Aptar is a global leader in the design and manufacturing of a broad range of innovative drug delivery, and consumer product dispensing, sealing and active packagingmaterial science solutions and services. Aptar's innovative solutions and services for the prescription drug, consumer health care, injectables, active packaging,serve a variety of end markets including pharmaceutical, beauty, personal care, home care, food and beverage markets. Aptar usesbeverage. Using insights, proprietary design, engineering and science to create dispensing, dosing dispensing, and protective packaging technologies for many of the world's leading brands, Aptar in turn makingmakes a meaningful difference in the lives, looks, health and homes of peoplemillions of patients and consumers around the world. Aptar is headquartered in Crystal Lake, Illinois and has approximately 13,00013,500 dedicated employees in 20 different countries. For more information, visit www.aptar.com.

Our business was started in the late 1940’s, manufacturing and selling aerosol valves in the United States, and has grown primarily through acquisitions and internal expansion. In this report, we may refer to AptarGroup, Inc. and its subsidiaries as “AptarGroup”, “Aptar” or the “Company”.

We have manufacturing facilities located throughout the world including North America, Europe, Asia and SouthLatin America. We have approximately 6,0005,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of our 20202022 Net Sales.

Consumers’ preferenceand patients' preferences for convenience and product differentiation through drug delivery and packaging design and function are important to our customers and they have converted many of their packages from non-dispensing formats to dispensing systems that offer enhanced shelf appeal, convenience, cleanliness and accuracy of dosage. We design our products with both people and the environment in mind. Many of our product solutions for the beauty, personal care, home care, food and beverage markets are recyclable, reusable or made with recycled content.

We partner with our customers by providing innovative delivery systems and a suite of comprehensive services to help them succeed. While we offer a wide variety of services and products, our primary products are dispensing pumps, closures, aerosol valves, elastomeric primary packaging components, active material science solutions and active packagingdigital health solutions.

Dispensing pumps are finger-actuated dispensing systems that dispense a spray or lotion from non-pressurized containers. The style of pump used depends largely on the nature of the product being dispensed, from small, fine mist pumps used with pharmaceutical products and perfume to lotion pumps for more viscous formulas.

Closures are primarily dispensing closures but to a lesser degree can include non-dispensing closures. Dispensing closures are plastic caps that allow a product to be dispensed without removing the cap.

Aerosol valves dispense product from pressurized containers. Thecontainers.The majority of the aerosol valves that we sell are metered dose continuous spray valves, with the balance being bag-on valvemetered dose valves and continuous spraybag-on valves.

We also manufacture and sell elastomeric primary packaging components. These components are used in the injectables market. Products include stoppers for infusion, antibiotic, lyophilization and diagnostic vials. Our elastomeric components also include pre-filled syringe components, such as plungers, needle shields, tip caps and cartridges, as well as dropper bulbs and syringe plungers.cartridges.

We provide active packaging solutions via our material science solutions using our platform technology which maintainsto maintain container closure integrity, extend shelf-life, control moisture and protect drug products from overall environmental exposures and degradations.

Our digital health solutions aim to improve patients' treatment experience and outcomes. We leverage connected devices, diagnostic and digital therapeutics tools that support patients to manage their disease as well as enabling care teams to remotely monitor the integrityhealth of the container contents, extends shelf-life, controls moisturepatients when needed. Available as standalone or as a fully integrated offering in our existing range of drug delivery solutions, we have digital health solutions covering a wide range of therapeutic areas including, but not limited to, pulmonary, oncology, diabetes, immunology, and reduces oxygenation. Our active packaging solutions remove gasses from the interior of the package environment and remove odor and other harmful contaminants.neurology.

During 20202022 and 2019,2021, we acquired several companies to strengthen and broaden our portfolio, including the following business combinations and asset purchases:

To further broaden our portfolio, during 2020 and 2019, we also investedmade the following equity investment in several equity2021 (no investments including:were made in 2022):

Refer to Note 19-19 – Acquisitions and Note 20 - Investments– Investment in Equity Securities in Part II, Item 8 – Consolidated Financial Statements and Supplementary Data for further details on acquisitionacquisitions and related investment activities.

We seek to enhance our position as a leading global provider of innovative drug delivery, and consumer product dispensing sealing,and active packagingmaterial science solutions and services to deliver increased value to our customers and stockholders through strategic focus and execution in the following areas:

Facilitating the execution of our strategy are our core values, which dictate how we interact internally and externally with our employees, customers, suppliers and all stakeholders.

OurDuring the year ended December 31, 2022, our organizational structure consistsconsisted of three market-focused business segments: Pharma, Beauty + Home and Food + Beverage. This

Operations that sell dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health solutions markets formed the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the beauty, personal care and home care markets formed the Beauty + Home segment. Operations that sell dispensing systems, sealing solutions and food service trays to the food and beverage markets formed the Food + Beverage segment. Each of these three business segments is a strategic structure which allows us to bedescribed more closely aligned with our customers and the markets in which they operate.fully below. We primarily sell our products and services through our own sales force to pharmaceutical, health care, beauty, personal care, home care, food and beverage marketers. To a limited extent, we use independent representatives and distributors to increase our reach to smaller customers and export markets.

