensing and food protection technologies. A focus on converting end markets to higher value dispensing closures and a reinvigoration of innovation globally helped to improve top line sales. The segment's increased margins were also positively affected by the higher value mix as well as a consistent focus on reducing costs and a steady improvement in plant utilization, supported in part by the mid year closing of a loss making plant in France. Stephan TandaPresident and CEO at AptarGroup00:06:33The segment improved its plant utilization by over 12% in 2024. Closures adjusted EBITDA margins were also within the long term target range in the second half of the year and improved by more than 110 basis points for the full year. Now turning to Slide four, we are very proud of our long record of returning capital to shareholders. Over the last five years, we have returned nearly 800,000,000 to shareholders through dividends and share repurchases. 2025 is expected to mark our thirty second consecutive year of paying an annually increasing dividend. Stephan TandaPresident and CEO at AptarGroup00:07:09Now I would like to highlight our products and technologies on Slide five, which feature examples from both the year and the quarter that exemplify our focus on innovation and the value that we bring to our customers and their end users. In pharma, you've heard us talk about our nasal bi dose system for Johnson and Johnson's SPRAVATO medication to treat treatment resistant depression. Recently, the FDA approved SPRAVATO as a monomer treatment, meaning it can now be used alone and not requiring additional orate solid dose drugs. Also, as shared during our last earnings call, the FDA and European Medicines Agency approved nephi and Euronephy nasally delivered epinephrine, which is now in the market. In Consumer Healthcare, we continue to increase capacity for our previously highlighted patented lateral control system technology with a one push button dosage activation, providing convenience, efficient relief and ease of use for Halion's OTrivion nasal mist. Stephan TandaPresident and CEO at AptarGroup00:08:16We also continue to grow our pharma innovation pipeline. As previously mentioned, during the year, we acquired all technology assets from Zippnos, increasing our proprietary portfolio of intranasal delivery platforms. We also entered and joined an exclusive agreement with Cambridge Healthcare Innovations for its Quattri dry powder inhaler platform where we see opportunities for this platform in delivering larger amounts of medication to the lungs. In addition, our agreement regarding Pulmotri's Colibri non propellant liquid inhaler platform will further strengthen our leadership in the respiratory space. In Avtar Digital Health, the Migraine Body app continues to be the number one migraine app with a community of over 3,000,000 users. Stephan TandaPresident and CEO at AptarGroup00:09:05The latest release of the app optimizes the way users can share migraine reports with doctors including sleep records and more. Finally, in Active Material Sciences, our N SORP technology, which is part of the FDA's Emergency Technology Program, delivers an active packaging based solution to mitigate the risk of nitrosamine impurities. Our technology can enable pharma companies to meet the FDA's August twenty twenty five deadline for full compliance with nitrosamine regulations, while avoiding costly and time consuming reformulation processes. Turning to beauty highlights from the year. Our new Prestige Fragrance Dispensing Technology, INHONE, features a more lightweight design and gentle actuation and is the dispensing solution for Lancome's refillable version of Idole eau de parfum. Stephan TandaPresident and CEO at AptarGroup00:10:01We also adapted our pump technology to meet the growing demand for alcohol free fragrances. Alcohol free fragrances are typically oil and water based making the formulation more difficult to dispense. Our pump is highly compatible with these formulations providing consumers with the same optimal gentle mist fragrance experience and is now featured on Guerlain's first alcohol free fragrance. Also in 2024, our custom beauty plant in Olyona France supported the launch of a major beauty customer's reformulated facial serum product, which features our patented dual pump technology and locking feature using post consumer recycled resins. Fusion PKG, our beauty turnkey packaging solution business, supported indie brands, Sai and Anastasia with full pack solutions. Stephan TandaPresident and CEO at AptarGroup00:10:57In our fourth quarter, Hermes selected our Prestige Fragrance Pumps for its line of Bahrainia Perfence and the Avene brand, San Ker Mist is featuring our e commerce capable locking pump with components made from post consumer recycled resin where no overcap is required. Turning to closures, throughout the year, we continue to partner with a major dish care brand on their easy squeeze inverted packaging with flow control, allowing for single hand operation without any leakage. Positive consumer feedback has led to major category expansion due to this innovation. If you're planning to watch the big game in The U. S. Stephan TandaPresident and CEO at AptarGroup00:11:39This weekend, you will see commercials for condiments that feature AVTA solutions, including our Simply Squeeze valve enclosure as we continue to bring convenience and cleanliness to consumer products