Aptargroup Inc Q3 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: George Staphos - Bank of America - Analyst : Hi, thanks everyone. Good morning. I guess, I'll start Bob and I'm sure everybody is going to say this from the bottom of our heart. Thank you for everything you've done to support our research of Aptar in the industry over the years. We really, really appreciate it and we will miss you and we welcome Vanessa. Thanks, Bob.

Question: George Staphos - Bank of America - Analyst : I guess my first -- all of our baseball debates notwithstanding. I guess the first question I had for you, for the team, do you have given the macro holding everything else constant recognizing comparisons are tough and China is weak. Do you have the elements in place so that beauty which is making progress can be at 15% margin in 2025. What do you need to do, what needs to go right? Can you get there? Related question, how far off right now is China in beauty from normal if there's a way to dimensionalize that and then the follow on. Thank you.

Question: George Staphos - Bank of America - Analyst : Stephan, and I recognize that maybe kind of a point of clarification on that question and my follow on. So recognizing China beauty touches more than just China itself, obviously, it affects your production around the world and particularly in Europe. Is there a way to say, okay, your level of activity as much as you can analyze is that X right now related to China beauty demand and it would be at X times some number or indexed in a normal environment. And then my follow on is a way to dimensionalize some of the inventory issues that you mentioned into fourth quarter for cough and cold. And I think you're all set for beauty. Thank you.

Question: George Staphos - Bank of America - Analyst : Okay, thank you. I'll turn it over.

Question: Ghansham Panjabi - Robert W. Baird & Co., Inc. - Analyst : Thank you, operator. Good morning, everybody. And yeah, Bob, I just want to echo George's comments as well. I congratulate you and your family on, obviously a very successful career. You'll definitely be missed by all of us and also best questions to Vanessa in her new role as well. I guess, first off on the pharmaceutical side and the new products that you highlighted is that a higher new product cadence than is typical or is it just part of what underpins the aggregate growth of 7% to 11% for that segment? And I guess I'm thinking more specifically about the outlook for 2025.

Question: George Staphos - Bank of America - Analyst : Yeah. So I guess that's the point. So would that point towards a higher portion of that 7% to 11% range?

Question: George Staphos - Bank of America - Analyst : Your last call, it's your last call, you know.

Question: Ghansham Panjabi - Robert W. Baird & Co., Inc. - Analyst : All right. I will let that go for now. And then also in terms of, prestige fragrances and the volumes, I understand the comps are difficult and so on and so forth. But having covered the ingredients producers as well that make the molecules with the fragrances. I mean, they're still seeing decent growth there. Some of the major customers are also seeing, moderation but decent growth as well. So I'm wondering what specifically are you seeing as it relates to weaknesses that seems to be a little bit more disproportionate to you?

Question: Ghansham Panjabi - Robert W. Baird & Co., Inc. - Analyst : Okay. And then in terms of the $0.5 billion share repurchase authorization, which is a pretty substantial number. Is this sort of a new pivot towards, maybe returning capital to shareholders more directly through share buybacks or is it just an extension as it relates to optionality for yourselves?

Question: Ghansham Panjabi - Robert W. Baird & Co., Inc. - Analyst : Okay. Very helpful. Congrats again, Bob.

Question: Daniel Rizzo - Jefferies - Analyst : Hi, everyone and thanks for taking my call -- my question. Excuse me. You mentioned in the -- I think in the prepared remarks or in the release that it takes a couple years, I think for new products to kind of ramp. I was wondering if OTC Narcan is like that too where we still haven't hit the kind of the run rate yet? Or is it a kind of a different product because of its unique use where it's already kind of ramped up?

Question: Daniel Rizzo - Jefferies - Analyst : Thank you. That's helpful. And then you talked a little bit about cough and cold about consumer, your customers kind of managing inventory a little bit differently than they used to, has been spun out. But the rest was kind of garbled. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, ATR.N - Q3 2024 Aptargroup Inc Earnings Call Just in terms of just this winter, I mean, garbled in terms of what I heard because my phone. Is the cough and cold season starting off slower than expected? I mean, is it just been mild winter, winter being an issue yet or is it too soon to say that or how should we think about it.

Question: Daniel Rizzo - Jefferies - Analyst : And for the record, it was my phone, not you that was garbled.

Question: Daniel Rizzo - Jefferies - Analyst : I'm sorry, last question. What's the sales cycle for beauty products? How long does it take to get like a new product? I guess it kind of varies depending on what you're creating. But I was wondering as you kind of take back North America, so to speak, is there a couple years kind of ramp time? I'm just talking about from a from a revenue perspective?