Operations that sell dispensing systems, drug delivery systems, sealing solutionsEffective January 1, 2023, there was a realignment of two of our segments, allowing us to better serve our customers and servicespositioning us for long-term profitable growth. We will continue to the prescription drug, consumer health care, injectableshave three reporting segments and active packagingthey will be called Aptar Pharma, Aptar Beauty and Aptar Closures.

We are combining all of our closures operations into a single segment - Aptar Closures. The Aptar Closures business will serve multiple markets, form the Pharma segment. Operations that sell dispensing systems and sealing solutions primarily to the beauty,including food, beverage, personal care, and home care, markets form thebeauty and healthcare. Closures that were developed in Beauty + Home segment. Operations that sell dispensing systems and sealing solutionsPharma will move to Aptar Closures together with the food and beverage markets form theoperations of legacy Food + BeverageBeverage. Aptar's food protection business and our elastomeric flow-control technology business will continue to report through the Aptar Closures segment. Each

At the same time, we are simplifying and focusing our Beauty + Home segment to better leverage our complex spray and dispensing solutions for prestige and premium brands in the beauty and personal care markets. For many of these three business segments is described more fully below.our customers, personal care products are considered part of "beauty" and so we are renaming this segment, simply, Aptar Beauty.

TheOur Pharma segment is our largest segment in terms of profitability, accountingaccounted for 68%65% of our Adjusted EBITDA excluding non-allocated corporate costs in 2022, and is our second largest segment in terms of net sales and our largest segment in terms of total assets, accounting for 42%representing 41% and 39%45% of our Net Sales and Total Assets, respectively, in 2020.for 2022. We believe we are a leading supplier of nasal drug delivery spray pumps and metered dose inhaler valves (“MDIs”) to the pharmaceutical and health care markets worldwide and we are an important supplier of elastomer for injectable primary packaging components worldwide. We also provide services designed to accelerate and de-risk the development and regulatory approvals of drugs using drug delivery devices. Characteristics of this market include (i) governmental regulation of our pharmaceutical customers, (ii) contaminant-controlled manufacturing environments and (iii) a significant amount of time and research from initially working with pharmaceutical companies at the molecular development stage of a medication through the eventual distribution to the market. We have clean-room manufacturing facilities in Argentina, China, France, Germany, India, Switzerland and the United States. We believe that providing value-added, convenient drug delivery and dispensing systems will continue to offer opportunities for our business. In addition, we believe there are opportunities for growth in the over-the-counter and generic pharmaceutical categories.

MDIs are used for dispensing precise amounts of aerosolized medication. This technology allows medication to be broken up into very fine particles, which enables the drug to be delivered typically via the pulmonary route. Currently the majority of our MDIs sold are used for respiratory ailments such as asthma and COPD (chronicchronic obstructive pulmonary disease)disease (COPD).

We continue to develop new drug delivery and dispensing systems and accessories in this segment. For example, we provide single dose delivery devices suitable for central nervous system applications. While we expect that these types of new products will come to market in the future, it is difficult to estimate when, as the rigors of pharmaceutical regulations affect the timing of product introductions by our pharmaceutical customers that use our drug delivery and dispensing systems.

TheOur Beauty + Home segment is our second largest segment in terms of profitability, accountingaccounted for 21%24% of our Adjusted EBITDA excluding non-allocated corporate costs in 2022, and is our largest segment in terms of net sales and our second largest in terms of total assets, representing 44%43% and 40%39% of our Net Sales and Total Assets, respectively, in 2020.for 2022. The Beauty + Home segment primarily sells pumps and decorative components to the beauty market and pumps, closures, aerosol valves, accessories and sealing solutions to the personal care and home care markets. We believe we are a leading supplier for the majority of the products we sell primarily to the beauty and personal care markets.

TheOur Food + Beverage segment is our smallest segment in terms of profitability, net sales and total assets, representingaccounted for 11%, 14% and 14%, respectively, of our Adjusted EBITDA excluding non-allocated corporate costs, 16% of our Net Sales and 13% of our Total Assets in 2020.for 2022. We primarily sell dispensing closures and, to a lesser degree, non-dispensing closures, elastomeric flow controlflow-control components, spray pumps and aerosol valves.

Sales of dispensing closures have grown as consumers worldwide have demonstrated a preference for a package utilizing the convenience of a dispensing closure. At the same time, consumer marketers are trying to differentiate their products by incorporating performance enhancing features such as bonded aluminum liners to plastic, flow-control and no-drip dispensing, inverted packaging and directional flow to make packages simpler to use, cleaner and more appealing to consumers. We also have an increasing number of product solutions that address the increased use of flexible packaging formats.

Our commitment to innovation, one of our competitive strengths, has resulted in an emphasis on research and development directed toward developing affordable, new, sustainable and innovative packaging, drug delivery solutions and connected devices and adapting existing products for new markets or customer requirements. In certain cases, our customers share in the research and development expenses of customer initiated projects. Occasionally, we acquire or license from third parties technologies or products that are in various stages of development.