that line the grocery store shelves. During the quarter, our custom flip top was featured as the dispensing solution from McCormick's, Grill Maid spices and Holiday Sugars in The U. S. Finally, in Asia, Nestle introduced the new adult powered milk product featuring our lighter weight custom closure. Now turning to recognitions on Slide six, we recently received confirmation that we have secured a place on the prestigious Climate A List with the global environmental nonprofit CDP for our leadership in corporate sustainability, environmental transparency and efforts to tackle climate change based on our 2024 disclosures. Stephan TandaPresident and CEO at AptarGroup00:12:37Also during 2024, Avta was named World's Top Companies for Women by Forbes for the fourth consecutive year and is ranked 41 out of the 400 companies who were evaluated in three categories, including employer brand, public opinion and leadership. For the sixth consecutive year, we were named one of America's Most Responsible Companies by Newsweek, ranked number 71 out of 600 companies. We are proud to continuously raise the bar on sourcing renewable energy, certifying sites as landfill free through our internal program and developing products that are more recyclable, reusable, refillable and incorporate more sustainable materials. Now I would like to turn the call over to Vanessa. Vanessa KanuExecutive VP & CFO at AptarGroup00:13:24Thank you, Stefan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Starting on Slide seven, our reported sales increased 1%, which included a foreign currency translation headwind of approximately 1%. Therefore, core sales grew 2% primarily due to continued demand for pharma's proprietary drug delivery systems as well as healthy growth in closure technologies for both the food and beverage markets. We achieved adjusted EBITDA of $195,000,000 an increase of 9% from the prior year and adjusted EBITDA margin of 23% compared to 21.4% in the prior year, driven by expanding margins in the pharma and closures segments and the impact of cost mitigation measures executed across the business. Vanessa KanuExecutive VP & CFO at AptarGroup00:14:14These strong margins combined with a lower effective tax rate translated into adjusted diluted earnings per share of $1.52 as shown on Slide eight, a 27% increase over the prior year at comparable exchange rates. Effective tax rate for the fourth quarter was 13% compared to 23% in the prior year due primarily to the realization of deferred tax assets which were previously not recognized as well as increased tax benefits from stock based compensation. Now turning to some of the details by segments. Our pharma segment's core sales increased 4%. Breaking that down by market, starting with our proprietary drug delivery system, prescription core sales increased 15% primarily due to continued strong demand for dosing and dispensing technologies for allergic rhinitis, emergency medicines and central nervous system therapeutics. Vanessa KanuExecutive VP & CFO at AptarGroup00:15:09Consumer healthcare core sales decreased 17% driven by decreased demand for nasal decongestants, nasal saline wind solutions as well as cough and cold medicines due to a weaker 2023, '20 '20 '4 cold and flu season and inventory management at the customer level. The healthy growth in Q4 product sales for ophthalmic and dermal treatments could not offset this decline. Injectables core sales decreased 8% due to lower service revenue and tooling. Injectable component sales were up slightly led by healthy GLP-one growth. And for our active material science solutions, core sales increased 35% aided by a large tooling sale in the quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:15:54Demand for our products used on probiotics and diabetes diagnostics also contributed to the positive results. Pharma's adjusted EBITDA margin for the quarter was 35.7%, a 160 basis points improvement from the prior year. The margin improvement was driven by increased sales of higher value products and services, including royalties and cost efficiency initiatives executed. Moving to our Beauty segment, core sales decreased 3% in the quarter with lower tooling sales contributing about a third of the decrease. Looking at the beauty segment by market, fragrance, facial skincare and color cosmetics core sales decreased nine percent due largely to lower sales of higher value prestige products, particularly in EMEA, which more than offset increased demand for massaged products. Vanessa KanuExecutive VP & CFO at AptarGroup00:16:46Personal care core sales increased 3% with continued demand for body care and hair care applications across several regions. Home care core sales increased 15% primarily due to continued growth of air care applications in North America. This segment adjusted EBITDA margin for the quarter was 12.4%, a two thirty basis point decline primarily due to the top line shortfall particularly in higher priced prestige products. Additionally, you may recall that this segment received a one time insurance claim settlement that benefited the prior year's margin. The impact of this non recurring item from prior year Q4 overshadowed the impact of operational efficiencies executed successfully within this segment. Vanessa KanuExecutive VP & CFO at AptarGroup00:17:31Moving on to the closure segment, core sales increased by 7% compared with the prior year, driven by increased demand across a number