AptarGroup, Inc. (ATR)

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AptarGroup, Inc. (ATR)

Q3 2012 Earnings Conference Call

November 2, 2012 09:00 AM ET


Matthew DellaMaria - Vice President, Investor Relations

Stephen Hagge - President and Chief Executive Officer

Robert Kuhn - Executive Vice President, Chief Financial Officer and Secretary


Matt Wooden[ph] - Robert W. Baird

Christopher Manuel - Wells Fargo Securities

Earnie[ph] – Credit Suisse

Gregory Halter - Great Lakes Review

Ryan Sundby - William Blair & Company

Brian Gary Rafn - Morgan Dempsey

Todd Wenning – Morningstar



Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup’s 2012 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) Introducing today’s conference call is Mr. Matt DellaMaria, Vice President, Investor Relations. Please go ahead, sir.

Matthew DellaMaria

Thank you, (Audio Gap) call with an overview of our quarterly performance. Bob will then discuss our financial results in greater detail, after which we’ll open it up for questions.

Information that will be discussed on today’s call includes some forward-looking comments. Actual results or outcomes could differ from those projected or contained in the forward-looking statements. Please refer to AptarGroup’s SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements. We will post a replay of this conference call on our website. AptarGroup undertakes no obligation to update the forward-looking information contained therein.

I would now like to turn the conference over to Steve.

Stephen Hagge

Thanks, Matt, and good morning, everyone. First of I would like to say our thoughts go out to the families who were affected by the terrible storm this week. I am sure many of you on the call today were impacted in some way and I want to thank you for making the effort to participate in today’s conference all. Thankfully, none of our people were harmed during the storm and none of our facilities were significantly damaged. We have 5 facilities in the region, all were affected by loss of power for a couple of days, and as of today 4 were back online and 1 is still waiting for power to be restored. Right now it’s too early to say what impact this will have on our business.

Yesterday we reported results for the third quarter. The consistent focus by our people on our customer end markets combined with the diversity of our business once again allowed us to achieve growth in a challenging environment. As anticipated, currency exchange rates continue to have a significant negative effect on our sales and earnings and we saw softness in selected markets. The softness is coming from certain customers remaining cautious given the current level of economic uncertainty and in some markets due to inventory management efforts. In spite of the challenges we continue to execute our strategy and we remain committed to investing in our research and development efforts. I remain encouraged by the good level of project dialog we are having with our customers across each of our segments.

Now looking at our segments performance for the quarter. Our Beauty & Home segment was negatively affected by the softness in the European beauty market, but this was offset by growth in the personal care markets. The beauty market is where we saw the most caution on the part of our customers in the quarter. However, project activity remains at a good level for our Beauty & Home products, and we participated in several new launches for our customers this quarter, which include Procter & Gamble’s new James Bond 007 Fragrance, which was introduced with our spray pump. Several new fragrance were equipped with our unique retro valve atomizer, including (inaudible) lily divine fragrance. In the personal care area, Guess brand introduced two men’s body deodorants in Europe using our spray systems and locking actuators. In the Home care market, the Glade brand’s fall collection of air fresheners are equipped with our twist to lock actuators.

Now, looking at our Pharma segment, demand for our nasal delivery devices from the prescription drug market increased over the prior year, but this growth was not enough to offset the decline in sales to the consumer and healthcare market, which was down principally due to softer demand from Eastern Europe. The fact that last year at this time our consumer healthcare business was growing at around 30%. We’re particularly pleased that our innovative dose indicator known as Landmark has been launched on two products since September. One of these being an asthma medication in Europe and the other an allergy medicine in the US. This is an exciting entry into the market with our patient friendly dose counting technology.

In the quarter, there were several interesting consumer healthcare launches which include various nasal moisturizing products using our nasal spray pumps in Europe and two ophthalmic product introductions, one in Switzerland and one in Argentina. We also include the results of Aptar Stelmi for the first time. Bob will go over the impact to their results in the quarter in his comments.

We are extremely pleased with the progress of Aptar Stelmi integration and the efforts of the combined team to make sure the business continues to grow uninterrupted. Our customer feedback has been very positive and the demand for Aptar Stelmi’s product has been strong throughout 2012. As we mentioned in the press release, volumes were up 9% in the third quarter compared to the prior year. We continue to be excited about the opportunities to grow this business.

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