AptarGroup, Inc.

Ladies and gentlemen, thank you all for standing by. Welcome to APTAR's 2024 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 Skircidis, Senior Vice President, Investor Relations and Communications. Please go ahead.

Good morning. Hello, everyone, and thanks for being with us today. Our speakers on the call today are Stefan Tanda, President and CEO, and Bob Kuhn, Executive Vice President and CFO. Also joining us on the call today is Vanessa Kanu, our CFO designate. 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, 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 now like to turn the conference call over to Stefan.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our third quarter results. Later in the call, Bob Kuhn, our CFO, will provide additional details on key drivers for the quarter. Starting on slide three for the third quarter, I am pleased to report that after I achieved core sales growth of 2% and delivered adjusted EPS of $1.49 per share, a 6% increase over the prior year's quarter, We grew adjusted EPS by 15% for the first nine months of the year and are well positioned to grow adjusted EPS double digits for the full year. The positive results in the quarter were driven by strong operational improvements, ongoing demand for our pharma proprietary drug delivery systems, growing pharma royalty revenues, and increased demand for our food closures technologies. This quarter, Aptor's adjusted EBITDA margin was at the top end of our long-term range at 23%. While our pharma segment has consistently performed within its long-term target range for both core sales and adjusted EBITDA margin, Closures joins pharma this quarter with core sales of 4% and adjusted EBITDA margins of 17%. The Closures segment returned to its core sales long-term target range was driven by increased demand around the world, a focus on converting end markets to higher value dispensing closures and the reinvigoration of innovation globally, altogether delivering improved top line sales. The segment's increased margins were also driven by a consistent focus on reducing costs, including the recent plant closing in France, a steady improvement in plant utilization, up about 10% over the past 18 months, and an ongoing focus on efficiency. Now, turning back to our pharma segment, We continue to see good demand for a proprietary drug delivery system, especially for allergy sprays, central nervous system, and emergency medicines, with 12% core sales growth in the quarter, following the 15% core sales growth in the third quarter of 2023. Pharma delivered adjusted EBITDA margins at the high end of the long-term target range due to sales of higher value products and increasing royalty revenues. Royalties are a newer, steadily growing revenue stream that may perhaps cause some lumpiness down the road. We believe the growing revenue stream from royalties is a testament to the value of the regulatory expertise and services that we offer to our customers, especially in the early stages of the drug development process. Some smaller clients, often startup ventures, choose to award APTA royalties on final product sales in lieu of service fees. In the quarter, we also had a number of exciting developments for our pharma business. As a reminder, one of the first nasally-delivered emergency medicines approved by the FDA was Narcan or Naloxone using Aptar's unidose device. About a year ago, this medicine was approved by the FDA for over-the-counter distribution to try to stem the tide of opioid deaths in the U.S. And recently, the Centers for Disease Control and Prevention released preliminary data showing that drug overdose deaths fell by almost 13% in the last 12 months. We are extremely encouraged by the significant drop in drug overdose deaths. Additionally, in August, the FDA, on European Commission, approved another important nasally delivered emergency medicine, NEFI, and your NEFI, nasally delivered epinephrine, is now available on the market. We have been working on this project for about six years, and it capitalizes on our delivery system proven FDA required reliability of 99.999% for emergency medications. This reliability is backed by some 30 years of field data, which is essential when you're dealing with the dosing and dispensing of lifesaving medications. As we have said, when a new medication is launched, it generally takes a few years to hit the steady sales trajectory. Over time, we believe we will see nasally delivered epinephrine become an exciting new application. Over the last few years, we have focused our capital allocation toward organic growth for our pharma business, but we are always exploring potential acquisitions that can strengthen our market position and deepen our moat. So recently, we acquired all technology assets from the proprietary portfolio of Cipnos, a company focused on intranasal delivery platforms for local, systemic, and central nervous system indications. all growth areas for APTA Pharma. This transaction offers additional intellectual property to fit a wide range of therapies and offers the opportunity to precisely target areas of the nasal cavity to enable enhanced systemic