AptarGroup(ATR) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Reported sales increased by 16% and core sales grew by 10% compared to the previous year, with EBITDA improvement noted [6][19] - Adjusted earnings per share rose by 7% to $0.91, while adjusted EBITDA increased by 8% to $148 million [19][20] - The overall adjusted EBITDA margin would have been approximately 180 basis points higher without the negative inflation impact [19] Business Line Data and Key Metrics Changes - Pharma segment saw a core sales growth of 2%, with a 14% increase in sales to the injectables market, primarily driven by vaccine administration [20][21] - Beauty + Home segment reported a 13% increase in core sales, with 75% of the growth attributed to increased volumes [22][23] - Food + Beverage segment experienced a 23% increase in core sales, with 60% of this growth coming from price adjustments due to higher resin costs [24] Market Data and Key Metrics Changes - Core sales to the prescription market decreased by 7%, while consumer healthcare sales fell by 1% due to inventory destocking [21] - Core sales to the beauty market increased by 28%, while personal care sales decreased by 1% as hand sanitizer demand normalized [23] - Core sales to the food market increased by 21%, and beverage market sales rose by 26% as demand for home cooking continued [24] Company Strategy and Development Direction - The company is actively pursuing M&A opportunities, including the acquisition of Voluntis and Weihai Hengyu Medical Products to strengthen its position in digital health and injectable markets [10][11] - Focus on sustainability initiatives and partnerships to promote a circular economy, including a collaboration with REBO for reusable products [11][12] - The company aims to expand capacity in high-growth regions and markets while maintaining a strong balance sheet with a leverage ratio of approximately 1.5 [26][29] Management's Comments on Operating Environment and Future Outlook - Management anticipates a gradual recovery in the beauty, beverage, and prescription pharma businesses, with a stronger performance expected towards the end of the year [28][29] - The ongoing uncertainty regarding economic recovery and customer caution may impact short-term performance, particularly in the prescription drug market [25][28] - Management remains optimistic about the long-term outlook, emphasizing the importance of strategic investments for future growth [29] Other Important Information - The company was recognized among the top 50 companies for ESG performance, highlighting its commitment to sustainability [12] - The board welcomed a new member, Candace Matthews, who brings extensive experience in various industries [13] Q&A Session Summary Question: Corporate expense increase - The increase was driven by strategic activities and variable costs, with expectations to stabilize between $14 million and $15 million going forward [33] Question: Pharma segment performance - The prescription market's decline is attributed to inventory destocking, with expectations for recovery in Q4 based on customer conversations [34][36] Question: Impact of acquisitions - The Weihai Hengyu acquisition enhances local supply capabilities in China, while Voluntis strengthens digital therapy capabilities [38][39] Question: Visibility on elastomer business - The company has a broad order portfolio for both COVID and traditional vaccines, indicating confidence in continued growth [46] Question: Inflationary pressures - Inflation negatively impacted margins, with expectations for a net negative impact in Q3, though improvements are anticipated [49][86] Question: Recovery in Beauty and Home segment - The segment is approaching pre-COVID levels, with Q2 volumes at about 95% of 2019 levels [61] Question: Overall impact of the pandemic on Pharma - The pandemic has had a net positive impact on the Pharma business, increasing exposure to new customers and driving innovation [82]