Aptargroup, Inc. Stock

Okay. Good morning, everybody. I'm Daniel Cohen, I'm a Managing Director at Morgan Stanley. It's my pleasure to host this fireside chat with the leadership of AptarGroup. AptarGroup is a global leader in drug delivery and active material science, the technology behind the nasal sprays, inhalers, injectables and dispensing systems that get critical medicines to patients. Before I introduce the team, just the disclosures that I need to read. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley representative.

With me here today, Gael Touya recently stepped into the role of President and CEO, capping more than 3 decades at Aptar and most recently leading the Pharma segment. Vanessa Kanu joined as Executive Vice President and CFO in January 2025, bringing a deep track record as a public company CFO. Gael, Vanessa, welcome, and thank you for -- both for being here.

Thank you, Daniel, for the invite.

Thank you.

Gael, congratulations on this next chapter as CEO. How should we think about Aptar priorities going forward under your leadership? What carries forward and perhaps where will there be changes?

Yes. So look, the first priority is really to execute on 2026 and our commitment. So no question. We need to deliver based upon our commitment and at the same time, is prep the company for our future long-term growth. This being said, I mean, priority one would be to stay focused and close to the Pharma segment. This is the growth engine for the company, looking for my successor for the segment. So I'm going to stay close to it because we need to keep on delivering where we are, and we've got a good business, a good pipeline and customers expecting on our partnership with them.

And then, look, I've been okay, 3 decades with the company. But it's been a long time, I was a beauty guy or a food and beverage guy. So as we speak, I have started my listening tour with the organization. So reengaging with customers, reengaging with the team and visiting the site. We've got a global footprint.

So starting, I will continue and priority would be to make sure that from an Aptar standpoint, we allocate resources, energy and our CapEx to the opportunities where we've got the greatest returns, value not only for customers but for shareholders.

Thank you. Vanessa, you've been with the company for going on 2 years now. Some of the markets still describes Aptar as a packaging company. When you first looked under the hood and over the past 2 years, what surprised you most about the business, particularly about the economic side of the business?

Yes. So first of all, I definitely would not describe Aptar Pharma as a traditional packaging company. So when I first joined the company, I have to tell you, I was very impressed by the breadth of the portfolio. So spanning everything from our proprietary drug delivery devices to our injectable solutions, to active material science solutions to the services that we offer, going from formulation expertise to development support, regulatory support.

I'm sure we'll talk a bit more about those services in our discussion. But when you look at the breadth of the portfolio and you look particularly at the product that we offer, these are products that are very technical, highly regulated, where safety, quality are super important, very, very important because we cannot compromise patients' lives. And so this is where our technical expertise, our intellectual property and our decades of know-how in this space really do form a competitive -- a differentiator, so to speak, and you do see that in our margin profile.

In the Pharma business, our EBITDA margins, I should say, are -- 32% to 36% is our target range, and we have consistently been in that target range. And I mean, these are EBITDA margins that are best in class. And so I would say it's really more reflective of a differentiated technology platform than a traditional packaging business.

So not even simply a component supplier either. There's more of a platform perhaps around that.

Absolutely.

Maybe just to talk a little bit about the transition. Obviously, you've been, Gael, in the job for a couple of weeks now. Stephan would say -- I think, was known for saying, "if it goes through the nose, Aptar is involved." Is that still how we should think about Aptar?

He was making a comment for Aptar Pharma. And I will say it's a colorful way to describe in the group. In the pharma space. We are way more than a component player. That was one of your questions. And 9 years ago, I mean, taking over the segment, this is all the work done to transition from a strong product vertical where I believe we've got the best-in-class drug delivery solutions for the nose, for the lungs, for ophthalmic or dermal type application. And we added a lot of capacity in order to make sure that we could become the partner of choice of customers.

And it does require that you start as soon as possible in the drug development program of our customers. So -- and then you follow the molecule. So we've got, as we speak, 9 years after, the ability to do formulation strategy, formulation development, predominantly for the respiratory tract and then to add the analytical support, the regulatory expertise for our customers, big, large and all the early-stage biotech company to be in front of regulatory bodies and to be approved.

So I will say we are way more than just a component, we are really part of the overall drug development program with our customers with a lot of humility. We know where we stand, where we can support them when we can derisk and accelerate their drug development program.

More broadly, Aptar is not only a pharma player, we are a long, long standing relationship, a very strong competitive advantage in beauty, in food and beverage. So everywhere where you need to protect formulation and dispense complex formulation, Aptar is the partner of choice.

And this is what I'd like to emphasize, the proximity, the long-lasting relationship with customers because we know how to solve their most complex dispensing challenges.

And do you see -- given your recent tenure leading that Pharma business, do you see opportunities in your new role to bring some of that some of the learnings or some of the expertise from pharma to the other parts of the business?

Yes. One of the learnings, if you really want to be a partner of choice and if you want to be, let's say, mission-critical for your customers, you need to bring way more than just a dispensing platform. You need to create value beyond products. So from components to integrated solutions, to service capabilities, digital support, where you're going to be supporting your customers during their development program and whatever the kind of development program. And the objective is for us to become the most trusted collaborators where we're going to be part of their success.

So depending on the business categories, we will have to create that value beyond just a technical platform. [indiscernible] mentioned, for example, in the beauty world, I mean you've got a lot of evolutions around the nature of fragrance without ethanol and so on and so forth. I mean how we're going to provide them the maximum support to find the right solution.

I was with L'Oreal not long ago. They've got a segment called Beauty Dermatology. L'Oreal is the #1 beauty player in the world. They were talking prescription, patients blur frontier between the pure skin care and the consumer health care, where to navigate. And the co-CEO of L'Oreal was telling again, you've got the unique expertise where you can really support a skincare player to transition to become way more a health care player where tech and science are so critical because consumer at the end of the day, we are patient and consumer at the same time, we want effective results.

Thank you. Maybe turning a little bit to diving into the business a bit. The last 18 months have been -- there's been some volatility in the business. Could you talk about that, reflect on that and perhaps how that -- how you think about the longer-term 7% to 11% pharma growth rate. I think that you've -- you've got there.