of end markets and across all regions. When looking at the market field for closures, car food sales increased 9%. The increase in sales was driven by solid growth across all regions led by strong continued demand for sauces and condiments in North America, our largest food market. Beverage core sales increased 10% fueled by healthy demand for bottled water and sports drinks. Personal care core sales decreased 5% due to lower demand across several regions, while our other category, which includes beauty, home care and health care, core sales increased 12% driven by higher sales for dish care and laundry care solutions. Vanessa KanuExecutive VP & CFO at AptarGroup00:18:18This segment's adjusted EBITDA margin was 16.1% representing a two sixty basis points improvement over the same period last year primarily due to volume expansion and cost and productivity management. Our total CapEx spend for Q4 was $66,000,000 with the majority going to our Pharma segment. Now moving on to the full year results. Slides nine and ten cover our year to date performance and showed 3% core sales growth, which includes the impact of an $11,000,000 decline in Schulich. Our gross margins expanded by 160 basis points due to top line growth, favorable mix towards higher margin revenue streams as well as productivity and cost efficiency measures executed across the business. Vanessa KanuExecutive VP & CFO at AptarGroup00:19:03These cost efficiency measures benefited both cost of sales and SG and A. Offsetting the cost reductions in SG and A were increased investments in R and D, particularly for pharma to support our innovation and higher non cash share based compensation expense. As a result, SG and A as a percentage of net sales remained relatively consistent year on year. Adjusted EBITDA margins expanded by 130 basis points to 21.6%. Indeed, all of our segments expanded EBITDA margins on a full year basis, including our Beauty segment. Vanessa KanuExecutive VP & CFO at AptarGroup00:19:40While our adjusted earnings per share, which were $5.64 were up 18% compared to $4.79 a year ago, including comparable exchange rates. Turning to Slide 11, we ended 2024 with a 12.5% return on invested capital, which was our second consecutive year of increased ROIC, driven by our increased earnings and realization of returns on our capital investments. Cash flow from operations was $643,000,000 up from $575,000,000 in the year ago period. Capital expenditures for the year were $276,000,000 down from $312,000,000 in the prior year. The reduction in capital expenditures signifies the completion of our large capital projects. Vanessa KanuExecutive VP & CFO at AptarGroup00:20:27Slide 12 shows our capital allocation over the last several years with the majority going to pharma. Free cash flow was $367,000,000 for the year, up from $263,000,000 in 2023 due largely to our increased earnings. Our strong cash flow has allowed us to neutralize any impact of our interest expense coming from rising interest rates by paying down a portion of our debts that have come due and increase the amounts we returned to shareholders. Speaking of which, in 2024, we returned $183,000,000 to shareholders in the form of $114,000,000 in dividends and $69,000,000 in share repurchases, up in combined total by 20% from 2023. Finally, we ended the year with a strong balance sheet reflecting a cash balance of $224,000,000 as of December 31, net debt of $800,000,000 which was down $116,000,000 from the prior year and a leverage ratio of 1.08. Vanessa KanuExecutive VP & CFO at AptarGroup00:21:30Now moving on to outlook. Slide 13 summarizes our outlook for the first quarter. We anticipate first quarter adjusted earnings per share, which as a reminder excludes any restructuring expenses, acquisition costs and changes in the unrealized fair value of equity investments to be in the range of $1.11 to $1.19 per share, which includes approximately a $0.07 headwind for currency effects compared to the prior year quarter. Our effective tax rate range for the first quarter is 25% to 27% due in part to an anticipated increase in the French corporate tax rate, which is an $0.08 headwind compared to the prior year quarter. At this point in time, we expect to have an approximately $0.15 impact due to currency and tax compared with the prior year quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:22:19Currency impacts are driving a larger headwind in the first quarter than typical because of the U. S. Dollar's renewed strength against many currencies, which for us includes the euro, the Brazilian real, the Mexican and Colombian pesos, amongst others. While our rule of thumb on currency impact is that for every $0.01 movement in the euro, there is a $0.02 annualized impact on earnings per share. Please keep in mind that we are subject to other currencies besides the euro, some of which I just highlighted. Vanessa KanuExecutive VP & CFO at AptarGroup00:22:48In closing, we're pleased with our strong operational performance for 2024 and are looking forward to the ample opportunities that 2025 will bring. As I mentioned earlier, we ended the year with a very strong balance sheet and a leverage ratio that will provide us with significant optionality. At this time, Stefan will provide a few closing comments before we move to Q and A. Stephan TandaPresident and CEO at AptarGroup00:23:09Thank you, Vanessa. We fully anticipate 2025 to be another strong year for