The majority of our worldwide production is located outside of the United States. Our philosophy is to produce as much as possible in the region where it will be sold. In order to augment capacity and to maximize internal capacity utilization (particularly for plastic injection molding), we use subcontractors to supply certain plastic metal and rubbermetal components. Certain suppliers of these components have unique technical abilities that make us dependent on them, particularly for aerosol valve and pump production. The principal raw materials used in our production are plastic resins, silicone, rubber and certain metal products. We believe an adequate supply of such raw materials is available from existing and alternative sources. We attempt to offset cost increases through improving productivity and developing new, higher margin solutions and increasing selling prices, as allowed by market conditions or contractual commitments. We source certain materials, especially some resins and rubber components for our pharmaceutical segment, from a single source. Significant delays in receiving these components or discontinuance of an approved raw material would require us to seek alternative sources, which could result in higher costs as well as impact our ability to supply products in the short-term. While there have been some supply chain disruptions due to confinements through the pandemic,We believe we have not been materially impacted by such disruptions.adequate safety stock to mitigate any significant supply concerns.

We have approximately 6,0005,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of 20202022 Net Sales. From time to time our customer base experiences normal consolidation events and this trend is expected to continue. A concentration of customers presents opportunities for increasing sales due to the breadth of our product line, our international presence and our long-term relationships with certain customers. However, consolidation of our customers could lead to pricing pressures, concentration of credit risk and fewer opportunities to introduce new products to the market.

We are geographically diverse with manufacturing and sales operations in Asia, Europe, Latin America (including Mexico) and North America. Europe is our largest region in terms of sales, where sales (including exports) for the years ended December 31, 20202022 and 20192021 were approximately 55% and 57%, respectively,53% of our consolidated sales. Asia and Latin America when aggregated represented approximately 12%14% and 14%13% of our consolidated sales for the years ended December 31, 20202022 and 2019,2021, respectively. Export sales from the United States were $179.0$211.1 million and $170.0$204.6 million in 20202022 and 2019,2021, respectively. Although Europe represents the largest region for us in terms of sales, our beauty and pharmaceutical customers often export their finished products using our technology around the world for consumption. We are a net exporter of goods from Europe and a net importer of goods to the North American, Asian and Latin American regions.

Because of our international presence, movements in exchange rates have a significant impact on the translation of the financial statements of our foreign subsidiaries. Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and SouthLatin American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies.

As of December 31, 2020, AptarGroup has2022, Aptar had approximately 13,00013,500 full-time employees. Of the full-time employees, approximately 7,900 are8,200 were located in Europe, 2,600 are2,800 were located in Asia and SouthLatin America and the remaining 2,500 arewere located in North America. The majority of our European and Latin American employees are covered by collective bargaining arrangements made at either the local or national level in their respective countries and approximately 60 of the North American employees are covered by a collective bargaining agreement.countries. The total labor force covered by a collective bargaining agreement represents 57%49.3% of the total employee population. Termination of employees at certain of our international operations could be costly due to local regulations regarding severance benefits. There were no material work stoppages in 20202022 and management considers our employee relations to be satisfactory.

All of the markets in which we operate are highly competitive and we continue to experience price competition in all product lines and markets. Competitors include privately and publicly held entities that range from regional to international companies. We expect the market for our products to remain competitive, as consolidation among our competitors is increasing in the current economic climate. We believe our competitive advantages areinclude our consistent high levels of innovation, quality and service, geographic diversity, financial strength and stability and breadth of products and services. Our manufacturing strength lies in the ability to mold complex plastic components and formulate and finish elastomer and silicone components in a cost-effective manner and to assemble products at high speeds. Our business is somewhat capital intensive and it is becoming more important to our customers that we have global manufacturing capabilities. Both of these serve as barriers to entry for new competitors wanting to enter our business. Furthermore, within our Pharma business, increasing regulatory hurdles present a barrierchallenge for new competitors to enter the market.

While we have experienced some competition in Europe, Latin America and the United States from low cost Asian suppliers, particularly in the beauty and personal care market, this has not been significant. Although using low cost Asian suppliers may have a cost advantage, somemore and more customers prefer local suppliers citing better quality, better customershorter lead times, higher reactivity and service, and shorter lead times.stronger safety of supply. We have also recently reduced our carbon footprint due to shorter supply chain networks being utilized,the increased use of lower-carbon fuels within some of our shipping lanes, which we see as a competitive advantage.

Our manufacturing operations primarily involve plastic injection molding, automated assembly processes, elastomer and silicone formulation and finishing and, to a limited degree, metal anodization and vacuum metallization of plastic components. Historically, the environmental impact of these processes has been minimal, and we believe we meet current environmental standards in all material respects. To date, our manufacturing operations have not been significantly affected by environmental laws and regulations relating to the environment.

