ATR - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Aptar's 2020 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Introducing today's conference call is Mr. Matt DellaMaria, Senior Vice President, Investor Relations and Communications. sir. ahead, go Please

Matt DellaMaria

welcome, President on and and President, and Executive and are Bob call Stephan Vice Secretary. Officer Financial Tanda, Chief Chief everyone. you, our Participating today Kuhn, Thank Executive Officer;

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this therein. conference refer from We on no post like to filings will replay I statements. differ projected of over in contained some turn cause Please also Aptar the those Today's website. statements. to conference could includes to obligation call call the results Stephan. that a the undertakes our update call SEC forward-looking to actual contained would materially to review forward-looking to factors now or information our forward-looking

Stephan Tanda

morning, joining good for everyone. you and Matt, Thanks, Thank us.

my to that proud workforce and had that time. patients to and this I they and tremendous moment of for systems our during around delivery has dispensing Let the me and could would pandemic. do hope and safe commitment production, thank our you to organization are consumers a start dedication like your how world. maintain the also am continuing throughout entire we this extremely I staying the difficult for well so to shown take risen expressing challenge critical the drug global by families

COVID-XX I three. starting few comment share related the to a results, I to slide like on Before would on updates

responsibility to products. previously we to industries, pharmaceuticals several live are up an consumer and to And society. as supplier proud shared, and We critical including essential to our are purpose

adapting guidelines support during customers Our teams of constantly and the this time. them. our flexible end, work to recently ensure remote To by are onset that motivated number expressions honoring to the we our many are employees approach issued by new our and and minimum commitments gratitude our for to we of further people potential

next several of have of work, formed We thinking post-COVID-XX in teams normal new era. including of address what's coming future also to and of the the the future customer the we engagement work

you Turning to a are solutions, but four, to slide our will society sample see now which of today. critical global

packaging drug and Our and cleaners, delivery, food medicines, be on products. dispensing, of sealing a can active number found solutions beverage sanitizers,

on Turning five. comments would the like a slide to to I offer few quarter.

which Our consumer engage declines Core eventually to same strong wave fluid offsetting our delivered Pharma which will in quarter and the expected be At it will vaccines. very is to injectable when. line packaging say challenging is to Pharma The comparison two market drugs to by time, in to very the The of our grew COVID-XX. and businesses, difficult in to related be in from that performance. faced sales business prescription, the very we benefit share another COVID-XX and evaluate continues business potential situation rise with last reasonable the opportunities and team is the active coming injectables, healthcare customers it year. approved expect of with strong

crisis. We vaccines may because expect traditional that have benefit for from been the therapies demand to and of also delayed initial increased

that healthcare COVID-XX related. Pharma and we are Our segment to diversified users pandemic during well is patient growing they as therapies expected and not this are a different reliably remain business across

U.S. Now, a I would recent few featuring like approvals to technology. out share FDA

to rechargeable implantable is device active and material dysfunction Axonics Our an featured on used by urinary bowel technologies Modulation Technologies. treat sciences

inside Our technology helps to protect key device. the elements

first that pump options treatment which is another This symptoms nasal directly. for allowing treatment features bypasses relief the oral the new unlike drug diabetic and only for multidose acute bloodstream enter gastrointestinal gastroparesis. our recent to U.S. the for example unique of the medications recurrent the of tract, second drug administered The disease good is and Gimoti, nasal FDA nasally approval application of

products Turning in anti-inflammatory America. to part a eye allergy, recent of Synthesis, eye care product by Latin introduction featured dispenser ophthalmic Abbott dry and squeeze on

prior quite The including Now, in Home. and year. grew the to turning hand sanitizer shipments beauty that to pump to remain market featured first Unilever. months sales and is also Demand reopenings continues personal Beauty though to U.S. like for sprays market over cleanses we Because of to the of even this, challenging, highlight our related quarter, I the of a two strong. by several of be relative sanitizers June spray hand the our increased care Suave countries, would on to line the the

for We pumps United America to campaign. these also of donated Unilever's support XX,XXX

pumps for pumps during and this tools, a in equipment around and featured hand the investing product are demand to numerous sanitizer via molding machines Our also world closures meet and new the time.

easy Our stand-up squeeze chosen closure SimpliSqueeze Dial and valve for body by pouch. and innovative the wash was

is the provides top This for purchase even Amazon. open. available technology controlled flip is pre-dispensing Our on when product