Aptar. Having said that, for the first quarter, we expect softer demand in certain end markets such as dispensing technologies for prestige fragrance and skincare as well as for nasal, saline and decongestions. Results in the first quarter will also be negatively impacted by significant foreign currency effects and a higher effective tax rate compared to the prior year quarter. As Vanessa stated, the impact in Q1 will be about a $0.15 headwind on EPS. Stephan TandaPresident and CEO at AptarGroup00:23:46Additionally, we are seeing healthy demand for our higher value elastomeric components, but anticipate a more gradual beginning to the year, especially as the new capacity comes online and is being validated. Looking ahead, pharma will continue to be the main driver of growth with our proprietary drug delivery systems and emergency medicines and central nervous systems therapeutics leading the way. We expect demand for our injectables division's higher value products to continue to grow throughout the year and are seeing strong interest for our premium coat and ready to fill solutions. Injectables has a strong pipeline and order book and we are ramping up new capacity for our higher value products cautiously to ensure the quality of our products continue to meet the stringent regulatory requirements. The Active Material Science business has returned to growth and is poised for solid 2025. Stephan TandaPresident and CEO at AptarGroup00:24:41We anticipate that Beauty's top line will improve as the year progresses. Beauty has a nicely built in project pipeline and has made significant structural improvements. Over the last four years, Beauty has reduced its plant count by 10 and over the last two years has reduced its workforce by 11%. Managing costs is an ongoing effort and while there is always more work to be done, these changes should continue to positively impact the bottom line as the top line improves. Closures has made great progress on several fronts, including reigniting its innovation engine, improving plant utilization rates and ongoing cost management efforts. Stephan TandaPresident and CEO at AptarGroup00:25:21Our innovations help customers win market share and there is tremendous interest in the dispensing technologies that we are developing. When adjusting for currency effects and tax impacts, we anticipate 2025 will continue to deliver solid earnings growth and increase shareholder value. With that, I would like to open up the call for questions. Operator00:25:45Thank you, Mr. Tanda. We will now begin the question and answer session. The first question we have on the phone lines comes from George Staphos with Bank of America. Your line is open. George StaphosManaging Director at Bank of America Merrill Lynch00:26:37Hi, everyone. Good morning. Hope you can hear me okay. Stefan, Mary, good morning. Vanessa, welcome. George StaphosManaging Director at Bank of America Merrill Lynch00:26:44My two questions. First of all, can you talk a little bit about the green shoots that you are seeing in China and what momentum, what impact that might be able to have to generate for 2025? The second question, recognizing it's tough to call, if you held currency rates where they're at and taxes do what you expect them, Do you expect that earnings per share will grow in 2025 off a very tough comparison in 2024? Would that be too difficult? Maybe a different way to handle the question. George StaphosManaging Director at Bank of America Merrill Lynch00:27:26If we exclude those effects, what how would you define solid earnings per share growth? Thanks guys. Good luck in the quarter. Stephan TandaPresident and CEO at AptarGroup00:27:37Hi, George. We could hear you great. Let me take the first one, the higher math of the second one. I'll let Vanessa handle. Look, as you know, the beauty market in China in general is still the largest country market for beauty with a particular emphasis on skincare. Stephan TandaPresident and CEO at AptarGroup00:28:02And all our customers have waited for that market to show additional or renewed vitality. And some of our larger customers have been struggling with that. What we see is that clearly local brands gain share and continue to gain share versus the multinationals. You all know the story of a one U. S. Stephan TandaPresident and CEO at AptarGroup00:28:30Based large multinational. But in general, 11.11 was pretty solid. The beginning of the year was pretty solid. So but it's more with local brands. And of course, ultimately, who serves the consumer, we are neutral to that. Stephan TandaPresident and CEO at AptarGroup00:28:51So I'm quite hopeful that we will see China building over the year and that will benefit, particularly, our skincare business. Fragrance is also growing, but it's still very small in China, but growing. I think that's about it. As a reminder, we serve in region, for region. So all this speculation about the tariffs for us is not that meaningful. Stephan TandaPresident and CEO at AptarGroup00:29:22And what we're really looking for is where is the Chinese consumer at. Anecdotally, we also see the Chinese consumer traveling more internationally again at the high end, and I think that should also bode well for the beauty business in general. Stephan TandaPresident and CEO at AptarGroup00:29:37And I'll Stephan TandaPresident and CEO at AptarGroup00:29:37hand over to Vanessa. Vanessa KanuExecutive VP & CFO at AptarGroup00:29:39Hey, George. It's