Recently,In 2020, we formalized our science-based targets, setting ana Scope 1 and Scope 2 emissions reduction goal consistent with requirements to keep global warming well-belowwell below 2° Celsius by year 2030, and a Scope 3 reduction goal consistent with requirements to keep global warming at 2° Celsius by year 2030. We surpassed our original Scope 1 and Scope 2 reduction target within the first year of validation by the Science Based Targets Initiative (SBTi). Therefore, in 2022 we began working with SBTi to revise the Scope 1 and Scope 2 target to a more aggressive ambition, and to align it to the requirements to keep global warming at 1.5° Celsius by 2030. Aptar’s Scope 3 ambition remains the same, as does our commitment to increase annual sourcing of renewable electricity to 100% by 2030. This science-based approach incorporates our own operations and operations within the value chain. In addition, we annually undergo data assurance as part of our sustainability reporting. This assurance process allows for data on consumption of electricity, fuel oil, and natural gas and renewable energy purchases to be verified for accuracy and completeness by an external organization. Globally this process is certified to the ISO 14064 standard for energy and greenhouse gas emission reporting.

Compared to our 2019 baseline, Aptar was recognized for its actionshas made progress cutting emissions, and continues efforts to cut emissions, mitigate climate risks and further the low-carbon economy, based on the dataas reported by the Company through global environmental non-profit CDP's 20202022 climate change questionnaire. Of more than 5,800 companies that were scored through the platform, Aptar is among the 273 companies securing a place on its prestigious 'A List' for tackling climate change. Through significant demonstrable action on climate change,and water questionnaires. We believe Aptar is leading on corporate environmental ambition, action and transparency worldwide.worldwide as proven by our "A-" letter grades on both the 2022 CDP climate change and water assessments.

We are actively collaborating with our customers on reliable products by supporting our customers’ participation in the circular e-commerce platform called “Loop,”Loop in addition to being an investor in Loop ourselves. We also invested in and partnered with PureCycle Technologies, to prepare for the introduction of Ultra-Pure Recycled Polypropylene (UPRP) into dispensing product applications.

Connecting with other companies through organizations like Ellen MacArthur Foundation’s New Plastics Economy and the World Business Council for Sustainable Development (WBCSD) provides an invaluable opportunity to share best practices and work on larger projects with aligned objectives towardstoward a more circular economy.

Future regulations on environmental matters regarding recycling or material inputs could impact our business.

The KigaliOn October 15, 2016, 197 countries adopted an amendment to the Montreal Protocol plans to phase down hydrofluorocarbon (HFC) propellants from baseline to 15% in order to reduce greenhouse gas emission.emission under the Montreal Protocol in Kigali, Rwanda. Under the amendment, countries committed to cut the production and consumption of HFC propellants by more than 80% over the next 30 years. This type of propellant is used for pressurized metered-dose inhalers (pMDI). The phase down plan has an exemption for pharmaceutical product applications of pMDIs; however, customers are looking for alternative propellants to reduce greenhouse gas emissions. We are working with the suppliers of these alternative propellants and our customers to develop new solutions.

Future government regulations could include healthcare cost containment policies. For example, reviews by various governments to determine the number of drugs, or prices thereof, that will be paid by their insurance systems could affect future sales of our pharmaceutical customers’ products and thus adversely impact our sales to these customers. Such regulation could adversely affect prices of and demand for our pharmaceutical products. We believe that the focus on the cost effectiveness of the use of medications as compared to surgery and hospitalization provides us with an opportunity to expand sales to the pharmaceutical market.

Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange CommissionSEC are risks and uncertainties that could cause our actual results or other events to materially differ from the results or events contemplated by the forward-looking statements contained in this report and in other documents we file with the Securities and Exchange Commission.SEC. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. You should carefully consider the following factors in addition to other information contained in this Form 10-Kreport before purchasing any shares of our common stock.

We are also subject to examination of our returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of itsour provision for taxes. There can be no assurance as to the outcome of these examinations. We are also periodically subject to tax assessments resulting from custom duties. If our effective tax rates were to increase in jurisdictions where we have significant operations, or if the ultimate determination of taxes owed or other tax liability is for an amount in excess of amounts previously accrued, our financial condition and operating results could be materially and adversely affected.

We have no unresolved comments from the SEC.

We lease or own our principal offices and manufacturing facilities. None of the owned principal properties is subject to a lien or other encumbrance material to our operations. We believe that existing operating leases will be renegotiated as they expire, will be acquired through purchase options or that suitable alternative properties will be leased on acceptable terms. We consider the condition and extent of utilization of our manufacturing facilities and other properties to be generally good, and the capacity of our plants to be adequate for the needs of our business. We manufacture products in 49 locations, with 1915 of those facilities serving two segments and 5seven serving all three of our segments.segments as of December 31, 2022. The locations of our manufacturing facilities, by geographic region/country, are set forth below:

In the normal course of business, we are subject to a number of lawsuits and claims both actual and potential in nature. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on our financial position or results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur that could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial position, results of operations and cash flows. Please refer to Note 13 -– Commitments and Contingencies in Part II, Item 8 – Consolidated Financial Statements and Supplementary Data for further discussion of contingencies affecting our business.

Not applicable.

Our Common Stockcommon stock is traded on the New York Stock Exchange under the symbol “ATR”. As of February 15, 2021,13, 2023, there were approximately 180160 holders of record of our Common Stock.common stock. A substantially greater number of holders of our Common Stockcommon stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions.