Continued flexibility and for our are upturn. of a state the to readiness we is important customers maintaining

overhead absorb, operating and while are We we costs costs. reducing we must other have travel that some labor,

well Food Beverage. by of lower were to sales as cost the customers customer tooling Sales to negatively its and close lower a due to COVID-XX impacted beverage the on-the-go crisis, resin passing sales. out decline Turning in and as on

continues space good launches. to momentum. flexible Turning The to product have

clean with closure pouch. which controlled stand-up valve innovative for major brand, a butter is providing SimpliSqueeze launched just and Our in dispensing has peanut

to solution evident remove tamper dispensing an also includes Our pull-ring. easy

the China. the of closure sports by inverted sports found launch Xiaoyangren in packaging U.S. signature Chik-Fil-A on Our drinks a SimpliSqueeze of In for of the closure found the on new our is and new market, line valve are and in beverage also sauces condiments

to on a the over Bob, would additional as share to turn call I I like Before six. shown few highlights slide

and the our the their the Report, FusionPKG safety community end sustainability products to agility to as beauty and off we Our rapidly which quarter, insights impact a marketing we approach. to XXXX programs, highlights Subsequent our start of benefit our sophisticated aspirations, demands, their societal is well of Sustainability outreach from great acquisition and adapt initiatives. to changing tremendous as consumer issued

that I on our accomplishments, you and report are to available review proud of encourage is our We website. that very

We achieve strategy, results. our to it now provide property, strategic us strengthen attorney President to as Chainey as will and Bob Vice are Her even of Kimberly multiple and industries With for Counsel. compliance innovation, over who lead global breadth acquisitions, the pleased I better position is to intellectual will team turn on and Global XXX Global our leadership General to companies that, Aptar also across our priorities. Fortune and going mergers the welcome comments experience for Executive and additional XXX to

Bob Kuhn

morning, of some and concerning starting details and second Thank good I'll the everyone. slide seven. our the you, of through walk with pandemic, Stephan, impact COVID-XX the results quarter

sales XXXX, declined resin costs to customers negatively quarter COVID-XX and exchange X% second by of in The the impacted positive impacts. currency related contribution were changes rates, the core and For coming recent X%. the on also lower reported performances. passing Taking to rates. a look headwinds declined changes segment from as our the offset a at acquisitions coming result, from currency sales helped And in timing

margin an Our to growth EBITDA year X% quarter a of and strong of second compared Pharma achieved sales very segment XX% ago. core a adjusted

on our cough for prescription of Core cold sales growth. to prior sales healthcare decongestant demand XX%, Strong XX%. reasons for X%, were treatments due and to injectables used the Core products on across market and to increase applications. variety nasal the demand a the increased market and market, sales difficult the increased market tooling sales basis. comparison to lower due to consumer to the year. core decreased at a growth Looking Core by sales the the a

our probiotics, Finally, core sales products. XX%, the to strong and growth diabetes, active film packaging market increased active due in to

Core on was were to was Beauty EBITDA Home's increase negatively offset Turning sales quarter. the care the COVID-XX. beauty market. market effects adjusted in due the in X% the impacted decreased Beauty partially quarter by and our negative an decline COVID-XX sales of to the sales Home by and impact XX%, negative of significant in The margin to and segment. personal the

care a the in prestige products, costs sun beauty our orders. to enough XX%, segment. Looking sales home care adhered providing to Core our higher beauty Food achieved standard and the market resin adjusted the sales X% to in market on from sales on significant market retail quarter the to customers deodorant, on hair The due care sales Core personal both was lower COVID-XX cleansing Turning beverage beauty lower not growth as quarter sales hand our and Beverage XX% basis. household cleaner used personal to sales, automotive customers, sanitation regulations. the in decreased retail of government throughout at XX% Core demand and as to mainly passing an laundry Many products margin travel stores core lower declines the increased of the products our and products mass products, orders tooling to to for closure and Food closed as care for of care reduction our offset sales the XX%. to Beverage applications mainly Core to segment of related and crisis. softness in in consumers shelter-in-place products settings. decreased EBITDA response decreased increased shelter-in-place sales the market due continued more a to and offset by than

Looking at each market.