right that you called out the tax and FX headwinds. We haven't seen these kind of headwinds in the recent past. The tax headwinds being driven by a lot of what we talked about about the French tax legislation that just came or is in the process of coming into effect as we speak. Look, when you normalize for FX and you normalize for tax, we are cautiously optimistic that we will have another potential double digit EPS growth for 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:10A lot of the drivers, Stefan talked about in his prepared remarks, you're aware that we've done a lot of work around cost reductions. Those cost reductions will accrete to EBITDA and EPS in 2025. So we are cautiously optimistic that once we normalize for consistency in FX and tax, we'll have another strong EPS growth here. George StaphosManaging Director at Bank of America Merrill Lynch00:30:31Vanessa, does the tax, is it only a 1Q effect or does it impact the whole of the year? Thank you. Sorry for that. And again, good luck in the quarter. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:38Yes. No, that's okay. It impacts the whole year. It impacts the whole year. So really what happened in the last so you may recall, George, this is we thought this was going to happen in Q4 because it was heavily reported by the French media. Vanessa KanuExecutive VP & CFO at AptarGroup00:30:50It didn't happen in Q4. It's just it's happening now. It passed both the lower and upper chambers of parliament and we think it's going to be an asset in the coming days. It will be a full year impact. And so we've built the Q1 effect into our Q1 guidance. George StaphosManaging Director at Bank of America Merrill Lynch00:31:08All right. Thanks so George StaphosManaging Director at Bank of America Merrill Lynch00:31:09much and congrats on the Stephan TandaPresident and CEO at AptarGroup00:31:09operating improvements across the segment as well. Awesome. Thank you, George. We'll take it. Operator00:31:20Thank Operator00:31:24you. We now have the next question from Gautam Panjabi with Baird. You may proceed. Ghansham PanjabiSenior Research Analyst at Baird00:31:33Yes, thanks. Good morning, everyone. Vanessa, just following up on George's question on the EPS bridge items. So if currency holds at current levels, what sort of year over year headwind would that be on EPS? The same with tax. Ghansham PanjabiSenior Research Analyst at Baird00:31:47And then in corporate, 4Q was quite a bit lower than the trend line from previous quarters. How should we think about that as a variance for '25 versus '24? Vanessa KanuExecutive VP & CFO at AptarGroup00:31:59So in 4Q, there are a couple of things. If we talk year over year or we talk versus guidance. So year over year, we did get some tax benefits from our tax planning. I called out in my prepared remarks that we were able to recognize some deferred tax assets from some loss carry forwards that we had not previously been able to recognize as a result of some of our ongoing tax planning. So that did result in sort of the wins that you're seeing in Q4 year over year. Vanessa KanuExecutive VP & CFO at AptarGroup00:32:25Separate from that, there is the delta to guidance. And so that wind was actually built into our guidance. The delta to guidance was really the French tax impact that we had built into our guide in Q4 that did not materialize. And now we're seeing that come into effect in Q1 of this year. You asked what is the impact in Q1. Vanessa KanuExecutive VP & CFO at AptarGroup00:32:43We called it out. It's $0.15 for the two factors combined. So I'm not clear on what incremental impact you might be looking for. Yes. Ghansham PanjabiSenior Research Analyst at Baird00:32:50So I meant for 2025 versus 2024. If twenty twenty four's baseline EPS is $5.64 the variances for FX, Max and Corporate? Vanessa KanuExecutive VP & CFO at AptarGroup00:33:01Yes. So we're not guiding for the full year. We're not I find it hard to give guidance on ETR, for example, independence of guiding on income just because we know that the jurisdiction mix of earnings can be a pretty significant impact. What I will say is at this point in time, given what we know, especially with what's happening on the French taxes, we expect ETR to be higher in 2025 versus 2024. We haven't gotten into exactly what the number will be. Vanessa KanuExecutive VP & CFO at AptarGroup00:33:28We'll guide as the quarters progress. And then the FX headwinds, I mean, it's pretty significant in Q1 with the 0.07 I expect that to continue for the rest of the year. Now depending on which forecast you're watching, we are seeing or hearing some commentary around perhaps the FX environment improving as the year progresses. But based on what we see now, we expect this double digit impact to continue. Ghansham PanjabiSenior Research Analyst at Baird00:33:54Okay. And then the corporate below trend line for 4Q, what was that due to? Vanessa KanuExecutive VP & CFO at AptarGroup00:34:02So there weren't any sort of unusual items there in Q4. What I will call out is typically as you get to the end of the year, you typically have your year end true up, which includes adjustment for bonuses and short term incentive accruals. But if you have pockets of the business where we didn't hit our target, some of those accruals got reversed. So that's probably what you're seeing. That's mainly what you're seeing in the corporate line in