On January 14, 2021,19, 2023, our Board of Directors declared a quarterly cash dividend of $0.36$0.38 per share of Common Stock,common stock, which waswill be paid on February 17, 202123, 2023 to stockholders of record as of January 27, 2021.February 2, 2023. We have paid an increased annual cash dividend total to stockholders each year for the past 29 years. During 2022, we paid $99.5 million in dividends to stockholders. While we expect to continue to pay a regular quarterly dividend of $0.36$0.38 per share in 2021,2023, the timing, declaration, amount and payment of any future cash dividends are at the discretion of the Board of Directors and will depend on our available cash, working capital, financial condition, results of operations, capital requirements, covenants in our credit facility, applicable law and other factors that ourthe Board of Directors considers relevant.

Certain French employees are eligible to participate in the FCP Aptar Savings Plan (the “Plan”). An independent agent purchases shares of Common Stockcommon stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of Common Stockcommon stock under the Plan. The agent under the Plan is Banque Nationale de ParisBNP Paribas Fund Services. No underwriters are used under the Plan. All shares are sold in reliance upon the exemption from registration under the Securities Act of 1933 provided by Regulation S promulgated under that Act. During the quarter ended December 31, 2020,2022, the Plan purchased 1,450did not purchase any shares of our Common Stockcommon stock on behalf of the participants. The Plan sold 5,121 shares of our common stock on behalf of the participants at an average price of $118.19$105.52 per share, for an aggregate amount of $171 thousand, and sold 7,299 shares of our Common Stock on behalf of the participants at an average price of $123.98 per share, for an aggregate amount of $905$540 thousand. At December 31, 2020,2022, the Plan owned 85,127118,132 shares of our Common Stock.common stock.

On April 18, 2019, we announced a share repurchase authorization of up to $350 million of Common Stock.common stock. This authorization replaces previous authorizations and has no expiration date. We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions.

The following graph shows a five year comparison of the cumulative total stockholder return on our Common Stockcommon stock as compared to the cumulative total return of the Standard & Poor’s 500 Composite Stock Price Index and to an index of peer group companies we selected. The companies included in the peer group are: Albemarle Corporation, Ashland Global Holdings Inc., Berry Global Group, Inc., Catalent, Inc., CCL Industries Inc., Hill-Rom Holdings, Inc., ICU Medical, Inc., Ingredion Inc., International Flavors & Fragrances, Inc., McCormick & Company, Inc., Sealed Air Corporation, Sensient Technologies Corporation, Silgan Holdings, Inc., Sonoco Products Company, Stericycle, Inc., STERIS plc, Teleflex Inc. and West Pharmaceutical Services, Inc.

The graph and other information furnished in the section titled “Share Performance” under this Part II, Item 5 of this Form 10-K shall not be deemed to be “soliciting” material or to be “filed” with the Securities and Exchange CommissionSEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.

The objective of the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to help the reader understand the financial performancecondition and results of operations of AptarGroup, Inc. from management's perspective. MD&A is presented in eight sections: Overview, Results of Operations, Liquidity and Capital Resources, Off-Balance Sheet Arrangements, Overview of Contractual Obligations, Recently Issued Accounting Pronouncements,Standards, Critical Accounting Estimates, Operations Outlook and Forward-Looking Statements. MD&A should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K.

In MD&A, “we,” “our,” “us,” “AptarGroup,” “AptarGroup, Inc.”, “Aptar” and the “Company” refer to AptarGroup, Inc. and its consolidated subsidiaries.

Aptar is a global leader in the design and manufacturing of a broad range of innovative drug delivery, and consumer product dispensing sealing,and active packagingmaterial science solutions and services for the prescription drug, consumer health care, injectables, active packaging,pharmaceutical, beauty, personal care, home care, food and beverage markets. We useUsing insights, proprietary design, engineering and science to create dispensing, dosing dispensing, and protective packaging technologies for many of the world's leading brands, Aptar in turn makingmakes a meaningful difference in the lives, looks, health and homes of peoplemillions of patients and consumers around the world.

The following table sets forth the consolidated statements of income and the related percentages of net sales for the periods indicated. Refer to Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 20192021 for additional information regarding Results of Operations for the year ended December 31, 20192021 as compared to the year ended December 31, 2018. Certain previously reported amounts have been reclassified to conform to the current period presentation:2020.

For the year ended December 31, 2022, reported net sales increased 3% to be essential products by various government agencies around$3.32 billion from $3.23 billion a year ago. The average U.S. dollar exchange rate strengthened compared to the world, our facilities remained operational during the year. We have taken a variety of measures to ensure the availabilityeuro and functioning of our critical infrastructure, to promote the safety and security of our employees and to support the communitiesother major currencies in which we operate. These measures include requiring remote working arrangements for employees where practicable. We are following publicoperate, resulting in a negative currency translation impact of 6%. There was no significant impact from our acquisitions of Voluntis S.A. ("Voluntis"), Weihai Hengyu Medical Products Co., Ltd. ("Hengyu") and private sector policiesMetaphase Design Group Inc. ("Metaphase") on our consolidated net sales during 2022. Therefore, core sales, which exclude acquisitions and initiativeschanges in foreign currency rates, increased by 9% in 2022 compared to reduce the transmission2021. Price increases to our customers due to rising inflationary costs had a strong impact on our core sales during 2022. Of our 9% core sales increase, approximately half of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing and the adoption of work-from-home arrangements, and all of these policies and initiatives have impacted our operations.

