AptarGroup, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Aptar Group's 2019 fourth quarter and year-end conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Introducing today's conference call is Mr. Matt Della Maria, Senior Vice President, Investor Relations and Communications. Please go ahead, sir.

Thank you, Lisa, and welcome, everyone. Participating on our call today are Stephan Tanda, President and Chief Executive Officer, and Bob Kuhn, Executive Vice President, Chief Financial Officer and Secretary. You can find a copy of our press release as well as a slide presentation file that summarizes our results on our website. We will also post a replay of this conference call on the website. Today's call includes some forward-looking statements. Please refer to our SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements. APTAR undertakes no obligation to update the forward-looking information contained therein. I would now like to turn the comments call over to Stephan.

Thank you, Matt, and good morning, everyone. Thanks for joining us. Before I comment on the quarterly segment results, let me start by sharing an update on recent activities. Since the breakout of the coronavirus, our management team in China has taken very strict measures around the health and safety of our employees, and we are thankful to say that to date, none of our employees have been infected with the virus. We do not have any operations in the Wuhan region, but beginning in late January, we restricted employee travel to and from China and have been closely tracking and monitoring the situation. We are keeping the most stringent protocols in place to keep our facilities in pristine conditions. Prior to the reopening of our operations after the mandated Chinese New Year holiday period, we received special permission from the Chinese government to begin production in early February in order to supply our farmer customers whose products are listed on the national emergency product list. We are, however, experiencing some labor shortages due to government restrictions on the movement of people, and we continue to update our customers with the latest supply and delivery information. We are also continuously assessing the impact that the crisis will have on our business in the first quarter and beyond, though it is impossible at this stage to predict the full extent of the impact. In addition to Chinese domestic retail beverage consumption, the area most at risk appears to be our prestige beauty business due to the coronavirus significant negative impact on prestige and luxury consumption and travel retail. We may see a positive impact to our business for pumps and closures for sanitizing and antibacterial products, but it is also still too early to tell. We're extremely proud of our people on the ground in China and how they have rallied together during this difficult time. Now moving on to other topics, as shown on slide four in the presentation that accompanied the press release and is posted to our website, APTA was named one of America's most responsible companies of 2020 by Newsweek magazine. This recognition of our ESG leadership by Newsweek, in addition to being named again by Barron's as one of the top 100 most sustainable companies in America, now for the second year in a row, is a reflection of our long-term orientation to build a sustainable business and also a testament to the commitment of our people to further and more inclusive and sustainable world. Turning to slide five, our pharma segment had a good fourth quarter and benefited from strong growth in our consumer healthcare market, injectable, and active packaging markets. I'm pleased to share that our patented unidose liquid system is the device delivering the first and only nasal rescue treatment that was recently approved by the US FDA to treat acute repetitive seizures in people living with epilepsy. This ready-to-use rescue treatment can be used when and where a seizure occurs thanks to a proven intuitive and convenient unidose system. Noble International, which we recently acquired as part of our drive to build up the pharma services platform, developed an accompanying training device in partnership with our customer to be used as a part of the patient onboarding program for this new product. We also partnered with Lupin Limited to launch India's first connected device for metered dose inhalers, also called MDIs, and this product is called Adhero. This unique add-on smart device is designed to help patients with chronic respiratory diseases, track their MDI usage, and facilitate improved adherence to their prescribed treatment regime. Adhero is a Bluetooth-enabled reusable smart device that attaches to the top of an MDI. With built-in sensors, the device tracks the patient's daily medication usage and consumption patterns. In other pharma news, we launched a first-of-its-kind combination oxygen scavenging and moisture absorption active packaging solution. This new technology utilizes our patented three-phase active polymer platform in the active film product configuration. As shown on slide six and outlined in our press release, it was an exciting year for our pharma segment as we broadened our services platform with the acquisitions of leading analytical laboratories, NanoPharm and Gateway Analytical, and the training device and patient onboarding expert, Noble International. Also during the year, several customers launched new US FDA-approved drugs