Aptar is a global leader in the design and manufacturing of a broad range of innovative drug delivery and consumer product dosing, dispensing sealing and active packaging solutions and services for the prescription drug, consumer health care, injectables, active packaging,protection technologies. Aptar serves a number of attractive end markets including pharmaceutical, beauty, food, beverage, personal care, and home care, food and beverage markets. Aptar uses insights,care. Using market expertise, proprietary design, engineering and science to create dosing, dispensing, and protective packaging technologiesinnovative solutions 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 13,00013,800 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 20202023 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 systemssolutions and a suite of comprehensive services to help them succeed.end market expertise. 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. 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.components for 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 oxygen while also protecting drug products from overall environmental exposures and degradations.

Our digital health solutions aim to improve patients' treatment experience and outcomes. We leverage companion and regulated software solutions, connected devices and diagnostic 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, neurology, 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.rare disease.

During 20202023 and 2019,2022, we acquired several companies to strengthen and broaden our portfolio, including the following business combinations and asset purchases:combinations:

We seek to enhance our position as a leading global provider of innovativein drug delivery and consumer productdosing, dispensing sealing, active packaging solutions and servicesprotection technologies 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 is a strategic structure which allowsEffective January 1, 2023, we realigned two of our segments, allowing us to be more closely aligned withbetter serve our customers and positioning us for long-term profitable growth. We continue to have three reporting segments; Aptar Pharma and Aptar Beauty are named for the markets in which they operate. Weserve with multiple product platforms, while Aptar Closures is named primarily sell our products and services through our own sales force to pharmaceutical, health care, beauty,for a single product platform that serves all available markets.

The Aptar Closures business serves multiple markets, including food, beverage, personal care, home care, beauty and healthcare. Closures that were developed in Beauty + Home moved to Aptar Closures together with the operations of the legacy Food + Beverage segment. Aptar's food protection business and beverage marketers. To a limited extent,our elastomeric flow-control technology business continue to report through the Aptar Closures segment. The realignment brings us closer to how our customers are structured and operate their businesses.

At the same time, we use independent representativeshave simplified and distributorsfocused our Beauty + Home segment to increasebetter leverage our reach to smaller customerscomplex spray and export markets.

The segment realignment had no impact on our Consolidated Statements of Income, Balance Sheets, and Cash Flows. Segment financial information for the Beauty + Home segment. Operations that sell dispensing systems and sealing solutionsprior periods has been recast to conform to the foodcurrent presentation.

These changes are intended to help us increase our rate of innovation, broaden our market reach, streamline operations, increase effectiveness and beverage markets form the Food + Beverage segment. Eachraise capital efficiencies. Additionally, we intend to continue to focus on sustainability because leadership in sustainability remains a key differentiator across all of these three business segments is described more fully below.our segments.

Our Aptar Pharma segment is our largest segment in terms of profitability, accounting for 68% of our Adjusted EBITDA excluding non-allocated corporate costs, and is our second largest segment in terms of net sales and total assets, accounting for 42%representing 44% and 39%47% of our Net Sales and Total Assets, respectively, for 2023 and accounted for 65% of our Adjusted EBITDA excluding non-allocated corporate costs in 2020.2023. 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 newproprietary drug delivery and dispensing systems and accessories in this segment. For example, we provide single dose delivery devices suitable for central nervous system applications.division. 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 proprietary drug delivery and dispensing systems.

Our Aptar acquired in 2018. Sales of active packaging products accounted for approximately 12% of the segment’s total net sales in 2020. Through proprietary material science expertise, we deliver active packaging solutions such as desiccant material to enhance the shelf life and effectiveness of diagnostic and solid dose products. Additionally, the technology is used to absorb moisture and oxygen as well as emit properties such as chlorine dioxide.

The Food + BeverageOur Aptar Closures segment isaccounted for 20% of our smallest segment in termsNet Sales, 17% of profitability, net sales and total assets, representing 11%, 14%our Total Assets and 14%, respectively, of our Adjusted EBITDA excluding non-allocated corporate costs Net Sales and Total Assets in 2020.for 2023. We primarily sell dispensing closures and, to a lesser degree, non-dispensing closures, elastomeric flow control components, spray pumps and aerosol valves.closures.