For further discussion on net sales by reporting segment, please refer to the segment analysis of net sales and operating income on the following pages.

Our cost of sales (“COS”) as a percent of net sales decreasedincreased to 62.9%65.0% in 20202022 compared to 63.6%64.1% in 2019. Our2021. While our COS percentage was positively impacted by ouran improved mix of business asour higher-margin Pharma product sales compared to 2021, this positive impact was more than offset by the under-absorption at certain Beauty + Home and Food + Beverage sites, especially in North America, due to lingering supply chain issues and our customers working off current inventory levels. During 2021, we reported sales growthalso received a $5.6 million favorable Brazilian court ruling that a certain state value added tax should not be included in the calculation of federal gross receipts taxes, which also lowered our higher margin Pharma segment2021 COS percentage. See Note 13 - Commitments and from cost containment efforts made to mitigate the impactContingencies of the COVID-19 pandemic. However, we did experience some additional costs in 2020 due to under-absorbed fixed overhead coming from lower volumes in our dedicated beauty facilities and also from special bonus payments to certain employees who worked to maintain supply to our customers and keep our facilities running, both of which increased our COS percentage during the current year.Condensed Consolidated Financial Statements for further details.

Our Selling, Researchselling, research & Developmentdevelopment and Administrativeadministrative expenses (“SG&A”) increaseddecreased approximately 10%1% or $45.6$7.0 million to $500.2$544.3 million in 20202022 compared to $454.6$551.2 million in 2019.2021. Excluding changes in foreign currency rates, SG&A increased by approximately $46.3$22.7 million compared to the prior year. Of this increase, $3.0 million relates to incremental SG&A costs in 2022 due to our acquisitions of Hengyu and Voluntis which were completed during the third quarter of 2021. The reportedremaining increase is mainly duepartially related to $20.8 million of incremental operationalhigher compensation costs, during 2020including accruals related to our acquired companies.current short-term incentive and equity compensation programs. We also recognized $9.4 million of retention and earn-out compensation for acquired company key employees as part of the Fusion and Noble acquisitions which was partially offset by lower travelhad an increase in information systems costs due to an upgrade of our enterprise reporting system along with higher professional fees for internal projects and higher travel costs compared to 2021. Also, in March 2022 we recorded a $1.4 million expected net credit loss reserve against the COVID-19 pandemic.outstanding note receivable from one of our venture investments (Kali Care). SG&A as a percentage of net sales increaseddecreased to 17.1%16.4% in 2022 compared to 15.9%17.1% in the prior year due to the cost increases mentioned above.year.

Reported depreciation and amortization expense increased approximately 13%decreased less than 1% or $25.7$1.1 million to $220.3$233.7 million in 20202022 compared to $194.6$234.9 million in 2019. The increase was not impacted by2021. Excluding changes in foreign currency rates. The majorityrates, depreciation and amortization expense increased by approximately $12.9 million compared to the prior year. Approximately $4.1 million of this increase is due to $14.7 millionour acquisitions of incremental depreciationVoluntis and amortization costs relatedHengyu completed during the third quarter of 2021 and the remaining increase relates to our acquired companies. We also increased ourhigher capital spending during the current and prior year to support our growth strategy. Depreciation and amortization as a percentage of net sales increaseddecreased to 7.5%7.0% in 20202022 compared to 6.8%7.3% in the prior year.

In late 2017, Aptarwe began a business transformation plan to drive profitable sales growth, increase operational excellence, enhance our approach to innovation and improve organizational effectiveness. The primary focus of the plan iswas the Beauty + Home segment; however, certain global general and administrative functions havewere also been addressed. Restructuring costs related to this plan forAs of the years ended December 31, 2020 and 2019 are as follows:

We continue to date is $113 million. We have also made capital investments of approximately $50 million relatedlook at our operating structure and are continuing to this plan, with noidentify actions to further significant capital investments expected.reduce costs and improve our competitiveness. Restructuring costs for the years ended December 31, 2022 and 2021 are as follows:

Reported operating income decreasedincreased approximately $32.2$31.9 million or 9% to $339.5$379.3 million in 20202022 compared to $371.7$347.3 million in 2019.2021. Excluding changes in foreign currency rates, operating income decreasedincreased by approximately $37.6$60.3 million in 20202022 compared to 2019. The majority of2021. Strong sales growth, along with lower restructuring costs, during 2022 drove this decrease occurred during the second quarter of 2020 due to the impact of lower sales and operational inefficiencies related to the COVID-19 pandemic.improvement. Operating income as a percentage of net sales decreasedincreased to 11.6%11.4% in 20202022 compared to 13.0%10.8% for the prior year.