featuring our delivery technologies, including our bi-dose nasal spray device, uni-dose powder system, nasal uni-dose device, and active blister packaging solutions, as shown on the slide. Now let me turn to the beauty and home segment results starting on slide seven. As we saw in the previous quarter, this segment faced considerable challenges from weak demand from the personal care market, including customer destocking. We also saw several beauty customers reduce inventory, which weighed on our beauty top line growth. However, we had some exciting activity in the fourth quarter as we opened new sales offices in Dubai and Tokyo, Japan, which serve as meeting occasions for our customers in these regions and will support all three of our business segments. We also celebrated the grand opening of our new facility in Guangzhou, China, to bring close proximity to our customers in southern China who are some of the world's leading brands and manufacturers. In the quarter, we helped Klaas to launch a new facial serum called Plant Gold, which features our dual delivery dispensing system. We're also pleased to be featured on several European prestige fragrances oranges including new eau de toilette called K by Dolce & Gabbana, featuring our spray pump in custom metal color, and the Miss Dior Rose and Roses Parfum by LVMH, featuring our spray pump. In North America, our small pump is found on the anti-wrinkle serum Elixir Vitae by the indie brand Tata Harper. Aligned with our drive towards a circular economy, starting this year in North America, we are converting our portfolio of stock block closures to post-consumer recycled resins. Now I would like to take a moment to outline how we are strengthening our beauty packaging business to keep winning for years to come. And now on slide eight. First, we have closed on our agreement to acquire the initial 49% equity interest in BTY. a leading Chinese manufacturer of high-quality decorative metal components, metal plastic sub-assemblies, and complete color cosmetic packaging solutions for the beauty industry. This is the first key step in our strategy to increase our capabilities and exposure to the fast-growing local Chinese beauty market. Second, we recently announced the acquisition of Fusion PKG, an asset-light innovation leader in high-quality, complete skincare and color cosmetics packaging solution. They add a new, agile concept to launch and turn key capabilities to Aptar to serve the North American beauty market. With proven creativity, engineering formulation, and fast go-to-market offerings, Fusion PKG has strong existing relationships with both global cosmetics and skincare customers and with many indie brands. Today's market demands what is called fast beauty. This is Fusion PKG's specialty. They have built an incredible business that is an excellent complement to Aptar's, and we will eventually look to scale this offering beyond North America to selected other regions. Both Fusion PKG and BTY are growing profitable businesses, and they will be margin accretives to the beauty and home segment. Finally, we are taking the next steps in our ongoing business transformation. We continuously evaluate and optimize our operations to adapt to changing market conditions to ensure we're delivering the very best to our customers. As a result, we've decided to close our Stratford and Torrington, Connecticut sites and absorb and rationalize these production capabilities into other existing AFTA facilities in North America. The transfer of production is planned to be completed by the end of the year. With these changes, we will be in a better position to serve our North American beauty and home customers and focus on long-term profitable growth. This is a continuation of other steps we have taken to streamline and modernize our beauty and home footprint. In 2019 alone, we sold our Liberty, Illinois, molding facility to one of our subcontractors, and we have made other consolidations in other regions. For example, we consolidated our two facilities in Argentina into one, We consolidated production capacity that was in Indonesia into our Thailand facility, and we consolidated two facilities in India into a new location. Moving now to slide nine, our core sales in our food and beverage segment declined due to decreased beverage closure sales and the negative effect of passing on lower resin costs to our customers. We launched new products in the quarter, including newly redesigned coconut and avocado oil cooking sprays for Aldi in North America, which feature our sprayer actuator. Our non-detachable, tamper-evident tear band and closure are also featured on the Yokui brand of infant formula in China. In the beverage market, our sports closures are featured on a line of Desani bottled water in Ecuador and on several new Disney-themed bottled waters by Danone in Brazil. In summary, overall, it was a challenging quarter due to the reduction in inventory by several key customers, making it a difficult comparison to the prior year where we were growing in all but one of our key markets. While we navigate through these short-term challenges, we are taking several steps to position us for long-term growth, including strategic investments in high-growth areas with BTY and Fusion PKG, and the consolidation of our North American beauty and home operations. With that, I will now turn it over to Bob, who is going to walk through some of the financial details that impacted the quarter.