SalesIn recent years, 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, e-commerce capable solution, inverted packaging and directional flow to make packages simpler to use, cleaner and more appealing to consumers. Aptar Closures is also evolving its product offering to make it more sustainable for example through light weighting, use of post-consumer recycled (PCR) resin, thermoplastic elastomers (TPE) flow control or by adding features such as tethered closures and non-detachable tamper evident packaging for beverages. 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 20202023 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, 20202023 and 20192022 were approximately 55%57% and 57%, respectively,53% of our consolidated sales.sales, respectively. Asia and Latin America when aggregated represented approximately 12%14% and 14% of our consolidated sales for the years ended December 31, 20202023 and 2019,2022, respectively. Export sales from the United States were $179.0$196.6 million and $170.0$211.1 million in 20202023 and 2019,2022, 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, Argentine peso, Mexican peso, Swiss franc and other Asian, European and SouthLatin American currencies. A strengtheningweakening U.S. dollar relative to foreign currencies has a dilutivean additive translation effect on our financial statements. Conversely, a weakeningstrengthening U.S. dollar has an additivea dilutive 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 has2023, Aptar had approximately 13,00013,800 full-time employees. Of the full-time employees, approximately 7,900 are8,400 were located in Europe, 2,600 are2,800 were located in Asia and SouthLatin America and the remaining 2,500 are2,600 were 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%approximately 55% 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 20202023 and management considers our employee relations to be satisfactory. Higher employee turnover levels or our failure to attract and retain talent in a timely manner could impact our future results.

Aptar is included in the SPDR SSGA Gender Diversity Index ETF (SHE) which invests in companies that rank among the highest in gender diversity within senior leadership. Aptar is also a participant in the Catalyst CEO Champions for Change and the Gender and Diversity KPI Alliance. Aptar was named on the World's Top Female-Friendly Companies by Forbes for 2022 and 2023. Aptar was also recognized by Women's Forum of NY for having 50% female board directors. Additionally, SHero has recognized Aptar Greater China as one of the Best Companies for Female Executives 2022. Aptar launched its first Diversity Supplier Program in 2023. Aspiring to build a diverse and inclusive culture that fosters fairness and belonging continues to be part of Aptar's strategic priorities.

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 increasingcontinue to grow both organically and through consolidation and/or changing of ownership 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 barrierscapabilities though we continue to entry for new competitors wanting to enter our business. Furthermore, within our Pharma business, increasing regulatory hurdles present a barrier for new competitors to enter the market.face meaningful competition from local and regional competitors.

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 customers often 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. This updated target was validated by SBTi in early 2023. With this update, 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 20202023 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 grade on the CDP climate change assessment and our "B" letter grade on the CDP water assessment.

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)("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)("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.

Customers and consumers are increasingly requesting solutions that can be refilled and reused as the market moves toward more sustainable environmentally-friendly products. A competitor'sOur competitors' design innovation or ability to provide more sustainable products could have an adverse impact on our business. If we are unable to compete successfully, our market share may decline, which could materially adversely affect our results of operations and financial condition.

We continue to monitor countries' progress toward enactment of the Organization of Economic Cooperation and Development's model rules on a global minimum tax. During 2023, various countries enacted domestic legislation to adopt the minimum tax rules which will be effective for years beginning on or after January 1, 2024. These specific actions did not affect our Consolidated Financial Statements in 2023. We are currently discussed tax rate changes inevaluating the U.S. would have a materially adverse impact of this rule on our reported tax expense and operating results.consolidated results for 2024.

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, including those described in Note 13 - Commitments and Contingencies of the Notes to Consolidated Financial Statements. 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 4950 locations, with 1913 of those facilities serving two segments and 5four serving all three of our segments.segments as of December 31, 2023. 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, 2021,5, 2024, there were approximately 180152 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, 2021,18, 2024, our Board of Directors declared a quarterly cash dividend of $0.36$0.41 per share of Common Stock,common stock, which waswill be paid on February 17, 202122, 2024 to stockholders of record as of January 27, 2021.February 1, 2024. During 2023, we paid $103.7 million in dividends to stockholders. While we expect to continue to pay a regular quarterly dividend of $0.36$0.41 per share in 2021,2024, 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, 2020,2023, the Plan purchased 1,450did not purchase any shares of our Common Stockcommon stock on behalf of the participants. The Plan sold 6,533 shares of our common stock on behalf of the participants at an average price of $118.19$124.57 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$814 thousand. At December 31, 2020,2023, the Plan owned 85,127113,946 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.,Enovis Corporation, ICU Medical, Inc., Ingredion Inc., International Flavors & Fragrances, Inc., McCormick & Company, Inc., Perrigo Company plc, Revvity, 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 peer group is consistent with the peer companies used by the Management Development and Compensation Committee of our Board of Directors (“MD&C Committee”) in connection with certain aspects of our executive compensation programs. The MD&C Committee selected companies that (i) compete with Aptar for market share, operate in similar industries (e.g., packaging, specialty chemicals, specialty materials) and are based in the U.S.; (ii) provide similar intermediate products (e.g., structured materials, packaging, closures, spray products) to similar end-use markets (e.g., consumer, beauty, home, pharmaceutical, medical, healthcare, food, beverage); (iii) fall within a reasonable range of Aptar's size and scale based on several factors (e.g., revenue, assets, invested capital, number of employees, market capitalization); (iv) earn a considerable amount of their revenue outside of the U.S.; (v) appear to be valued like Aptar by the stock market based on their market capitalization to revenue versus Aptar’s; and (vi) compete with Aptar for senior executive talent (companies Aptar potentially would recruit senior talent from, and possibly lose senior talent to).