Net other expense increased $8.3 million in 20202022 to $38.3a $3.7 million expense compared to $29.6$4.6 million of income in 2019. Interest expense,2021. We report the change in the fair value of our PureCycle investment in net of interest income, increased by approximately $1.0 million due to lower cash on hand after our acquisition of Fusion at the beginningother expense. As discussed in Note 20 – Investment in Equity Securities of the secondConsolidated Financial Statements, our investment in PureCycle was converted into shares of PCT, a publicly traded entity, during the first quarter of 2020. Miscellaneous expenses increased by approximately $3.2 million2021. This investment is recorded at fair value based on observable market prices for identical assets with the change in fair value being recorded as a resultnet investment gain or loss in the Consolidated Statements of higher pension costs due to the decline in discount rates in 2020 compared to 2019,Income. During 2022, we recognized a $3.0$2.1 million other than temporary impairmentloss on the Kali Carethis investment and higher costs to hedge certain Latin American currencies. These expenses were partially offset bywhile we reported a $4.7 million gain of approximately $3.1 million due to an observable price increase which determines the account value on our minority investment in PureCycle.during 2021.

The reported effective tax rate on income before income taxes for 20202022 and 20192021 was 28.9%28.4% and 29.2%24.3%, respectively. The tax rate for 20202022 was lowerhigher compared to 20192021 due primarily to our mix of earnings, with lower results in our high tax jurisdictionsbenefits from share-based compensation and improved results in our loss jurisdictions. This was offset byincreased taxes related to a $4.7 million charge taken in 2020 to adjust the income tax payable balances.legal entity reorganization.

At December 31, 2020, under currently enacted laws,2022, with the exceptions identified below, we continued to assert indefinite reinvestment of foreign earnings from Aptar's foreign operations. We do not have a balance of foreign earnings that will be subject to U.S. taxation.tax upon repatriation under the currently enacted U.S. tax laws. We continually analyze our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries made a distribution of their cash or distributable reserves. These liabilities would includeas well as local country withholding and income tax and potential U.S. state taxation. operation needs.

During 2020,2022, we removed our indefinite reinvestment assertion that pre-2020with respect to undistributed earnings in Italy, Switzerland, and Columbia are indefinitely reinvested.Germany. We recorded a liability of $0.9$0.6 million to reflect the taxes that would be paid when these amounts are distributed. AsWe previously removed the indefinite reinvestment assertion for the pre-2020 earnings in Italy, Switzerland and Colombia, and have accrued $0.6 million for those taxes. We continue to assert indefinite reinvestment with respect to foreign earnings from other countries. We estimate that if the non-U.S. subsidiaries were to make a distribution of December 31, 2020, all othertheir cash or distributable reserve amounts continuereserves to be reinvested indefinitelythe U.S., we would incur local country withholding tax and would become subject to these additionalincome taxes if they were remitted as dividends. We estimate the additional tax that would be payable on these earnings to be in the range of $15 million to $25$20 million. We would recognize such tax expense in our Consolidated Statements of Income and Consolidated Balance Sheets should we change the current indefinite reinvestment assertion on foreign earnings.

Reported net sales increased approximately 12%6% in 20202022 to $1.23$1.36 billion compared to $1.09$1.28 billion in 2019.2021. Changes in currencies positivelynegatively affected net sales by 1%8%, while ourthe acquisitions of Noble, NanopharmVoluntis, Hengyu and Gateway positively impacted sales by 2% in 2020.Metaphase had a positive impact of 1%. Therefore, core sales increased 9%13% in 20202022 compared to the prior year. Sales increased in allThe majority of the segment's markets during 2020. Core sales to the prescription drug market were up against difficult comparisonscore sale growth is due to stronghigher product sales growth in 2019, but still increased 2% mainly driven by strong demand for our drug delivery systems sold for central nervous system and asthma treatments. Prior year prescription drugvolumes while pricing pass-through increases were more than able to offset lower tooling sales benefited from the realization of $1.8 million of revenue for achieving a development milestone related to a customer project. Core sales to the consumer health care market increased 5% on increased demand for our drug delivery systems used on nasal decongestant, cough and cold and eye care treatments.during 2022. Core sales of our products to the injectables markets grew 22%prescription drug market increased 11% on price increases and higher COVID-19 relatedstrong demand for primary components used with injected medicines such as existing seasonal flu vaccinesour allergic rhinitis and other injected medications related to higher levels of hospitalization. Active packaging core sales increased 28%asthma devices as a result of the destocking effect during 2021. Additionally, within our consumer health care division there were higher incidents of cold and flu during 2022, as well as the Omicron variant of COVID-19 which manifests itself similar to cold and flu symptoms. We also saw strong sales of our products on emergency medical applications for existing and new solutions in the prescription drug market. The 15% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinses and cough and cold solutions. Increased demand for elastomeric components for vaccines and biologics drove the 7% core sales growth in our Probioticsinjectables market. Core sales of our active material science solutions increased 21% mainly on strong demand for our oral solid dose solutions and ActivFilmActiv-Film products alongused with $12.0at-home COVID-19 test kits.