Question: Daniel Rizzo - Jefferies - Analyst : All right, thank you very much.

Question: Matt Larew - William Blair & Company - Analyst : Hi, good morning. I wanted to ask about injectables obviously, up year-to-date here, but down in the quarter. Obviously, other peers that talked about destocking you'd referenced that it really hasn't been an issue for you. Just wanted to check to make sure that was still the case. And then I guess thinking about or maybe asking about when we can get back to perhaps more regular cadence of growth and injectables. Obviously, in light of capacity coming online in Normandy and at Congress? Thanks.

Question: Matt Larew - William Blair & Company - Analyst : Okay. And then maybe just on profitability for the injectable side, obviously, you're nasal delivery business, much larger, more mature, you've recently added a lot of capacity for injectables. Would you give us a sense for sort of where you're seeing profitability right now and what the opportunity is improvement there as you scale?

Question: Matt Larew - William Blair & Company - Analyst : Okay, thanks. I appreciate it. Bob, congrats.

Question: Gabe Hajde - Wells Fargo Securities, LLC - Analyst : Stephan, Bob, Mary, good morning echo all the kind words to you, Mr. Kim. Stephan, you said it, you guys are kind of a story of kind of singles and doubles. I noticed this Sudafed kind of nasal product that you highlighted as a new item this quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, ATR.N - Q3 2024 Aptargroup Inc Earnings Call Can you talk about -- I guess at least in meetings, sometimes you talk about Europeans more inclined to use nasal cleansing and things like that as part of their daily routine. Based on sort of your dialogue with the customer here or -- and I know it's sensitive, but just is that sort of their intention to maybe bring some of that type of behavior here with a with a branded product? Just maybe again, it's over the counter is more accessible for consumers and you might get a bigger pop initially from over the counter versus maybe something like neffy. Just trying to dimensionalize the opportunity there.

Question: Gabe Hajde - Wells Fargo Securities, LLC - Analyst : Okay. Thank you for that. And then you mentioned kind of working on neffy for six years, and I'm just going to try to get to Ghansham's question. You said good growth for '25 pharma. But just as you look across, the platform in pharma, we go into the presentation you guys provided in at the France site visit. I think, weighted value of pipeline is still up 41% which is pretty robust given a lot of the commercialization you've had. So just I know it's tough but, maybe from a stage gate perspective projects that you're working on, that you're excited about maybe over the next two or three years that we could be hearing about or just how to think about -- again, it's just, I guess, gives you confidence in the 7% to 11% growth. How should we think about it?

Question: Gabe Hajde - Wells Fargo Securities, LLC - Analyst : Great. Thank you. And Bob maybe one for you just so we can calibrate. I know Q1 you tend to have a little bit higher incentive or I should say stock based comp expense flowing through. Is there anything else that we should be mindful of when thinking about kind of the first half or the first quarter for '25?

Question: Gabe Hajde - Wells Fargo Securities, LLC - Analyst : Thank you.

Question: George Staphos - Bank of America - Analyst : Thanks so much. Follow on question on pharma. When we were visiting you a few weeks ago, and then I think even on today's call, there was some reference to nasally delivered treatments, targeting the brain, Stephan. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 25, 2024 / 1:00PM, ATR.N - Q3 2024 Aptargroup Inc Earnings Call And so I was wondering if there's a way to, again recognizing it's not necessarily going to move next quarter, what that opportunity might look like. And if I misheard, please, correct me where you're going with the trends there and what that revenue opportunity might look like. And does it come through your traditional devices? Does it come through powder? Any thoughts there that you can share would be great. Thank you and good luck in the quarter.

Question: George Staphos - Bank of America - Analyst : Is there a way to -- I'm guessing it's going to be a reason why you think, comfortably about the, 7% to 11% growth, but is there a way that, that perhaps adds margin or incremental revenue beyond the trend line for pharma in the next three years. And then, separate totally unrelated question to the extent that you've been successful and recognizing it's a challenging topic, it's never a happy topic about, rightsizing your footprint, closing facilities where you've needed to. Is there potentially more of that required to get to the margin that you need over the next couple of years in beauty or not necessarily, you just need the markets to do what they would normally do. Thank you and good luck again in the quarter.

Question: George Staphos - Bank of America - Analyst : Understood. Thank you so much.