Q4, nothing more unusual than that. Vanessa KanuExecutive VP & CFO at AptarGroup00:34:29Primary driver. Ghansham PanjabiSenior Research Analyst at Baird00:34:30Got it. Thank you for that. And in terms of just second question, I guess, in terms of the destocking that you're seeing in cold and flu and the timeline for that to sort of normalize? And then also in Prestige, you call that weakness, I think, in the EMEA region as well. Just based on some of the customers that are reported, it seems like volumes seem relatively stable across the board from a customer level standpoint. Ghansham PanjabiSenior Research Analyst at Baird00:34:56So what do you think is going on there specific to Avtar? Stephan TandaPresident and CEO at AptarGroup00:35:01Yes. So let's take consumer healthcare first. We see some bottoming out. And in fact, the last two months, we saw sequential increases again. A lot will depend again on how the flu season unwinds. Stephan TandaPresident and CEO at AptarGroup00:35:20Just heard this morning that we might have another peak in The U. S. And so sequentially, I think it will start to go up again, but we still face tough comparables in quarter one into quarter two. Now on the beauty side, we I pointed out that unit volume actually was up in beauty slightly. So what you're really seeing is the mix effect is Masdiige, fragrances picked up significantly and the high end luxury prestige launches did not repeat. Stephan TandaPresident and CEO at AptarGroup00:35:56So that it's more of a mix effect as opposed to an underlying volume effect. Ghansham PanjabiSenior Research Analyst at Baird00:36:04So much. Operator00:36:09Your next question comes from Matt Roberts with Raymond James. Please go ahead. Matthew RobertsEquity Research Analyst at Raymond James Financial00:36:19Hi, Stefan, Vanessa. Good morning. Stefan, you noted that you're expecting a more gradual ramp up in injectables. I believe last quarter you said that that business could potentially be high single digits to low single digits based on GLP and biologics growth, albeit stopping short of any official guide there. But based on the new ramp up expectations, do you have better visibility or comfort in firming what that injectables core sales growth number could look like in 2025? Matthew RobertsEquity Research Analyst at Raymond James Financial00:36:51Or given strong underlying growth rates in those drugs, what factors could dictate either coming in above or below any expectation? Stephan TandaPresident and CEO at AptarGroup00:37:01Yes. I wouldn't change my answer there. The pipeline looks good. The order buildup looks good. There will be quarter to quarter variance also in terms of our ramp up and when we get certain pieces of equipment validated. Stephan TandaPresident and CEO at AptarGroup00:37:17It's always after you the moment customers want it, they want it now and they'll need to get this test done or this thing done. So overall, the demand picture is good. All we're being is a bit cautious in able to exactly match that in the first quarter, but I'm quite bullish about that business. Matthew RobertsEquity Research Analyst at Raymond James Financial00:37:41Okay. That's helpful. Thank you. And then maybe on the proprietary delivery system side, so 2024 had continued strong performance and you noted that category will lead the pharma segment. So as we look to '25, what type of growth do you think is achievable there? Matthew RobertsEquity Research Analyst at Raymond James Financial00:37:57And as we've heard positive commentary on some of the newer drugs you've had, whether that's SPRAVATO broadening or neffy coming out of the gate in 4Q, would you say that 2025 growth in proprietary is more so dependent on further new drugs coming to the market or more so underlying secular trends for nasal delivery and drugs that are already on the market? Thanks again for taking the questions. Stephan TandaPresident and CEO at AptarGroup00:38:21Sure, Matt. Look, fundamentally, that core engine of pharma is fully humming. We feel very good about the continued growth there. We were at JPMorgan earlier in January and also the J and J CO called out SPRAVATO ARS was there. So we see continued good growth in the emerging treatment, the central nervous system drugs as well as the underlying allergic rhinitis franchise continuing. Stephan TandaPresident and CEO at AptarGroup00:39:00As we just discussed, the cold and cough is a little wobbly, but I think we're at the other end of the trough. Matthew RobertsEquity Research Analyst at Raymond James Financial00:39:12Great. Thank you again. Operator00:39:16Thank you. We now have a question from Daniel Withow with Jefferies. You may proceed. Daniel RizzoAnalyst at Jefferies00:39:24Good morning, everyone. Thank you for taking my question. Well, the first thing I wanted to ask about is tariffs. Obviously, it's a very fluid situation and I don't expect you to have any answer to what's going to happen. But I was wondering what happened last time, there were tariffs on Chinese products, if it had any effect to you guys at all or not necessarily you directly, but also on your customer demand or customer order trends? Stephan TandaPresident and CEO at AptarGroup00:39:49Yes. Look, obviously, it's not in our guidance. For the most part, we produce in region for the region and as I said about China. So there are, of course, some special situations in those cases. We passed it on or will pass