Correct. Yes. So if we step back, the last 9 years, we've been growing top line at a CAGR growth rate of 9%, but in the last 18 months, we've been facing some volatility and that's due to the emergency medicine. You know that we are a strong partner of the opioid overdose issues. I mean trying to make sure that you've got naloxone drugs all over the place in the U.S. And this market is facing inventory readjustments. So we qualify the, kind of, negative impacts, we're going to face in 2026 with a $65 million top line impact. And obviously, we are losing the contribution for.

We are trending pretty in line with what we share with you, and we are very close to our customers. So we believe by early 2027, we will know where the baseline of this market will be. This being said, and if you look at our Q2 results, excluding emergency medicine, that is a major impact. The Pharma segment grew by 8%.

If I look at the different divisions, Injectable grew by 9%. And Q2 2025 was a very solid, so comparisons were challenging. And following 2 quarters with plus 20% growth rate. Consumer Health Care done plus 15%. And prescription -- pharma prescription excluding the Naloxone impact. I mean the emergency medicine impact at plus 8%.

So beyond your question, should we change our framework and the algorithm? The answer is no. The 7% to 11% long-term growth remain the framework, we believe, strongly. Market conditions are good. The overall pharma market is growing. Some segments are growing faster than others. And then you combine or you accelerate that growth with your innovation and with your pipeline build and pipeline conversion.

One example, the cough and cold market has been quite challenging for us. The growth rate is GDP plus. You've got the ability to accelerate that growth, thanks to your innovations because you're going to convert some dispensing solutions to your innovation. And this is what Haleon, one of the leader in the market with Theraflu in the U.S., Otrivine outside of the U.S. is grabbing significant market share with our new innovation. So that's where natural market growth, accelerated by innovation and innovation, critical for us and the pipeline build and pipeline conversion make us being confident with the 7% to 11% long-term targets.

Great. Just a question on margins as your pipeline expands into other therapeutic areas, cardio, neuro and biologics. How do you -- how does the margins of that business compare to existing margins?

So you know we share with you, we've got 4 divisions, Prescription is the most profitable divisions of Aptar Pharma followed by Consumer Health care, Active Material Science and then Injectable. The nose to brain or the central nervous system type we are doing via the prescription division. So to give you some color on maybe some indications about potential margin expansion for this pipeline conversion, part of the pipeline conversion. And that's why we are comfortable with the 32% to 36% profitability range.

What would I characterize for you? Years back, Aptar Pharma entered the nasally delivered drug to treat local issues. You've got your nose running, you've got your nose block, you've got your allergies. But in the last 9 years, we have been working a lot in order to use the nose as a different pathway to treat chronic disease to treat emergency. This is what we see with Naloxone being one example. You take Baqsimi for severe hypoglycemia, you take spravato for depression-resistant treatment.

You take the [indiscernible] or UCB for severe, I will say, epileptic seizure or epinephrine with neffy. So the more and more you're going to use the nose as an alternative pathway for chronic and emergency treatment, and part of the pipeline is more and more for the nose to brain, where we are working actively with different scientific organizations in order to characterize the science behind the nose-to-brain delivery pathway.

We published yesterday a joint collaboration with the Mass General Hospital. What is the job there with them is to characterize the pathway to understand the kinetics of the drugs moving from the nose to go through the brain and to avoid the blood-brain barrier that is highly protecting, I mean, the brain.

So we are characterizing the science, we want to evaluate different compounds or different potential candidates to go through the nose for CNS treatment. And that's the work we are doing and that's the quality of our pipeline. And that's why we were indicating with Vanessa. We are not just a component, we really play with them to understand the science behind to understand the regulatory standpoint or to build the regulatory with authorities and the analytical science. The objective for us is to demonstrate to the hundreds of early-stage biotech that nose to brain might be a very interesting delivery pathway.

Can you talk ...

If I can just add because I wanted to make sure we hit your margin comments also. So just to complement what Gael was saying, the pipeline is very diversified. It is -- if you kind of look at the weighted pipeline in terms of what does it comprise, right? It's respiratory, it's biologics. It's the systemic nasal drug delivery that Gael's talking to, its injectables, ophthalmic, et cetera. And the reason I really wanted to complement Gael to add that on is because it's not going to be any one molecule, any one therapeutic area, any one delivery route, it's very diversified.

And when you think about the top items there, these are the highest margin parts of our portfolio. So when you think long-term margin profile, which is, kind of, where you're going, it is well supported just based on what is in our pipeline today and the weighted value actually skews upward.

One other exciting area of pharma is the GLP-1 space. Can you talk about the opportunity in intranasal or pulmonary delivery and if Aptar is playing a role there?

So our business model is customer-led. I mean we work with pharma company. We support them to accelerate and derisk their drug development program. In the space of GLP-1, everybody is focusing on injection and oral, we participate to that growth. But nobody was really moving there. So because we've got the capability to say, hey, why not taking an API and working around the formulations to nasally deliver GLP-1 or to look through the lungs. We've got the formulation capabilities. We've got the technical platform capabilities, why not doing this? So we've done it. We file the patent and so on. We're going to be looking whether we can partner with some companies because we don't look at going to the end. That's not where we are. And that was also a way, Daniel, to prove our thought leadership.

Whenever it goes through the nose or the lung, we are more than a component, and we can really support you guys in your drug development. So will GLP-1 delivered through the nose will be a huge -- I mean administration pathway? I don't know. It's a good example of what we can offer.

Let's look pragmatically speaking, how can we support biotech, a big company that could be interesting by the work we have done and let's look at that one. I mean there are many cases when you think about Enbumyst where we work with the lab -- I mean when you do excess body [ fluid ], you can take your pill or you go to the hospital and you've got an IV. We work with them to say, maybe you can have a treatment through the nose. So that's the same principle to support customers whenever they consider a potential alternative pathway.

And it sounds like some of that early work may start on your own, but you will look to partner that with the customer.

Ideally, we want to start with early-stage biotech. How can we support you? Obviously, the earlier we start, the earlier we're going to spec our drug delivery platform, once you start generating data and if you do a good job and you are a true partner of choice, you're going to continue the course of the developments. And then you look at your revenue extraction model being slightly different. Fees for service, but why not also extracting your fair value from the work you are doing through access fees, milestone payments, change of control and why not drug royalties. So that's also a way to strengthen our pipeline, have a defensive moat around our product and to generate different revenue streams.

Got it. Maybe talk a little bit -- because you do play across the life cycle of a drug, maybe talk about a little bit conceptually about how the economics for Aptar evolve as a drug goes from brand to generic maybe to OTC. Is that -- there's a lot -- there's evolution that's going on in the respiratory market with the new propellants, how does that all interplay in your business?

Okay. So we are actively focusing on the life saving -- the life cycle management, sorry, for our customers. So you're right, the drug will start with an originator. Some years after, you're going to get generic players and maybe the regulatory bodies will say from prescription, we can move OTC. This is what happened with Naloxone and with Emergent, the originator, but this is also what happened with many, many customers with whom we are working.

So our algo is 90% of our business is really with the natural growth of the molecule, the ability to support this life cycle management and to provide support to generic company to enter that space and they are working with us. And then the additional growth rate will be really back to this innovation accelerator, convert additional market to our solutions and the pipeline conversion.

In the example of the new propellant, the world is going to switch from current propellant to a new one, having less of an impact to global warming. The entire world is going to change, where Aptar is playing a role is to define the right technical platform that's going to be compatible with the new formulation because the formulation with the new propellant will behave differently. How to make sure that we're going to be fully compliant, number one.

Number two, the regulatory pathway might be different. And we, at Aptar, working with the FDA in the U.S. to define the guidelines for pharma to come with an approval for a propellant switch because at the end of the day, it should be fully compliant, fully safe for the patient. So we are supporting our customers there, not only with the device, but with the services and that's our business model. This is from formulation to patients.

And then maybe just turning to the injectable side, I think there's also an evolution, particularly in Europe with respect to Annex 1 compliance. How does that impact you?

So the European regulatory agencies are raising the bar. The Annex 1 is really a requirement for all players in that ecosystem to be more, I would say, in line with the best product to be delivered on the market. So we are fully compliant with Annex 1, number one. We raised the bar everywhere in our different manufacturing sites. We've got a good pipeline build with Annex 1 because all our customers should comply with the regulation, and they are looking at partner, Aptar being one of them, to make sure that we've got the organization to be in line with Annex 1 in order to give them the comfort that Aptar is the right partner to be fully Annex 1 compliance. So that's a good pipeline build for us, and that's where we are fully committed to.

Got it. Maybe Vanessa just talked a little bit about balance sheet, Aptar has relatively low leverage as a company, low amounts of debt. How do you, as a management team, prioritize returning of capital, organic investment and M&A as you look to the future.

Yes. So we have a very strong balance sheet. As you've pointed out, so we have discussed our leverage corridor being between 1x to 3x EBITDA. And the -- think of the leverage corridor as the range of leverage that we would expect to be within under normal steady-state conditions. So if we went above 3, we would expect to delever back down to be in that range. If we went below 1, we would expect to get back within the range. So that's our corridor. And as of the end of last quarter, we're about 1 -- just under 1.5 in leverage.

So low on the leverage scale, as you mentioned, which gives us a lot of flexibility. In terms of how we deploy capital in terms of our priorities, our first priority is always to invest in the business, invest in the business, in R&D, in innovation, digital technologies, capital investments that will help to not only sustain the business but also drive profitable growth and obviously return.

So that's always the first priority, organic and inorganically, in terms of where we deploy our capital. And then once we have done that, we obviously then prioritize return of capital back to shareholders. And in that vein, we're actually very proud of our dividend program. We are in -- we're 32 years of annually increasing dividend. We do participate in share buybacks.

I would say that is the more flexible discretionary part of our capital allocation framework. Although if you look at the last 18 months alone, we've returned about $700 million of capital just in the last 18 months to shareholders, roughly $180 million in dividends and the rest being in share buybacks.

So we've been pretty active on that front. But what I would say, just to your question about looking forward is what you can expect from the management team is to continue to prioritize those opportunities where we see that, of course, we're going to generate significant returns to the organization and ultimately our shareholders.

We've talked about a lot of different -- Aptar's exposure to a lot of different therapeutic areas, modalities, whether it's nasal or pulmonary, ophthalmics, injectable. If you look out, you're at the, kind of, beginning of a new journey. If you look out 3 or 5 years where would you expect to see the most exposure impact to your business. And also in addition to modalities, there's also therapeutic areas that we talked about that's pretty wide ranging. Where -- would you prognosticate into the future that will have the impact?

So from a pipeline perspective, I would say, 3 years, I don't know whether this is a good indicator. You know that in pharma, everything is taking a little bit longer. That's all the work done around the nose to brain is pretty excited. So building the science, building the analytical framework to support the company. I mean when you think about some neurodegenerative issues with the Wake Forest University School of Medicine last year, I mean, we published a joint research and demonstrated that nose to brain, we've got a way better deposition rate of insulin and taking a pill or injections because you need to bypass the blood-brain barrier.

So there's a lot of very interesting tractions, where not only this is a new pathway, but also the technical platform being different because you need to have a different delivery mechanism. So that's one area of interest. Obviously, all the SNDD, chronic disease treatment through the nose, through the lungs. We are working a lot around biologics as well. That could be an alternative pathway.

And we are pretty excited to continue the work in the injectable space. In the injectable space, we are a component player. We have to be clear there. We supply stopper, plunger for prefilled syringe or needle shield protection.

We provide a certain level of services behind and we participate in full to the growth of that market. So -- and it's strategic for us, but I wanted to be fair on that one. So we see the injectable having a lot of potentials because the market is looking for good, reliable partner, working with them for biologics trends for Annex 1, having a global footprint that we invested a lot in order to be present in China and the U.S. on top of Europe.

So we're going to be pretty exciting, looking at injectable moving up. And it's going to be a lot already there. And helping the market to transition to the new propellant. We are also investing a lot more through the lungs, for the lungs with biologics, larger molecule that does require different kinds of [indiscernible] or [indiscernible] of drug delivery payload system, and we are actively working on this.

Well, I think -- look, this is a health care conference, so we've spoken a lot about the Pharma business. So I appreciate that. I mean what certainly comes across is and perhaps is underappreciated is how deeply embedded Aptar is in the development and delivery of critical medicines. And so both from a component supply standpoint, services as well, so that certainly came across in your remarks today. Any final thoughts from you, Gael?

I will add something -- I mean we have not discussed patients, but that's maybe something that is underappreciated. I mean, everything we are doing at Aptar is patient focused. And when you look at the developments, we are offering user experience back to our customers. The economics about a product. We are providing human factor to our customers. We are providing on-boarding solution, the complexity of the world and with the shift from clinics to at home or to virtual settings, very challenging for a new patient to onboard and to have a good adherence rate.

So we're working a lot on many times when you've got big players, Aptar is the one in the room with their commercial and their business development team to discuss patients because we do understand how the patient is going to behave and what kind of on-boarding solution. And we've got data showing that the better you are onboarded, the longer you stay the course and the sooner you're going to refill your script.

And last, all the digital elements. We've got patient communities, for example, we've got an app that is used by over 3 million patients on a worldwide basis for migraine treatment. So how to track, how to understand, how to improve and potential issues. We've got this patient community. We are operating on behalf of Biogen. I mean we are the operator from a digital standpoint. So I truly believe that better understanding a patient in these environments, better supporting remote monitoring, having patient community is helping ready to position Aptar as a trusted partner with companies, not only as a drug delivery expert, having the ability to provide formulation, analytical and regulatory support, but also to put the patient at the center of everything.

On that note, thank you, Gael and Vanessa.

Thank you very much.

Thank you.

AptarGroup since the mid-2000s. Joining us today is Gael Touya, who is, as of September 1, President and CEO. Congratulations, once again, and Mary Skafidas, IR. So, this session, or these sessions, are intended to be interactive. To the extent there are questions in the room, please do not hesitate to ask. And with that, I would like to just, Gael, maybe, give you a moment to a quick introduction. And you're 9 days on the job, but you've obviously been at Aptar for a long time. Nobody expects a strategic overhaul this afternoon. But as you've, kind of, prepared yourself for the new role, what are some -- maybe 2 or 3 things as you look across the organization that are, sort of, core to what Aptar is and nonnegotiable in terms of we're not going to change -- we know we're not going to change this, if you will? Thank you.

Okay. So, thanks, Gabe. And of course, pretty excited to be with you. So, thanks for the invite. 9 days into the job and still alive, so good. But as you rightly said, I mean, more than 30 years with the company in different parts of the organizations, all the 3 segments, and different -- working and living in different regions. But I will share with you 3 elements.

I mean, the first one being the customer centricity. I mean, I want us to continue to be perceived as the preferred partner for our customers and to develop this kind of very tight relationship. So, for me, that's not negotiable. I'm not there to be a supplier. I'm there to be a partner of choice with whom, as a customer, because we bring the right value proposition, expertise, and capabilities, you're going to co-invest with. That's number 1.

Number 2 is innovation. In that space, I mean, for me, innovation is the -- one of the only sustainable competitive advantage of any company. So, for me, innovation is what will give you that ability to be perceived as a preferred partner. And number 3, I mean, performance mindset, execution. I'm coming with nearly a decade in pharma. When you play in the pharma space, you know that your quality of supply, your safety of supply, is nonnegotiable. And this is the same for the other segments.

When L'Oréal is waiting for a new product because they've got a new product to be introduced on the market, and they signed already with all the, I don't know, Sephoras of the world that they're going to get product on time for their product launch -- I mean, you better have, as a partner, to be on time with good quality products.

So, that will be the 3 elements. And me as CEO, cross-segment, I going to be looking at where we need to really strengthen our leading position, but at the same time, where we need to look at course-correcting and to improve performance, and how we can unlock value across the organization.

Got it. On the Q2 call, you talked about visiting some factories. And again, maybe some preliminary groundwork for setting the stage to step into the new role. You obviously ran Pharma, I think, since 2017.

Correct.

So, maybe not as close with Beauty and Closures necessarily. Again, not asking you to grade anyone. But as you're going through that process, and I guess in fairness, Beauty has had a couple of stumbles here in the past couple of years, some of which were outside of Aptar's control. But just things that you're looking at within those 2 segments that you're -- like I said, maybe couldn't see from pharma that you're paying attention to?

Yes. So, I've been -- I started my listening tour, and I will continue. And that listening tour is putting me in front of the business, I mean, at any level of the organization, but also with customers and partners. And what I will say for the 2 segments, I mean, there's a very strong technical capabilities. You've got people extremely committed and engaged for their business, and I had a very interesting conversation around talent management, for example. Our people are asking us to be way more agile and to accelerate some process decision approaches.

But when I look at the 2 business, there's 2 different realities. I mean, on one hand, Beauty is outside our long-term target and outside their potential. This being said, I have seen regions that are well within the long-term targets. And I could say Asia is well within the long-term target, but also Europe, knowing that Europe is our largest market from a beauty perspective.

Americas is a problem. I mean, LatAm for me is temporary. They're going to -- they should rapidly be back on track where they should be. The #1 problem for us is really North America Beauty. I'm not satisfied at all with the performance over there. And we need to be way better from an execution standpoint. So -- and everything will come down to -- you set the expectation, you've got a culture of execution with discipline and a clear accountability and sense of ownership through the organization. So, that's what I've seen.

Closures, they've been within the long-term target. They have been off. They have been within. We need to be reliable from an execution standpoint, and we have been facing 2 problems for production ramp-up, and the other one was for a maintenance issue in one of our main factories. Performance is a little bit lower than the long-term target, but the top line is there, the business category, the pipeline, and the mindset. And for me, I'm confident that they're going to be back within their long-term targets.

Okay. Maybe we'll come back to Beauty in a second. But I think you closed the second quarter call talking about 3 priorities: profitable growth. You've talked already a decent amount about execution. So, I think that's pretty clear. And then allocate capital. And I guess what's becoming more evident to me over time is companies that consistently are profitable, they're capital aggregators. And then it ultimately rolls up to you to decide where that goes: reward shareholders, share buyback, et cetera, make acquisitions. If you had to, kind of, pick one today that's maybe been a little bit of a binding constraint looking backwards on, I'll say, the Aptar value creation, which one do you think was, kind of, a little bit of a thorn?

Execution. I mean, we don't control the weather conditions, but we need to control the way we navigate those different weather conditions. So, Beauty and Closures -- I mean, 2 of them, they've got good fundamentals from a market standpoint. Market is growing. So, we've got long-term relationships with customers. They want more of Aptar with more listening tools. We've got good technology. We need execution, right? We need to make sure that through accountability, we need to make sure we lead with accountability. So, we set the expectation. We control transparently the performance, and we deliver based upon our commitments.