of which by during food functional X% prior While sales to lower to the our is the to recognized the several our as bottled ultimately increased significantly of sales Core on-the-go year. closures the market X% of drink lower sales. sales due for XX%, single-serve quarter market we closures led X% COVID-XX impacts. projects decrease Demand and tooling core a was of water products decreased beverage to tooling for tooling second large affected

to eight. Turning slide

and core totaled cover spike the performance share was XX% Second earnings year down earnings Slides totaled XX our the quarter year. decline adjusted X% prior economic Slide is of share per nine comparable world adjusted from first show $X.XX. sensitivity sales and earnings XX forward. it third quarter. the the year-to-date which per Prior our outlook analysis many shows recent per share, $X.XX. and showed the uncertainty Slide some in XX cases move in as in the markets. our quarter, regions and The for we in outlined COVID-XX creates of relevant that we still

then turn Capital $XX $XX totaled our approximately the approximately million a a year. Our around on was flow year. to prior second million. breadth retail was cash and in $XX closing as expenditures And heavily details half dependent flow our call reopening to to the compared and cash of share remarks. of and the consumer the in the and of shown see pace general the more slide air cash and of CapEx, improvement quarter, flow Stephan resumption XX, from reported million. strong operations gradual will free million confidence, outlook the $XXX we few I is spending over In were expect for on and travel,

gross a debt was approximately net on We continued was it basis to and basis have strong XX%. to on a a balance sheet, approximately XX%, while capital

continue In $XXX needs addition, to provide range will capital we to million challenge Q-&A. time, we this $XXX and are At our to of evaluate Stephan expenditure move few million. before comments a a and forecasting

Stephan Tanda

like seen on be Thank you, Bob. few takeaways slide XX. close, To a can would to I as cover

While we there effects for is uncertainty in due our to invest continue to long-term. COVID-XX, company the the of

Our resulted cash reopenings initial the demand product and the served -- of The our good strong innovation our end towards second remained greater including the of quarter. beauty for in our generation products products, improved some of society.

the the reopening and well evolving as as country monitor the status to continue will by pandemic, of state. of by trajectory We

and tangible value And questions. long-term, like up the providing our will many focus I customers, to open for made world's would our As we up leading the the company brands. manage continue we consumers, of to for on patients, of call to

Operator

with [Operator Panjabi Ghansham question from Your first Baird. Instructions] comes

is Your line open.

Ghansham Panjabi

Good everybody. Hi. morning,

Stephan Tanda

Hi, Ghansham.

Bob Kuhn

Good morning, Ghansham.

Ghansham Panjabi

Yeah.

expand the there's for and a your just the COVID-XX the people to related supply. only much a on Stefan, of So, any chain could sort vaccine. on you lot There's obviously, so supply position vaccine, of comments to and maybe has obviously, planet

So, customers to more managing And of how of as that? relates are ahead that the inventory broadly activity your just segment. it kind touch of buildup COVID-XX on

Stephan Tanda

all in all are many projects are Ghansham. hundreds them Thanks, we closely. aware and of on, we are Look, going of as following Sure. there

big this projects but as in well in vaccine-related And morning, nasal ones About more. Zeneca, headlines, respiratory a space. the treatment Sinovac, additional projects just are of -- China are inhalation see Pfizer, many two-thirds third we Sanofi space, and you have related. as in our course, then in nasal inhalation Of Bayer, the CanSino, also COVID-related many,

say, to or So, is the the SKU question prefilled then rededicated tremendous. business, flu COVID. assets are of syringe activity like, you vaccine, displacement And -- There have also is traditional the coded, vial. being traditional non-coded of

parts. are moving many So, there

our to going we mentioned many that. We're with clients in space. discussions everybody COVID But very my in of the that remarks, are safe related on clearly, I line here on from is And we the injectable market with the uplifting space. any And following active benefit is will comment it in as to assumption are, not project. We like business are an closely. our it share individual in else

Ghansham Panjabi

And then that some drawdown, is in touch bridge year-over-year. significant. us Okay. just pretty I and was think Can Beauty but And down Bob the in break XX%, -- by I of to segment, Home margins just the related looks assume help sort sales that, of then for because the in the segment, detrimental terms it just you on quarters quarter. of you that I XQ mentioned mentioned that two month? inventory beauty think that out just core

Stephan Tanda

the Bob very May then and point, its second June and as made there part. mount was good cover me April around take the the reopening world, then improvement some let the part in Clearly, impact. was were U.S. effective the especially low Maybe first Europe and

We July. also good into see continued momentum

So, here let I And of side. Bob -- margin address what really solid great effect the months one you and not months. two is the see