it on and have passed it on. Stephan TandaPresident and CEO at AptarGroup00:40:15Of course, it's a commercial negotiation. But out of all the things you could worry about, the tariffs is not the one that I worry terribly about. Daniel RizzoAnalyst at Jefferies00:40:26Okay. And then you had a pretty solid improvement in ROIC over the last couple of years. I was wondering what and maybe you've mentioned this in October or something and I forgot, but what the goal is if you can get this up to, I don't know, 15% or if there is a gold for that metric? Stephan TandaPresident and CEO at AptarGroup00:40:45Yes. We're not in the habit of changing long term targets on the quarterly calls. We have an Investor Day coming up, I think, in September. If we revise it, we would do it then. But clearly, the increased operational performance, the more distant acquisition of CSP and continued discipline in CapEx is helping ROIC. Stephan TandaPresident and CEO at AptarGroup00:41:11And we'll take a look at that as we get into September, and we'll update you then. Daniel RizzoAnalyst at Jefferies00:41:18Thank you very much. Operator00:41:22Thank you. And we now have Matt LaRue with William Blair. Please go ahead. Matt LarewResearch Analyst - Healthcare at William Blair00:41:37Hi, good morning. Yes, you talked a little bit about the cough and cold side and injectable side of pharma. I wanted to ask about royalties. Obviously, that's something that you've been mentioning more on the call in the last year or so. And I presume it was a driver of some of the margin improvement in 2024. Matt LarewResearch Analyst - Healthcare at William Blair00:41:53Was there anything you sort of long time in nature in either the quarter or the year? Or are they all structured as royalties rather than milestones? And then how should we think about the contribution moving forward in 'twenty five and beyond? Stephan TandaPresident and CEO at AptarGroup00:42:08Sure. Yes. Look, first and foremost, those are recognition of the value we add during the development process of a drug product that can be a decade or longer. Sometimes if we're dealing with really small companies and they bulk it out service fees, then we get something on the back end. And what we call out royalties is indeed that, as there might be some smaller milestone payments, but it's fundamentally royalties on finished product sales. Stephan TandaPresident and CEO at AptarGroup00:42:43They are lumpy, but they make a bigger part of our overall revenue base, but still you're talking a few tens of millions for the company. Matt LarewResearch Analyst - Healthcare at William Blair00:43:00Okay. And then I did want to just follow-up on injectables. Obviously, that was up significantly in Q1 twenty twenty four, so a tough comp and then was down the last three quarters. When you say a slower end to the year, I guess we should think about that being maybe down in the first quarter and then growing from there? Stephan TandaPresident and CEO at AptarGroup00:43:19Yes. We're not guiding by the individual business line, but it's too far away from the commentary we gave. Matt LarewResearch Analyst - Healthcare at William Blair00:43:32Okay, thanks. Stephan TandaPresident and CEO at AptarGroup00:43:33But having said that, unit volume continued to grow throughout the year. Those are some other things in the injectables that we report like service revenue that is more lumpy. Matt LarewResearch Analyst - Healthcare at William Blair00:43:49Okay. Thanks, Stefan. Operator00:43:52Thank you. We now have Gabe Haley with Wells Fargo. Please go ahead. Gabe HajdeAnalyst at Wells Fargo00:44:03Stefan, good morning, Vanessa. Welcome. I wanted to focus on the capital allocation side of the business. You talked about wrapping up a couple of big investments as we know to add capacity and injectables. And I think it's a good thing, but it still seems you guys are kind of guiding $280,000,000 to $300,000,000 for capital. Gabe HajdeAnalyst at Wells Fargo00:44:23You also gave us a slide where you're showing a lot of your internal investments are directed at your pharma segment. So I think all in we interpret that as a positive signal. But just any color that you can provide in terms of what options you're seeing for investment internally? Vanessa KanuExecutive VP & CFO at AptarGroup00:44:45Sure, Gabe. Why don't I take that and Stefan please add any incremental color. So Gabe, the capital allocation policy, as you know, has been a pretty healthy balance of organic capital, which as you call out has been largely geared towards pharma, not exclusively, but largely so M and A, dividends and share buybacks. And I think as we get into 2025, you'll see a level of continuation of that. And you did call out our CapEx expected investments in 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:45:13Pharma will once again get a big piece of that. From an M and A perspective, I'm not foreshadowing anything imminent, but we do regularly evaluate potential M and A candidates where we see strong strategic fit and accretion potential. And you've heard Stephan talk about that in the past. And that again, more geared so towards pharma, but not exclusively so. So I think that would continue in terms of the evaluation process. Vanessa KanuExecutive VP & CFO at AptarGroup00:45:36And then from a dividend perspective, we just ended our thirty first year, as Stephan called out in his prepared remarks of increasing