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 statementsConsolidated Statements of incomeIncome 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, 20192022 for additional information regarding Results of Operations for the year ended December 31, 20192022 as compared to the year ended December 31, 2018. Certain previously reported amounts have been reclassified to conform to the current period presentation:2021.

For the year ended December 31, 2020,2023, reported net sales increased 2%5% to $2.93$3.49 billion from $2.86$3.32 billion a year ago. Strong sales growth in certain markets were offset by changes in currency exchange rates, passing-through lower resin costs to customers and COVID-19 related effects on other markets we serve. While theThe average U.S. dollar exchange rate weakened compared to the euro and other Europeanmajor currencies it strengthened compared to most of our other major operating currencies,in which we operate, resulting in a negativepositive currency translation impact of 1%2%. TheThere was no significant impact from our acquisitions of Gateway, Nanopharm, NobleMetaphase, iD SCENT, and Fusion positively impactedGulf Closures on our consolidated net sales by 3%. Therefore, coreduring 2023. Core sales, which excludesexclude acquisitions and changes in foreign currency rates, increased by 3% in 2023 compared to 2022. Volume growth, especially for 2020 wereproducts in line with 2019. While our Pharma segment reported strong productprescription, consumer healthcare and beauty applications, had a positive impact on our core sales growth during 2020, both our Beauty + Home and Food + Beverage segments were impacted by the COVID-19 pandemic and the negative impactin spite of passing through lowera 1% headwind on resin costs to our customers.cost pass-through reductions.

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 decreased to 62.9%63.8% in 20202023 compared to 63.6%65.0% in 2019.2022, in spite of approximately $16 million additional costs related to the validation of the new injectables expansion capacity as well as inefficiencies in the first part of the year due to the Enterprise Resource Planning ("ERP") system implementation. Our COS percentage was positively impacted by ouran improved mix of business asour higher-margin Pharma product sales compared to the same period in 2022. We also benefited from the moderation of inflationary cost increases. Since we reported sales growthmaintained our normal pass-through of resin costs during 2023 and there is no margin on these pass-through costs, the decrease in resin prices caused a decrease in our higher margin Pharma segment and from cost containment efforts made to mitigate the impactCOS as a percentage 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.sales.

Our Selling, Researchselling, research & Developmentdevelopment and Administrativeadministrative expenses (“SG&A”) increased approximately 10%4% or $45.6$21.5 million to $500.2$565.8 million in 20202023 compared to $454.6$544.3 million in 2019.2022. Excluding changes in foreign currency rates, SG&A increased by approximately $46.3$14.7 million compared to the prior year. The reportedOf this increase, is mainly$1.5 million relates to incremental SG&A costs in 2023 due to $20.8 millionour acquisitions of incremental operationalMetaphase, iD SCENT, and Gulf Closures. Improvements from our overhead cost management initiatives during 2023 were more than offset by higher compensation costs, during 2020including accruals related to our acquired companies. We also recognized $9.4 million of retentioncurrent short-term and earn-outlong-term incentive compensation for acquired company key employees as part of the Fusion and Noble acquisitions which was partially offset by lowerprograms, along with higher travel costs due to the COVID-19 pandemic.costs. SG&A as a percentage of net sales, increasedhowever, decreased to 17.1%16.2% in 2023 compared to 15.9%16.4% in the prior year due to the cost increases mentioned above.year.