Bob Kuhn

so Beauty to and important I keep diverse widest in of that the Home offering. the mind product -- it's has think, I three segments, most More or mean, and

you've more down the this And other market, as a you has than the -- have that being result parts market when Ghansham, facilities beauty of you So, as particular case, in XX%, referenced, But facility. that personal contrast with fairly got got high. are time where at big some running running breakeven are factories, which a which care facilities side, record then portions we've all below of dedicated segments.

of months before -- can't So, with We've you out have Stephan mentioned, a there take offline. coming mentioned couple that. we low them really completely volumes entirely

run low kind do You idle the to in mode. have of

were low of that to. those side, explained have particularly really once levels, of margin, you you referring the certain very that on incremental running kind beauty So, factories, at that

Ghansham Panjabi

Thanks so much.

Operator

from America George Your next comes Bank question Securities. of Staphos with

line open. Your is

George Staphos

dig morning. all for everyone. wondering Hi, COVID activity. if Good little deeper details. was bit a maybe could Thanks I Stephan, the into your project you

or you think mentioned call, phrasing. I last were on around something serious That's my there so projects. had the XX

discussions currently a customers, a where XX will COVID-XX from bit you you're phrase mentioned, way And get pack, XX, be around yet relatedly And little You level? higher you us from the a size it digits on or think might single it those you the there recent what high had packs projects update is working with differently. market dosage you're a in digits more stand per low seeing or that on ultimately or occurs. do single per when to just for can trying

Stephan Tanda

numbers response bit in to up. more try of I'll a to are trending to color I question. Ghansham's Sure. add mentioned course, the what Look,

there before, project COVID-related said hundreds industry. the we think, I were of in

number certainly said -- now, has XX certainly about Now, and X,XXX XX% for this above hundred a us bit couple higher. a irrelevant we probably that is -- the the ones are well gone

probably than me that triple get into more, higher is digits. not approaching XX, it but Let

your differs doses, Now, question really by around of in is that geography. terms

And in in that also you be pin me I believe geographies, don't U.S., significant five down, that close below but in syringes. whether mix to Europe, part vials multi-dose the it will multi-dose XX, prefilled it's of it's we a will think, of there be get, likely vials. In it's Asia, a other both. or and

of realignment flu that syringe. opportunity. lot a hint flu vaccine provides of that, that there vaccine, is vaccine, for being traditional capacity And the which the of in effect, is course, towards to chain prefilled also other COVID. repurposed And the a supply capacity's traditional the industry traditional So, the I flu of a tried lot

it's space, an and share. will in we well with line again, our market participate active So,

George Staphos

Thanks, Stefan.

So, turn my and related over. I'll follow-on, the question, other

potentially like flu mist the that somewhat of just dispenser. we'd increase traditional if because is by infrastructure producing suggest in you anyway, to, supply that -- would chain being -- a you flu been So, talking what's Ghansham there's mentioned expect that things on you're also but larger given flu vaccines for the that happening, displaced season COVID was

and be margin to right it no my XQ, we Home we you're would that Beauty let So, and sensible where given particularly lows I Bob, businesses sequential margin would expect Beverage it question, Food not alone other are now, Thank to given Aptar of comment across by obviously and in you. third guarantees the some that life, for be segment quarter. from know where a seeing flu around I'm going. improvement should in say, for the And off to quarter, be any context? stronger season going to But fair

Stephan Tanda

may Yeah. Look, failing probably be to whole to better. pent-up a for the know flu say it. heavy vaccinations demand this decongestant is is of so if and tends on. there rinse, how that it that add there don't And us, a more and save Obviously, season nasal rinse, to a suspect. just because we here you vaccination terrible for I other flu is positive

So, are yes, good in in if business, pharma business. if well you're the unfortunately I'll that's things that question. the season, margin for flu going pharma the Bob let not address

Bob Kuhn

Sure.