dividends. So I would expect that also to continue in 2025. And then lastly, just on the share buybacks, you know that the board approved a refreshed $500,000,000 buyback program in October, and that is the more discretionary component of our capital allocation. We're already active in the market with the repurchases, and it's a lever that we have. And I would expect that to also continue in 2025. Vanessa KanuExecutive VP & CFO at AptarGroup00:46:11Anything you want to add, Stefan? No, perfect. Gabe HajdeAnalyst at Wells Fargo00:46:15And any particular projects or discrete things that are in that capital that you guys would want to call out? Stephan TandaPresident and CEO at AptarGroup00:46:26Not really. As we discussed, we built these three disrespectfully called boxes, the one in France and Oyama, the state of the art facility in China and the injectables. Now we're really creeping investment and gradually growing capacity, not only in those three locations, but everywhere. And I think the single largest investment for us is $5,000,000 in that $300,000,000 to $300,000,000 envelope. So it's a lot of just good organic growth investments, maintenance investments, capacity creep investments across the company. Gabe HajdeAnalyst at Wells Fargo00:47:04Okay. And then I guess switching gears a little bit, you guys have been pretty active. I think you called out closing and I apologize if I misheard 10 facilities in Beauty, but just we're kind of on the other end of what was a multi year kind of efficiency initiative across the organization. Again, I know you're not done, you're always trying to get better. But as we look forward, do you see anything else that you need to do from a footprint standpoint or cost reduction? Stephan TandaPresident and CEO at AptarGroup00:47:42Yes. Just to clarify what we said, Beauty reduced its plant count or its site count by 10, Not that we built 10, but we reduced by 10. And also over the last two years, reduced the test count by 11%. And as you rightly said, you're never done. We have some ideas. Stephan TandaPresident and CEO at AptarGroup00:48:03Nothing where is imminent here. And productivity is increasingly coded in our DNA, and I'm very encouraged with the productivity plans. All three businesses have brought to the table for this year and we're tracking that closely. But beyond that, really nothing to report at the moment. Gabe HajdeAnalyst at Wells Fargo00:48:29Thank you. Operator00:48:33Thank you. I would now like to conclude the question and answer session and hand it back to Mr. Tanda for some closing comments. Stephan TandaPresident and CEO at AptarGroup00:48:42Wonderful. Thank you. So let me end by zooming out. As usual, quarter four was a solid finish to a very strong year 2024. And on top of a very strong year 2023, we delivered back to back double digit earnings per share growth for both years and followed through on our raised margin targets. Stephan TandaPresident and CEO at AptarGroup00:49:04Driving productivity, as I just said, is increasingly firmly coded into the DNA of the company in addition to innovation and sustainability that remain alive and well. Looking at '25, we are excited to continue the journey. Our customers are taking very much note of our increased focus on competitiveness and on meeting their needs more rapidly and flexibly with our much upgraded footprint. We are back on the front foot. Our project pipelines across the company are in very good shape and the pipelines continue to grow. Stephan TandaPresident and CEO at AptarGroup00:49:38Having said all that, as we discussed, we are operating against the more challenging macro especially with foreign exchange and the anticipated higher French corporate income tax rate. It doesn't mean that our tax planning activities are done. You always look for ways to abate impacts like that. We had a good start of the year, but faced some spots of tough comparables that we discussed in Fragrance Consumer Healthcare, but both of these are fully expected to be transitory. Gentle reminder, I know we're all focused on the quarter, but several of you were able to look under the hood, so to speak, just a few four months ago when you visited some of our facilities, we're still the same company that you saw four months ago. Stephan TandaPresident and CEO at AptarGroup00:50:24And indeed in the slowing economy, we are confident in our future trajectory given the resilience of our product portfolio and the strength of our pipeline. We discussed the balance sheet. We're on track for a thirty second year of paying an annually increasing dividend and our balance sheet affords us a lot of strategic flexibility. Thanks for joining the call and we look forward to discuss more on the road. Operator00:50:50Thank you all for joining the Aptiles twenty twenty four fourth quarter and annual results conference call. For time confirmed, today's call has now concluded. Thank you for your participation and you may enjoy the rest of your day.Read moreParticipantsExecutivesMary SkafidasSenior VP of IR & Corporate CommunicationsStephan TandaPresident and CEOVanessa KanuExecutive VP & CFOAnalystsGeorge StaphosManaging Director at Bank of America Merrill LynchGhansham PanjabiSenior Research Analyst at BairdMatthew RobertsEquity Research Analyst at Raymond James FinancialDaniel RizzoAnalyst at JefferiesMatt LarewResearch Analyst - Healthcare at William BlairGabe HajdeAnalyst at Wells FargoPowered by