ReportedDepreciation and amortization expense increased approximately 6% or $14.9 million to $248.6 million in 2023 compared to $233.7 million in 2022. Excluding changes in foreign currency rates, depreciation and amortization expense increased by approximately 13% or $25.7$11.4 million to $220.3 million in 2020 compared to $194.6the prior year. Approximately $0.9 million in 2019. The increase was not impacted by changes in foreign currency rates. The majority of this increase is due to $14.7 millionour acquisitions of incremental depreciationMetaphase, iD SCENT, and amortization costs relatedGulf Closures. The remaining increase relates to our acquired companies. We also increased ourhigher capital spending during the current and prior yearyears to support our growth strategy.strategy, including several new manufacturing facilities commencing operations during 2023. Depreciation and amortization as a percentage of net sales increased to 7.5%7.1% in 20202023 compared to 6.8%7.0% in the prior year.

Operating income increased approximately $24.7 million or 7% to $404.0 million in 2023 compared to $379.3 million in 2022. Excluding changes in foreign currency rates, operating income increased by approximately $14.7 million in 2023 compared to 2022. Strong Aptar Pharma segment sales growth along with our lower COS percentage and SG&A leverage discussed above more than compensated for our higher restructuring costs. Operating income as a percentage of net sales increased to 11.6% in 2023 compared to 11.4% for the prior year.

In late 2017, Aptar beganInterest expense decreased by $0.4 million in 2023 to $40.4 million compared to $40.8 million in 2022. During 2022, we repaid part of our private placement debt, which included 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 is the Beauty + Home segment; however, certain global general and administrative functions have also been addressed. Restructuring costs related to this plan$0.4 million make-whole payment for the years ended December 31, 2020 and 2019 are as follows:

Net other expense (income) increased $15.0 million to $11.2 million of income in 2020 to $38.3 million2023 compared to $29.6$3.7 million of expense in 2019. Interest expense, net2022. During the fourth quarter of interest income, increased2023, we reached a $6.6 million settlement for disputed amounts with our insurance company to recover for losses caused by approximately $1.0a fire at our facility in Annecy, France (the 'Annecy Settlement'). $3.5 million due to lower cash on hand after our acquisition of Fusion at the beginning of the second quarter of 2020. Miscellaneous expenses increased by approximately $3.2$15 million as a result of higher pension costsincrease is due to the declinechange in discount ratesfair value of our PureCycle investment. As discussed in 2020Note 20 – Investment in Equity Securities of the Consolidated Financial Statements, 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 net investment gain or loss in our Consolidated Statements of Income. During 2023, we also recognized $1.8 million of improved performance in our equity investments along with $3.2 million in lower pension costs compared to 2019, a $3.02022, which more than offset $2.4 million other than temporary impairment on the Kali Care investment and higher costs to hedge certain Latin American currencies. These expenses were partially offset by a gain of approximately $3.1 millionforeign exchange losses due to an observable price increase which determines the account value on our minority investment in PureCycle.devaluation of the Argentine peso during the fourth quarter of 2023.

The reported effective tax rate on income before income taxes for 20202023 and 20192022 was 28.9%24.2% and 29.2%28.4%, respectively. The tax rate for 20202023 was lower compared to 20192022 due primarily to oura better mix of earnings with lower results in our highand increased tax jurisdictions and improved results in our loss jurisdictions. This was offset by a $4.7 million charge taken in 2020 to adjust the income tax payable balances.benefits from share-based compensation.

At December 31, 2020, under currently enacted laws,2023, 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 as well as local country operation needs in developing our repatriation plans.

During 2023, we recorded a liability of $2.8 million in connection with the distribution of all pre-2023 earnings of a China subsidiary that were previously asserted to be indefinitely reinvested. We also previously removed our indefinite reinvestment assertion with respect to undistributed earnings accumulated in Germany. We also previously removed the indefinite reinvestment assertion for the pre-2020 earnings in Italy, Switzerland and the potential tax liabilitiesColombia. We continue to assert indefinite reinvestment with respect to foreign earnings from other countries. We estimate that would be incurred if the non-U.S. subsidiaries madewere to make a distribution of their cash or distributable reserves. These liabilitiesreserves to the U.S., we would includeincur local country withholding tax and income tax and potential U.S. state taxation. During 2020, we removed our assertion that pre-2020 earnings in Italy, Switzerland, and Columbia are indefinitely reinvested. We recorded a liability of $0.9 million to reflect the taxes that would be paid when these amounts are distributed. As of December 31, 2020, all other cash or distributable reserve amounts continue to be reinvested indefinitely and would become subject to these additional 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.