year the think see certainly, I I back. throughout do savings look amount And we're we market today back China, done that volume of come point, that And were see back does done because as start does resilient. want that in back line, a then come we've kind is the positioned when on down top transformation. So, bounced on what beauty opposite better we're an quarters, the the fact EBITDA. X% with normal, comment when the we've we improvement when to to that is for beauty in XX% down economy incremental reference follow line, of above starting that following a for the did the to, I and we is year, thanks we growth and to first significantly core bouncing think that would to XXXX, on I back. finished cost business it George, mention XXX% a made tremendous in back that of that getting I And rate the to three say, for if Once

get you the to margin. incremental So, once kind of that you point, see breakeven start above opposite any effect, then that,

be in, going to to it's we're before, what gradual the think I improvement. a as second and it's So, in here, is half, highlighted Georges, of going immediate to be more we've believe not snapback seeing continue an

those So, don't home margin. beauty I improvement a quickly depend to on we all see think in think the kind factories. of to and that, how we'll I some moving going -- we'll of improvements. beauty see margin once breakeven that we start dramatic that's in really the some significant and back can when above get It's But beyond points further then start

Stephan Tanda

margin the the this all Maybe I create Yeah. on additional activity would some costs, additional thing of course, also side, other some of mention COVID-related investment.

the on few So, already. with of think I two increases And we did also passing a space. a injectable in quarter percentage in some we that price

George Staphos

guys. you, Thank

Operator

from Instructions] Kumar with next Stanley. question Neel Your Morgan [Operator comes

Your line is open.

Neel Kumar

Hi. Thanks for taking my question.

about injectable related talked You projects are COVID majority applications. of potential the to

additions, potential increased was ultimately growth France available a wondering have there. you as capacity in for the capacity plans further potential any I I know you just to you're meet have the chosen If demand. but -- capacity given to year, last if you injectables supplier,

Stephan Tanda

Yeah.

line product then safe our again, then geographies. with situation then share increase shields, and And finishing, that less. really product that formation, the into to is think, And capacity our the beginning -- the so plungers and injection whole market we assume formation, on, overlaid need and more stamping, look I our stoppers, it's So, capacity types, or the in you on needles, Obviously, is different details. to you the coding. washing, blastema will

have, -- commit course, we cases, situation. the many then and I chain, that. wants source think, be this or to discussions But a capacities. and some of supply the chain in customer Nobody I and supplier So clearly, performance we when and capacities opposition certain reserve can with supply And accelerate in of that's you CMOs their supply In rely -- each dual with probably -- will be a investments say what we certain will -- the about yeah, industry. single line critical. on will including

Neel Kumar

I core you Great. had but That's the there any some in year-over-year. know color. And pretty called comps decline packaging. But had business, then were prescription you in And a pharma that strong were in particularly areas tough helpful also had growth growth you weaker? the active out in some that you quarter.

I for expected had a you quarter. previously the growth think bit moderate

just drove to expectations talked what about, initial upside there? we the As

Bob Kuhn

if I take. Stephan, can

Stephan Tanda

Yeah. Go ahead.

Bob Kuhn

side of which a prescription growth did and last rhinitis, there. of on have over of well. partially There CNS we on the couple kind softness we've that kind a comps, Sure. side, the had softness Saw with saw to -- a also counter new bit The the we we that's difficult allergic launches little indicated little bit before year the of due business in as because space. of big volume the peaked --

those we So, side. the of what on and really actually to were were kind referring prescription what materialized

as kind it level did we a fact, we whether quarter, strong so diabetes of -- we bit continue and a As little or experienced sales that some QX And first I to going at to thought going very level with the was had see active relates in was in in packaging, cautious that strong vial off. whether that to continue well. it were

good on And can see really of traction film The growth in other the out exceptional well. a as trying that is active that as quite probiotics. to healthier our starting there right you also now people thing industry lead well articles seeing nutraceutical are lifestyle. we said projects to see then, the is are doing And some plenty we're

see second a did QX. surprise little continues So, it how diabetes it us strong into the continuing that was bit the volume but we'll half, in

with closely So, really very mirrored QX our QX.

Operator

turn closing [Operator to Instructions] back are And the Tanda Mr. call there this I'll no at remarks. for questions over time. further

Stephan Tanda

very put feel in performance I Europe's about with quarter pullback board the bottom the largest we the annualized XX% economic good. the back the and Recession at think, a We've and with the if excited very out of we'll work good to history on see done going upturn. Thank the virtual preparing many about good probably I'll basis. and U.S. on road a cost the And that, posted close the we've the of down on to in we're future. XX% And call, an lot for generations, Very overall, coming is over Great Well, taking the the guide, and months. you. GDP you

Operator

This call. concludes conference today's

may You disconnect. now

AptarGroup (ATR) 31 Jul 202020 Q2 Earnings call transcript