Adjusted EBITDA for 2022 increased to $441.6 million compared to $425.7 million in 2021. This increase was mainly driven by our strong core sales growth described above which was able to compensate for a negative $31.5 million impact from the translation of non-recurringour foreign currency results into U.S. dollars. However, the lack of margin on the pass-through of higher input costs and incremental startup costs for our digital health investments and elastomeric component capacity expansion led to a lower Adjusted EBITDA margin of 32.4% compared to 33.1% in 2021.

Reported net sales grew slightly in 2022 to $1.44 billion compared to $1.43 billion in 2021. Changes in currency rates negatively impacted net sales by 7%. Therefore, core sales increased 7% in 2022 compared to the prior year. The majority of this core sales growth came from pass-through of higher input costs. Core sales of our products to the beauty market increased 13% during 2022 as we experienced growth across the majority of our applications. Personal care core sales increased 3% due to higher sales of our hair care and sun care applications. Core sales to the home care markets decreased 12% mainly due to lower tooling sale activities.sales and reduced demand for our industrial and household cleaner applications as rates of COVID-19 transmission have slowed in certain regions during 2022.

Adjusted EBITDA for 20202022 increased to $428.5$166.5 million compared to $387.5from $154.7 million in 2019. Strong2021 due primarily to product sales growth across alland operational improvements mainly during the segment's markets, along with incremental profit related to our acquisitions was able to compensate for $3.9 millionfirst half of additional stock-based compensation expense, a $3.0 million other than temporary impairment on the Kali Care investment and $1.0 million of retention and earn-out compensation2022. These improvements compensated for the Noble acquisition. While the Pharma segment did not experience a significant salesnegative $10.7 million impact from COVID-19,the translation of our margins wereforeign currency results. During the prior year, we reported a $2.7 million favorable value added tax ruling in Brazil, which also negatively impacted by an unfavorable mix of sales within our portfolio of products . We also made special bonus payments to certain employees who worked to maintain supply to our customers and keep our facilities running during the pandemic.current year comparison.

Adjusted EBITDA for 20202022 decreased to $129.3$71.5 million from $181.2compared to $79.4 million reported in 2019.2021. As discussed above, the COVID-19 pandemic affected our profitability due to overall lower sales volumes. Our profitability was further impacted by lower overhead absorption due to fluctuations in demand primarily in our facilities that manufacture beauty products and by special bonus payments to certain employees who worked to maintain supply to our customers and keep our facilities running. We also incurred $6.5 million of retention and earn-out compensation for the Fusion acquisition.

In addition to our three reporting segments, Aptar assigns certain costs to “Corporate & Other,” which is presented separately in Note 18 — Segment Information of the Notes to the Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items) primarily includes certain professional fees, compensation and information system costs which are not allocated directly to our reporting segments.

Corporate & Other expenses in 2020 decreased2022 increased to $43.4$62.9 million compared to $44.4$52.3 million in 2019.2021. This increase is partially related to higher compensation costs, including our short-term incentive and equity compensation programs. We recognized slightlyalso reported higher operatingprofessional fees and travel costs during 2020as travel returned to normal (pre-pandemic) levels as compared to the prior year. Our results include approximately $1.2 million and $2.0 million realized gains on sales of PCT shares for 2022 and 2021, respectively. As noted above, any unrealized investment gains or losses are removed from our Adjusted EBITDA calculation as we were ablebelieve that unrealized cost investment gains and losses from changes in market prices are not considered relevant to mitigate higher variable compensation and other personnel costs with cost containment activities such as reduced travel spending. However, this increase was more than offset by a gain of approximately $3.1 million due to an observable price increase onunderstanding our investment in PureCycle. reported consolidated earnings or evaluating our periodic economic performance.

In addition to the information presented herein that conforms to U.S. GAAP, we also present financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period-over-period comparison of operating results by removing the impact of items that, in management’s view, do not reflect Aptar’sour core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the audited consolidated statements of income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measuremeasures to arrive at these non-U.S. GAAP financial measures.

In our MD&A,Management's Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales and other information, which we define as “constant currency.” Changes in net sales excluding the impact of foreign currency translation is a non-U.S. GAAP financial measure. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current period foreign currency exchange rates. As a result, our management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of material acquisitions when comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.

We present earnings before net interest and taxes (“EBIT”) and earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude the business transformation charges (restructuring initiatives), acquisition-related costs, and purchase accounting adjustments related to acquisitions and investments.investments and net unrealized investment gains and losses related to observable market price changes on equity securities. Our Operations Outlook is also provided on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as taxexchange rates and exchange rates,changes in the fair value of equity investments, or reliably predicted because they are not part of our routine activities, such as restructuring initiatives and acquisition-related costs.

We provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. Net Debt"Net Debt" is calculated as interest bearing debt less cash cashand equivalents and short-term investments while Net Capital"Net Capital" is calculated as stockholder’sstockholders' equity plus Net Debt. Net Debt to Net Capital measures a company’s financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents and short-term investments when evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.

Finally, we provide a reconciliation of free cash flow as a non-U.S. GAAP measure. Free cash flow is calculated as cash provided by operating activities less capital expenditures plus proceeds from government grants related to capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives.