AptarGroup's CEO Discusses Q2 2012 Results - Earnings Call Transcript

AptarGroup, Inc. (ATR)

Q2 2012 Earnings Conference Call

July 27, 2012 09:00 AM ET


Stephen J. Hagge - CEO, President, Director and Member of Executive Committee

Robert W. Kuhn - CFO, Principal Accounting Officer, EVP and Secretary

Matthew DellaMaria - VP and Assistant Secretary


Benjamin Wong - Bank of America-Merrill Lynch

Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division

Alex Ovshey - Goldman Sachs Group Inc., Research Division

James Armstrong - Vertical Research Partners Inc

Alton Stump - Longbow Research

Christopher Manuel - Wells Fargo Securities, LLC

Adam Josephson - KeyBanc Capital Markets Inc.

Mark Wilde - Deutsche Bank Securities, Inc.

Albert Kabili – Credit Suisse AG, Research Division

Jason Rodgers - Great Lakes Review

Brian Gary Rafn - Morgan Dempsey Capital Management, LLC.

Jon Andersen - William Blair & Company L.L.C., Research Division



Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup's 2012 Second Quarter Results Conference Call. (Operator Instructions) Introducing today's conference call is Mr. Matt DellaMaria, Vice President, Investor Relations. Please go ahead, sir.

Matthew DellaMaria

Thank you, Jonathan, and welcome, everyone. Participating on the call today are Steve Hagge, President and Chief Executive Officer; and Bob Kuhn, Executive Vice President, Chief Financial Officer and Secretary. Steve will begin our call with an overview of our quarterly performance. Bob will then discuss our financial results in greater detail, after which, we'll open it up for questions.

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

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

Stephen J. Hagge

Thanks, Matt, and good morning, everyone. Yesterday we reported results for the second quarter that were in line with the updated guidance we issued a couple of weeks ago. We also announced that we completed the Stelmi acquisition in early July. We view this transaction as a very positive expansion of our pharma segments product portfolio, I’m happy to report that the underlying Stelmi business is doing very well and our integration work has already begun and that the customer feedback on the transaction has been very positive.

Bob will discuss the financial impact of the transaction a bit later. The second quarter was a challenging one. Currency exchange rates had a significant negative impact on our sales and earnings. Also broad based softness in Europe affected each of our business segments, but on the positive side, we experienced strong growth in Latin America and Asia.

Overall, we were able to grow core sales, in spite of the challenges. Thanks to our innovative industry leading products, our widespread global presence, and a variety of markets we serve and the dedication of our talented employees. Even with the difficult economic environment, I’m very encouraged by the level of project activity across each of our segments.

Now looking at the segments – looking at our segments performance for the second quarter, our Beauty & Home segment primarily serves the fragrance/cosmetic and personal care markets. These two markets were affected by the slow down in Europe in this quarter. Project activity remains at good level for our Beauty & Home products and we participated in several new launches by customer this quarter, including several new fragrances, a new men skincare, several new cosmetic products launch using our innovative dispensing solutions, including our fully recyclable airless pump.

We also participated in several hair care product launches by some of our large multinational customers and several body lotion and spray products that are equipped with our dispensing systems that were launched in Russia, Poland and Thailand. Now looking at our pharma segment, strong demand for our nasal delivery devices from the prescription drug market was partially offset by weaker sales to the consumer healthcare market.

We’re particularly pleased that we began shipping from our new facility in Mumbai, India during the quarter as anticipated. Also it was an exciting quarter in terms of approvals of new drugs that are equipped with our delivery systems. There were a couple of approvals that happened in the quarter, that did not impact our results. But are important nonetheless as they relate to the debut of our patented dose indicator called Landmark.

Skyepharma’s Flutiform, a combination steroid treatment for asthma has been approved in Europe and is expected to be on the market before the end of the year. Flutiform is equipped with Aptar Pharma’s Landmark dose indicator and a metered dose valve. Also in nasal aerosol allergy treatment distributed by Sunovion Pharmaceuticals has been approved by the FDA and also uses our Landmark system. This treatment is planned to be on the market in the U.S. later in the third quarter just ahead of the fall of allergy season.

On the generic front, the FDA approved Sun Pharma’s generic Astelin Nasal Spray, which is equipped with our nasal delivery device and this again is expected to be on the market in the second half of 2012. We also have some several interesting consumer healthcare launches including a new eye moisturizing product in Europe that uses our preservative free pump. Several nasal saline launches in Brazil and Argentina, using our Bag-on-Valve system and in China several customers launched antiseptic sprays using various topical spray pumps of ours.

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