We need to move with agility. We need to simplify the way we work internally. We need to reduce complexity. We need to accelerate the decision-making process. And we need to win through accountability. I mean, and we need to transform or to turn, what I will say, our great market position into market leadership -- what we have -- but into sustainable profitability for the organization. So, execution by far.

Love it. It's obviously a health care conference. Turning to Pharma. Hopefully, this is one of the last quarters that we're talking about this emergency medicine destock issue. Last update, it was on track. We knew it was going to be about a $65 million to $70 million top-line hit abating -- starting to abate in Q3, mostly gone by Q4. Some of the data that I look at actually says -- suggests the molecule has started to inflect positively from a scripts standpoint, and I appreciate that's not the only channel in which this kind of drug gets distributed. So, any updates for us there funding-wise or just we've got line of sight, feel good about?

You've got good public health programs. You've got good funding programs that are critical to tackle the opioid overdose situation. We are on track with the $65 million to sell impact in H1 and the remaining for the second part of the year. You know that we have to rely a lot on our customers because you don't have any public information. I mean, I can't go to Nielsen and to buy Nielsen to get the sellout of the product. I mean, it doesn't work that way because the #1 market is public market interest. So -- and when you listen to those different players, they are telling us low mid-single digits. So, we have to track on that one.

Early 2027, we're going to better know where the baseline has been reset up to build from. But fundings, public market interest, discussing with our customers -- they are all trying to make sure that you've got, let's say, opioid overdose using our technology everywhere on the market. And yes, that's a $65 million top-line hit, and margin-wise also, we are losing that contribution. Maybe I could share that we factor in early on this kind of negative impact. If you exclude the margin from this emergency medicine, Pharma margin that went up. And here also, you don't have any -- I don't have a magic recipe over there than being disciplined on the execution and making sure that we prioritize, we execute, we deliver on time to make the overall machine, I mean, more performant.

So, I was very pleased to see that excluding emergency medicine, prescription is at 8%. I mean, in Q2, Injectables is at 9% following 2 quarters where they were in the 20%, because the market is growing and the market is asking for solutions. CHC is at 15%. So, excluding emergency medicine, yes, the 7% to 11% algorithm and that framework still solid for us. It's a long-term commitment.

I was going to go to the 7% to 11%. So, what kind of -- what excites me, and we're overweight on the stock, and it's one of our favorite ideas as we sit right now, particularly given we want to lean into defensive names in the moment. Your model is a little bit unique relative to maybe some other folks that are here at the conference or even packaging in general. You've talked about roughly 90% of, kind of, your revenue is recurring and growing. And then you get the remainder contribution from the pipeline of new molecules, new product introductions, things like that. Can you talk about, sort of, the magic of -- I mean, you say we don't have a secret sauce, but that is a little bit of a unique strategy that you have or...

So, when I came on that business back in '17, I mean, we were, what, USD 750 million, good technology, but we were predominantly a product-driven organization. You need a product to dispense your solution for a specific route of delivery: nasal, pulmonary, ophthalmic, and so on and so forth. Here are our products. And fantastic technology -- I mean, fantastic technology. So, we have been keeping evolving and developing and strengthening our technology. Don't get me wrong.

But the point was to gain flexibility in the value chain and to say, well, if 70% of all the R&D work is done by 2-person, 1-molecule, early-stage biotech company, I mean, maybe we could partner with those guys in the early stage of their development and then to follow the molecule from formulation, from analytical support, but also whenever they're going to face the FDA or any regulatory bodies. And that was the decision taken by them to say, yes, we're going to be on top of drug delivery devices, a combination product player that will be able to provide formulation support for any drug to be repurposed through the nose or the lungs from an analytical standpoint. And the regulatory guys, they are raising the bar always. So, we've got that expertise. We strengthened a lot our regulatory capabilities in order to support our customers to navigate such complexity.

So, when you are in the early stage, they're going to specify your product. They're going to generate data to demonstrate compliance, efficacy, safety to the FDA, and they're going to stay the course with you. And we went, event a year ago, or a little bit more than a year ago, we went even to acquire the company doing clinical testing Phase I and Phase II. So, the ability to work drug substance and to fill the substance with our product for our customers to do clinical testing. And guess what? They stay with us.

So, the magic recipe is maybe to follow the molecule, to be the partner of choice, and to look at different ways to extract value with them. Why not? Instead of waiting to get your product on the market, we can have fees for service, or we can discuss differently saying, "Guys, maybe we would like to have a kind of biotech value extraction model. Why not for your different milestone payment?" I'm going to put resources to support your program. Phase I, you're successful, I want to cash in. Phase II, you're successful, I want to cash in. Change of control, I want to cash in because I've been supporting you, early-stage biotech company, to be acquired by a big guy. So, that's some of the magic ingredients, if I may say -- not so magic, but that is making our value proposition so robust.

And it's one side. The other side of this magic recipe is we are a customer- and a patient-centric organization. Everything we are doing within patients. We've got user experience capabilities: how to onboard patients, how to remote-monitor patients in a world where the health care market is moving a lot from clinics to virtual settings at home, how to support them. We bring this element of differentiation, and we extract value from it.

I'm an analyst, so I have to ask the question. You talked about maybe 6 or 7 years ago, the change in mindset to maybe -- I'm going to say co-invest, but with some of those customers on the molecule. Presumably, you've got scientists on staff that are saying, "This one has a higher probability of efficacy than this one," or something like that. Do you guys track -- I suspect you do -- the number of projects that maybe starting point indexed to some level, and now you're 200 -- you're up 2x on opportunities sort of in the pipeline, irons in the fire, if you will, conversion rate, things like -- anything that -- and a little off script, but I'm just curious if there's something like -- since you're running Pharma.

How much we can share, I mean, to support the algorithm, and so that's something we are working on because when you listen to pharma company, they're going to openly share, "This is the number of Phase I I've got, number of Phase II. This is the readout for Phase III that I'm expecting," and so on and so forth. So, that's something we are working with Mary to improve the way we could disclose our pipeline because, yes, we are very strict on our pipeline build and pipeline conversion, and we follow all the steps and so on.

And -- and at the same time, because in many routes of delivery, as we've got a leading position, I don't want to give indications to my competitor. That's where these 'Aptar guys, they are sniffing around. There's maybe something interesting.' What I will say, though, is that everything that goes through the nose, that goes through the lungs, we are behind any kind of development, and we are trying to support our customers at best. And this building of drug capabilities behind has been helping us to move from, I will say, kind of, decongestion. You spray through the nose to treat a local issue: nose is running, your nose is blocked, you've got some allergies.

And now we've got more and more through the nose to your blood system for different kind of products: tachycardia, Enbumyst, I mean, edema for water retention problems, opioid overdose, severe hypoglycemia, and so on. And we are also working a lot around the nose-to-brain. We all have a blood-brain barrier, and this blood-brain barrier is protecting, basically, our brain. You take your pill, it goes through your GI tract, only a fraction will go through the brain. For different kind of treatments through the nose, you can directly go to a very specific part of the brain. That's where we're working to develop the science and the analytical capabilities to provide the support to all the early-stage biotech to work and develop their solutions.

So, you mentioned a couple of drugs. I had it on the list: Enbumyst, CARDAMYST, neffy, a couple of these products. I know it's difficult to say in terms of uptake and how physicians are going to adopt different drugs and treatments and things like that. But just as you look across the addressable markets maybe internally, are there 1 or 2 drugs that you're more excited about today than maybe you were 6 months ago, is kind of, question number 1. And then anything in the pipeline on the generic conversion opportunity -- because I think that's unique again to Aptar as drugs go from patent-protected, generic, and then maybe over-the-counter -- sort of the multiplier effect, if you could talk about that a little bit?

Yes. So, the very first part of the -- you've got 2 questions, again. So, first question, I will say we are not predicated on any single drug. I'd like to say we hit a lot of singles or doubles, rarely home run. We are not against. So, what we are exciting about is really to see the attractiveness of the nose or the lungs for therapies to be repurposed from the one route of delivery to another one, the oral or injection. So, that's one. And there are some interesting programs.

The adoption level varies a lot. I mean, the one where I believe we could have some potential success -- I mean, I'm still very big on -- I'm not going to name neffy, but the epinephrine. I mean, you've got an anaphylactic shock. I mean, you need to carry your EpiPen. It's bulky. It's very painful. If you discuss with patients, you go to a restaurant, I mean, they don't have any EpiPen. I mean, I hope they're going to carry neffy somewhere, or the new neffy is coming and so on. But I see a potential for scalability for that product. Now we see the success, and it will depend on the success of our customers.

The second part of your question is, kind of, from originator to generic and from prescription to OTC. How would I say? We've got a long experience around moving drugs from -- through the life cycle. And everywhere, we are there to support our customers. So, with the originator day 1, if it's successful, it's going to attract generic companies. This is the way it works. And the generic companies, they are all fighting to get the first-mover advantage because they know that they're going to grab most of the market share. I mean, a drug per se from an originator is going to lose a lot of market share after 2, 3 years with a generic company. That's why all the big pharma, they are a lot discussing about loss of exclusivity. That's why they are fighting hard to reshape their pipeline.

So, we are the partner of choice for the generic because they want to be the first one, and they're going to work with, as much as possible, the originators. So, they develop their formulation. But from a drug delivery standpoint, they're going to work with us also because we're going to support them to be in front of the regulatory guys to be approved. And then on the switch prescription OTC market, I mean, yes, naloxone has been the first one to blur frontiers because it's a prescribed drug that was available over the counter, and you've got additional drugs whenever it's critical to reach at scale number of patients.

And there also, we have to be well prepared for the scale volume. So, we have to discuss clearly with the customers: what does it mean? Because between a drug being prescribed and being over the counter, you multiply the access or the accessibility of the drug. So, you have to discuss your supply chain resilience with your customer, and you have to have a very tight connection with them.

As we learned during the pandemic. Okay. I wanted to ask about something specific, I know it's sort of more in developmental phases and maybe difficult to comment. I think May, you announced a patent application, preclinical data supporting intranasal delivery for GLP-1. I think a lot of people are trying to draw a correlation or use you as a proxy for how successful West may be on the injectable side as it relates to GLP-1. But just maybe where that is in the stages. It sounds like early stage, but I could be wrong. And then as you look at your drug delivery versus it being injectable, I mean, that seems like, at least based on the script data that we look at, would be a pretty big opportunity, way to scale it, think about it?

Right. Okay. So, first, whenever you deliver a drug through the nose or the lungs and so on, we want to be involved. So, we are scouting the market. And we are scouting if it's starting somewhere in a 2-person, 1-molecule somewhere, we want to be their partner on the discussion. And because we have not seen any early-stage biotech, I mean, working on that one, we decided, why not us?

So, yes, we develop the formulations because we've got that capability. But the intent for us is not to go to commercial. I mean, we know where we are. But we've got the ability, I mean, to reformulate a drug being either orally taken or injected to be delivered through the nose: which kind of excipient, which kind of can you characterize the deposition, the dissolution to the human tissue, how you build the analytical support on that one -- we know this. So, the job is, well, let's look at that one. Let's patent that route of delivery and let's shop around and to see whether some company could be of interest or not. And obviously, we spec our delivery solution. So, that's also another way to demonstrate the kind of capabilities we have in terms of being a partner of choice for the market.

Now, will that nasally delivered GLP-1 be impacting the injectable space? I think it's not going to be on the market before years. That's a long road first. And we are very humble with that program -- very humble. But it demonstrates that we are more than just a device player, and this is what I wanted to demonstrate.

If I could add, because this is really a capability that Gael started, the services part. So, this ability to reformulate an injectable into something that's nasally delivered, respiratory delivered. If you talk to the team, they say, "We usually wait for customers to come to us. They need formulation help." But if we see an idea now, why don't we reformulate it? Take it to maybe a Phase I, maybe a Phase II, and see then who might be interested in the market. But right now, it's exploratory, right? Very early stages.

And that's a way to demonstrate the strength of your expertise and capabilities. In the asthma and COPD market using our valve, we've done more or less the same. I mean, you know, guys, that we contracted with the FDA -- and the FDA is developing the guidelines for the new propellant switch because the entire market will transition to a new propellant with Aptar because we develop the methodologies and the clinical expertise, and we've got the formulation capabilities, I mean, to be the right partner with the FDA to define the guidelines for new drug approval. That was not our job before. We were just a product player. "You want my product, you have my product. You want my product, yes, but I can offer way more."