Adjusted EBITDA for 20202023 increased approximately 14% to $428.5$502.6 million compared to $387.5$441.6 million in 2019. Strong product2022. The positive impact of our strong core sales growth across allin the segment's markets, along with incremental profitprescription drug and consumer healthcare divisions was partially offset by the additional expenses related to our acquisitions was ableinjectables ERP system implementation in the first quarter of 2023 and the impact of lower COVID-19 related sales in our injectables and active material science solutions divisions, as discussed above. Overall, our Adjusted EBITDA margin improved modestly to compensate for $3.9 million 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 compensation for the Noble acquisition. While the Pharma segment did not experience a significant sales impact from COVID-19, our margins were negatively impacted by an unfavorable mix of sales within our portfolio of products . We also made special bonus payments33.0% in 2023 compared to certain employees who worked to maintain supply to our customers and keep our facilities running during the pandemic.32.4% in 2022.

Reported net sales decreased approximately 4%5% in 20202023 to $1.30 billion$698.8 million compared to $1.35 billion$738.5 million in 2019.2022. Changes in currency rates negativelypositively impacted net sales by 1%, while ourthe acquisition of Fusion positively impacted sales by 4% in 2020.Gulf Closures also had a positive impact of 1%. Therefore, core sales decreased 7% in 20202023 compared to the prior year. The COVID-19 pandemic negatively impactedApproximately half of the core sales decrease is due to passing through lower input costs, mainly due to lower resin prices during 2023. Tooling sales and product volumes were also lower as customers continued to work through their inventory levels, primarily in North America. Core sales to the food and personal care markets decreased 9% and 16%, respectively, while core sales to the beautybeverage market increased 5% during 2020 due2023 compared to a significant reduction in retail salesthe prior year. For the food market, we were up against strong prior year period comparisons, mainly for sauces and in duty free sales due to domesticcondiment applications and international travel reductions. Coreour infant nutrition products. The personal care market was also negatively impacted by lower sales of our products to the beauty market decreased 20% as we experienced a significant reduction in orders from customers providing both fragrancebody and skin care products, mainly in the travel retail and standard retail settings. However, personal care core sales increased 7% as increased sales of our hand sanitizer and liquid soap dispensers more than compensated for softness in our deodorant, hair care and sun care applications, as many consumers continue to shelter in place. Core sales towhile the home care markets increased 3% on strongbeverage market reported growth mainly from higher demand for our household cleanerbottled water and disinfectantconcentrate products.

Adjusted EBITDA for 2023 increased approximately 20% to $72.0$103.7 million compared to $86.1 million in 2020 compared to $68.1 million in 2019. Higher product sales to the food markets2022. Our profitability was positively impacted by a focus on operational improvements and containing costs within our new segment structure. As discussed above, along withapproximately half of our sales decrease was due to passing through lower input costs. As these pass-throughs typically do not carry any margin, the benefits we receivedlower sales favorably impact our margins. Together, these changes led to our Adjusted EBITDA margin improving from our cost containment activities and other operational improvements realized11.7% in 2022 to 14.8% during 2020 more than compensated for lower tooling sales and other negative COVID-19 impacts, mainly on our on-the-go beverage market applications.2023.

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 20202023 decreased to $43.4$62.3 million compared to $44.4$62.9 million in 2019. We recognized slightly higher operating costs during 20202022. This expense decrease is mainly due to realized gains on the sale of PCT shares related to our PureCycle investment. Our results include approximately $4.2 million and $1.2 million realized gains on sales of PCT shares for 2023 and 2022, respectively. As noted above, any unrealized investment gains or losses are removed from our Adjusted EBITDA calculation as we were ablebelieve that unrealized investment gains and losses from changes in market prices are not considered relevant to mitigate higher variable compensation and other personnel costs withunderstanding our reported consolidated earnings or evaluating our periodic economic performance. The remaining cost containment activities such as reduced travel spending. However, this increase was more than offset by a gain of approximately $3.1 millionincreases are mainly due to an observable price increase onhigher professional fees for corporate projects and higher incentive compensation costs, including accruals related to our investment in PureCycle. current short-term and equity compensation programs.

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 statementsConsolidated Statements of incomeIncome 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),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.