AptarGroup, Inc.

Hello, and thank you for standing by. Welcome to Aptar's 2023 third quarter 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 Mrs. Mary Scafidis, Senior Vice President, Investor Relations and Communications. Please go ahead.

Thank you. Hello, everyone, and thanks for being with us today. Joining me on today's call are Stefan Tanda, President and CFO, and Bob Kuhn, 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. These measures are reconciled to the most directly comparable GAAP financial measure in our press release, which was disseminated yesterday. Please refer to the press release. As always, we will post a replay of this call on our website. I would now like to turn it over to Stefan Tanda. Stefan, over to you.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our results for the third quarter. Later in the call, Bob Kuhn, our CFO, will provide additional details. Starting on slide three, for the third quarter, APTA achieved core sales growth of 2% and delivered double-digit EPS growth of $1.39 per share due to continued strong demand for our proprietary pharma dosing and dispensing systems, as well as our fragrance dispensing technologies. We experienced significant margin improvement in the quarter with an adjusted EBITDA margin of about 22%, a four-point increase over the prior year's quarter. The margin improvement was driven by a strong focus on cost management across the company and the better mix from relatively faster sales growth in pharma. In quarter three, robust demand continues for our proprietary pharma drug delivery systems, which grew across multiple therapeutic applications, including allergic rhinitis, emergency medicines, central nervous system therapeutics, nasal saline rinse solutions, eye care, and cold and cough, as well as asthma and COPD therapies. In the last year, there has been a lot of focus from our shareholder base on sales of our unidose drug delivery dispensing system for Narcan and generic Naloxone, as this emergency medicine has gone over the counter, or OTC. We have certainly seen solid growth in this important lifesaving application. In addition, we also want to highlight our proprietary bi-dose dispensing system for J&J's Spravato, which has also been a strong contributor to our growth this year. Recently, a study published by the New England Journal of Medicine outlined the positive benefits for patients using Spravato. This drug targeting treatment-resistant depression in adults is delivered in a bi-dose liquid nasal spray system that underwent numerous human use studies to ensure optimal positioning and consistent dosages are delivered with every administration. The medicine is administered as a nasal spray that is absorbed by the lining of the nasal passages and into the bloodstream. This nasal delivery supports rapid and appreciable absorption into the bloodstream. Relative to an IV formulation, the nasal route of delivery provides a non-invasive and more convenient dosing option for patients and physicians and is associated with a reduced likelihood of dosing errors. We are proud of the role our dispensing systems play in helping making critical medication more easily administered. Nasally delivered therapies for neurological diseases like depression is a growing area of focus for our customers. Over the last few quarters, we have talked about our pharma service offerings. These are a small part of our overall revenue, but help to position us as a partner of choice for pharma companies, large and small. We are very honored that our pharma service group has been awarded a new contract by the US Food and Drug Administration, studying opportunities for low global warming potential propellant solutions for metered dose inhalers. This contract recognizes and reinforces our thought leadership and expertise in the inhalation space, and also highlights our focus on sustainability, which we know is a differentiator and competitive advantage. In our beauty segment, we saw continued healthy demand for our dispensing solutions for prestige and mass fragrance. Demand for fragrance pumps continue to be driven by growth in Europe and Latin America. Sales for our fragrance sampling solutions also grew modestly in Europe. additionally fusion pkg our full packaging solution provider in north america had strong growth in the quarter when compared to the prior year with its sales pipeline continuing to build having said that duty north america overall continues to be substantially below 2019 volumes especially in personal care however in recent weeks we are starting to see a pickup in orders for some end markets as inventories approach normal levels for certain SKUs. While recovery will not be linear, we believe the worst is behind us and look forward to improving dynamics in North America in 2024. Now turning to slide four, I would like to highlight a few products and medications that launched in the quarter featuring our technology. In pharma, Aptar's seven-year collaboration with Halion led to the launch of a nasal spray technology with an innovative side push button to activate the spray. This patented, intuitive and more consumer-friendly lateral control system technology by Aptar, a first of its kind, features a shorter nozzle, which means more comfort when using the product, while the one push button provides more accurate dosing. In addition, Aphter's metered dose inhaler valve is featured on the RENYA inhalation aerosol, the first FDA-approved generic version of Simbicort. In the European beauty market, Aphter's fragrance and lotion pumps are featured on Jean-Paul Gaultier's Divine Brand products by Pooch. In Asia, our airless technology is the refillable dispensing solution for a new faceless skincare product by the brand Subban. Turning to sustainable solutions, we've expanded our sampling portfolio to include monomaterial paper fragrance sampling, which LVMH is now featuring for a top fragrance brand. Finally, our post-consumer recycled resin pump is the dispensing technology for Estee Lauder's MAC brand foundation in North America. For closures in North America, McCormack is now featuring our closure on their new spice package, and our snap-top dispensing closure for inverted packaging is providing control dispensing for SC Johnson's OFF insect repellent lotion in Latin America. As we mentioned at our recent Investor Day, we have additional information to share around our focus on footprint rationalization and reduction of manufacturing costs. To that end, we have started a second process with our European and French labor representatives to shut down our closure facility in Poissy, France. As we have stated before, these processes take time. We will share more information with you as we can and expect to start realizing savings from this planned closure by mid to late 2024 and full run rate savings in 2025. Our SG&A as a percentage of sales is on track to be around 16% for the full year 2023. Finally, I would like to touch on an ESG update. Earlier this month, we were recognized by 3BL Media and by ISS ESG for our transparency and performance in categories such as climate change, stakeholders and society, human rights and ESG performance for the third consecutive year. We are ranked number 34 on the list of the 100 best corporate citizens. Before I hand the call over to Bob, I also want to highlight that in September, we added a new board member, Sarah Glickman, the CFO of Criteo. Sarah is a highly accomplished executive with more than 30 years of global, financial, and deep operational experience in diverse industries with such companies as Novartis, Honeywell, and Bristol-Myers Squibb. And with that, over to you, Bob.