Switching gears to Injectables. Last year, you completed and wrapped up qualified $170 million-ish investment in Injectables. I don't know if you guys have talked about the, I guess, objective to maybe double that business over 5 to 7 years. But just as you look across, again, the pipeline and thinking about just that market itself, the pace at which it's growing, can you lay out for us -- you're fully done, you're qualified, selling product. Any new updates, incremental margins that we should think about there? And then as that utilization rate comes up, maybe does that change anything?

So, different questions. So, number 1: are we done with the big investment program? As we speak, the answer is yes. I mean, no more big box on the CapEx road map. This being said, within those big box, if we need to add additional lines and manufacturing lines, we're going to do it based upon the different programs -- so number 1.

Number 2: do we maintain our vision to double the business for the next years? We share we are confident, and pretty confident, to be in the high-single, low-double-digit growth. Some quarters will be better than others and so on. That's directionally where we are, and this is where we've been: Q2 at 9%, and that was a pretty solid Q2 2026 following 2 quarters where we've been at 20%-plus percent. So, confident on that one because customers -- first, the market is growing faster than the overall pharma market. I mean, the Injectables segment, Biologics, more sensitive type formulation, GLP-1 -- I mean, people are looking for a reliable partner to sustain that growth, and this is where we are. And what was the last question?

Margin expansion. And margin expansion because our strategy is very much to focus around high-value products where, once again, we try to be the right partner and try to be selective on our market, I mean, to extract best value as possible. And remember, we represent a fraction of the overall drug product. So, yes, we believe good execution, market segmentation, pushing our high-value product will contribute to margin expansion. Now, you know that we share that prescription is the highest profit engine of the segment, followed by Consumer Health Care, then Aptar material expert is CSP, and then injectable. But confident that we're going to move and profit margin expansion from an injectable standpoint as well.

Understood. Last one as we wrap up, and a little bit of a sensitive topic, I appreciate that. But intellectual property is the lifeblood of what you guys do. There's a couple of cases out there right now. Maybe not necessarily anything specific, but any updates? I think that there was a case in California that got consolidated to New York. So, that's good, I think, generally speaking. But just maybe for investors that are worried about this or paying attention, is it possible that it's wrapped up in 2026? Too hard to tell? I can't say.

So, I mean, first, I mean, the decisions taken by the judge from our landscape is a positive decision. Aptar strongly values innovation. We are not there to be experts in litigation and so on. That's not the point. But whenever we believe that we have to defend our know-how, expertise, and IP, we will be present. We've done it. We are doing it. We're going to do it. I'm sure this is -- the pharma environment is behaving that way. And so to give you now the outcome of those 2 cases for 2026 or to give you more color, I can't -- and for many kind of reasons, but I can't share more.

Fair enough. All right. That wraps it up for today. Thank you very much.

Thank you very much, Gabe.

Ladies and gentlemen, thank you for standing by. Welcome to Aptar's 2026 Second Quarter Results Conference Call. [Operator Instructions] Introducing today's conference call is Ms. Mary Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead.

Hello, everyone, and thanks for being with us today. Joining me on today's call are Stephan Tanda, our President and CEO; Vanessa Kanu, Executive Vice President and CFO; and Gael Touya, our CEO Designate; and President of Aptar Pharma.

Our press release and accompanying slide deck have been posted on our website under the Investor Relations page. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for the reconciliations of non-GAAP measures to the most comparable GAAP sure discussed during this earnings call. As always, we will post a replay of this call on our website.

I would now like to turn the conference call over to Stephan.

Thank you, Mary, and good morning, everyone. As many of you know, this is my final earnings call as CEO of Aptar before I will retire later this year. It has been a tremendous honor to lead this company and work alongside our talented teams around the world. I'm incredibly proud of what we have accomplished together and confident that Aptar is well positioned for continued success. With Gael Touya, assuming the role of President and CEO on September 1, I am assured in the future success of the company and exceed as a shareholder.

Gael and I have worked closely together throughout this transition and for much of the last decade. I know Apta will greatly benefit from his deep experience, leadership and vision. Gael is joining us on the call today and will be sharing our outlook towards the end of the call. On a personal note, leading Aptar has been the greatest privilege of my career. What I will remember most is not any single accomplishment, but the people I've had the opportunity to work alongside and the relationships I have built with employees, customers, the investment community and partners around the world.

I have always believed that great companies are built by great people, and Aptar is fortunate to have an exceptional team, a strong culture founded in performance and purpose and a consistent focus on execution, innovation, agility and value creation. While there is always more work to do, I believe Aptar is entering its next chapter from a position of strength. I am excited about the future under Gael's leadership and remain confident in the company's ability to deliver profitable growth and create long-term value for shareholders.

And now back to the business at hand. Let me begin my earnings remarks by highlighting our second quarter results and later in the call, our CFO, Vanessa Kanu, will provide additional details on the key drivers for the quarter. I am pleased to report that all 3 of our segments delivered positive sales growth during the quarter and we delivered adjusted EPS results above our guidance range due in part to better-than-expected farmer performance.

The Pharma segment continued to perform well driven by strong demand across our injectables, consumer health care and prescription businesses, highlighting the strength of our innovation-led portfolio and the dedication of our teams around the world. We saw continued momentum in injectables, supported by demand for elastomeric components used for biologics. Vaccines and GLP-1 therapies, which -- according to a recent survey showed that 11% of Americans are currently taking GLP-1 for weight loss, up from just 3% in 2024.

Consumer Healthcare benefited from strong nasal decongestion and Eye Care Solutions sales. Prescription saw growth in central nervous system therapeutics and asthma COPD applications, which help offset the anticipated destocking related decline in emergency medicines. Beyond Pharma, Beauty benefited from double-digit core sales growth in prestige fragrance, while closures saw strong beverage demand, particularly in bottled water.

Operational performance in both segments improved progressively from the first quarter. Shifting gears from performance highlights, I want to spend a few minutes discussing how we continue to strengthen the pipeline and long-term growth of pharma. Beyond our core delivery systems, we continue to expand the capabilities we bring to customers across formulation development, analytical services regulatory support and patient engagement. A few good examples include the patent applications we announced during the quarter related to inhaled and nasal GLP-1 therapies. While these programs remain in the early stages, the build on formulation expertise that we currently provide to customers and demonstrate our continued exploration of capabilities that could create future growth opportunities in the delivery of biologics and other high-value therapeutic areas.