local or even direct nose to brain delivery. Acquiring the IP assets of the SIP nodes expands our patent product portfolio and supports new product development to further supplement intranatal delivery applications and R&D innovation platforms. Two weeks ago, our board of directors visited a new state-of-the-art injectable facility in Grandville in Normandy in France, just as some of our newly installed, highly automated manufacturing lines were being tested. We are bullish about the future of our injectables business. The majority of new drugs that come on the market are in injectable format, and 50% of those are biologics. To meet this growing market need, our Normandy, France, and Congress New York facilities will be focused on higher value components and services, including premium fill and premium code, which are designed to optimize drug integrity and patient safety. Requirements for ready-to-use components which are sterilized are only increasing with the launch of NX1 in Europe in 2023. Looking ahead, we see a number of biologic projects filling our pipeline, including GLP-1 and blood factor drugs developed from blood derivatives. As an aside, we recently celebrated a capacity expansion at our Congress New York facility, a key step in our global expansion program, which supports growing proprietary drug delivery systems in our injectable business in North America. The building extension enhances warehousing, clean room and manufacturing capabilities and adds an additional nearly 30,000 square feet of manufacturing footprint. I also want to touch on two exciting announcements from our active material science division. Earlier this week, we announced that we were awarded a contract from the U.S. federal government to advance development of our active shield sterilization technology. This innovative solution sterilizes medical devices without the need for a power source, making it ideal for remote environments, military settings, and healthcare facilities with limited or no current sterilization capabilities. In September, we also announced that NSORP, a technology that mitigates nitrosamine impurities, has been accepted into the FDA's Emerging Technology Program, which helps promote the adoption of innovative approaches to pharmaceutical product design and manufacturing. Our ability to mitigate nitrosamine formation with active material science introduces a critical quality control element designed to ensure patient safety. We are eager to collaborate with the FDA to empower pharma brands with this innovative offering. Before I touch on recognitions and new innovations for quarter three, I want to provide an update as we recently closed on the previously announced JV with a pump manufacturer in China, acquiring a 40% stake. As a reminder, through this partnership, APTA will have access to cost-effective pump manufacturing, faster go-to-market agility, and a more complete end-to-end local supply chain, all of which will further strengthen our competitiveness in the region and beyond. Additionally, we will have access to competitive mold and machine building capabilities that can be used globally and will provide us with high-quality and lower-cost capital investment alternatives. Finally, the partnership will also give us access to much-needed energization capabilities used across our pharma and beauty segments. Now, turning to the recent recognitions received in the quarter, Time named APTA among the world's best companies of 2024. This Great recognition reflects our steadfast commitment to employee satisfaction and transparency in environment, social and governance data reporting. We were also recently named to 3BL's ranking of the 100 best corporate citizens. This ranking evaluates roughly 1,000 companies based on 223 ESG factors across seven pillars. Now switching to new launches and innovation as shown on slide four, For our pharma segment, our nasal spray and bag on mouth technology was featured on new nasal saline launches in the US, including one for the brand Sudafed. We have also entered into an exclusive collaboration agreement with PulmoTree to lead the development and promotion of their Colibri non-propellant liquid inhaler platform. We are providing our robust support services and will be the main point of contact for customers. Now turning to our beauty business, Pooch is featuring our prestige fragrance pump on its Paco Rabanne Lady Million fragrance in Europe. Our dispensing pumps are featured on Tresemme hair care products by Unilever in Latin America and the BioStove Eucerin brand cleansing gel in Europe. Finally, our NeoDropper technology for the controlled application of serums is featured with the Freyda brand hair care product in Asia. In closures, we continue to bring innovation to store aisles with our solutions. Campbell launched its paste taco sauces in an easy squeeze inverted bottle using our closure with simply squeeze valve. Kraft Heinz and IHOP teamed up to launch a syrup with our poor spout closure. In personal care, our new lightweight desktop is the dispensing solution for Paul Mitchell's clean beauty shampoo and conditioner. Now I would like to turn the call over to Bob.