Turning to Active Materials Science. Our U.S. patent application for NSORP has been approved. NSORP is designed to address unacceptably high levels of nitrosamine impurities in pharmaceutical products. The FDA has issued guidance on nitrosamine it's predicted carcinogenic potency categorization and recommendations on when a manufacturer should recall a product. As a first of its kind packaging delivery solution, Aptar's [ NSORP ] sort technology is intended to give pharmaceutical companies a new tool to reduce risk, meet regulatory demands and deliver safer products.

Additionally, we announced a collaborative system framework for injectable therapies, providing customers with earlier insight into assembled system performance for injectable therapies. These expanded capabilities help customers make more informed development decisions, better manage risk, accelerate development time lines and address the expectation of the United States Pharmacopeia Taken together, these investments continue to advance our strategy focusing all the way from drug formulation to the patient and deepen our role in the pharmaceutical development process.

During the quarter, we also saw several milestones that reinforce the strength of our core pulmonary nasal and injectable delivery platforms. In respiratory health, products utilizing Apta technologies received FDA approvals across both rescue and maintenance therapies for asthma and COPD, further validating the performance and regulatory track record of our pressurized metered dose inhaler, or PMDI platform. is received approval from the U.K. Medicines and Healthcare Products Regulatory Agency for the world's first PMDI utilizing HFA 152A one of the next-generation propellants with low global warming potential. This achievement is particularly meaningful because in 2023, Aptar was selected by the U.S. Food and Drug Administration to conduct research on next-generation propellant pMDIs through our Nanopharm business, recognizing our deep expertise in inhaled drug delivery.

It is encouraging to see the first approval with this new Propel and come to market, helping expand patient access to essential respiratory therapies while helping to reduce environmental impact. We continue to see growing interest in nasal delivery across a widening range of therapeutic areas. A recent example is Eli Lilly's announced acquisition of a tire Backley centered on an intranasal therapy for treatment-resistant depression that has received the FDA breakthrough therapy designation and the program has begun initiating Phase III trials.

We believe this highlights and confirms a broader trend we have been discussing for some time now. nasal delivery is increasingly being explored not only in allergy, migraine and emergency medicine, but also in central nervous system disorders where rapid onset and direct access to the central nervous system may provide meaningful therapeutic advantages. One of the most significant developments during the quarter was the FDA's update to multiple product-specific guidance documents for generic inhaled therapies. These changes remove certain requirements, including certain clinical studies and bioequivalence testing, representing a significant shift in the FDA's expectations for generic PMDI development.

We believe this is a positive development for Aptar as the streamlined requirements should help bring more generic inhaled products to market more efficiently, while also highlighting the value of the scientific expertise and data generated through our collaboration with the FDA. Moving to Beauty, we continue to focus on premiumization, differentiated consumer experiences and dispensing technologies that help our customers stand out in the increasingly competitive categories.

We had the first commercial launch of our auto loading dosing TROP technology for Dermalogica as future code booster skin care product. This technology features an auto loading dropper cap which fills the applicator with the same dose after each use and addresses consumer needs around dosage control, convenience and clean usage. I also want to highlight that a new range of fragrances by French corner have launched in the Middle East market featuring our prestige fragrance pump.

Lastly, enclosures, recent launches showcase our ability to improve convenience, functionality and the overall consumer experience through differentiated dispensing solutions. Heinz is featuring our tap top closure for clean, convenient directional dispensing on its new line of flavorful dipping sauces in North America. In China, our closure with SimpliSqueeze valve is being used for easy one-handed spill free hydration on the go.

In terms of sustainability, there are several notable recent accolades to touch on. Aptar was named a CDP supplier engagement leader for the sixth consecutive year. This assessment highlights companies that are engaging their suppliers on climate change and supporting efforts to address emissions throughout the value chain. We have also been named one of the world's most sustainable companies by time for the third consecutive year, and we have been named among the magazine's top 100 America's best companies. This inaugural list highlights top U.S.-based companies during the nation's [ 250th ] anniversary. The Americas Best Companies 2026 ranking identified the top-performing companies based on employee satisfaction financial performance as well as sustainability performance and transparency.

Aptar is ranked within the top 5 companies nationwide in the engineering, manufacturing and medical technology category and is ranked in the top 10 companies nationwide for sustainability and transparency. I also want to provide an update on litigation. Recently, the court issued a favorable ruling for Aptar in our litigation against ARS Pharmaceuticals related to Aptar's proprietary nasal drug delivery technology and confidential manufacturing know-how. The court granted our motion to amend the complaint to maintain our state law trade secret misappropriation claim and denied ARS motion to dismiss the remaining claims.

We were also pleased that the core transfer, the later filed California action brought by ARS to New York under the first-to-file rule, ensuring the related matters will proceed in a single jurisdiction. The litigation remains ongoing, and the next phase will allow us to further develop the factual record. Overall, we view this decision as a positive step, allowing Aptar to continue pursuing the claims at the heart of the case and reinforcing the importance of protecting the intellectual property, technical expertise and manufacturing know-how that differentiate us in the marketplace.

Now I would like to turn the call over to Vanessa to provide additional details.

Thank you, Stephane, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Our reported sales increased 6% to approximately $1 billion, a new quarterly record. And core sales, which adjust for currency effects and acquisitions, increased 1% compared to the prior year. We achieved adjusted EBITDA of $213 million, a decrease of 3% from the prior year. and adjusted EBITDA margin of 20.7% compared to 22.6% in the prior year, primarily due to less favorable product mix and ongoing operational challenges in beauty and closures that have progressively improved since the beginning of the year.

Adjusted earnings per share were $1.42 compared to the prior year's adjusted earnings per share of $1.68 at comparable exchange rates. Before moving to segment performance, I'd like to briefly address the higher input costs experienced since the start of the recent conflicts in the Middle East. As anticipated, we experienced higher input costs during the quarter, which we largely offset through customer pass-throughs with some timing lag in beauty. As we look beyond Q2, we continue to monitor the situation closely and we'll also continue to take appropriate pricing actions to offset higher costs where necessary.

And with that, let's turn to our Pharma segment results. Pharma core sales increased 1%, impacted by the anticipated decline in emergency medicine. As previously discussed, emergency medicine sales are expected to decrease by approximately $65 million in fiscal year 2026, approximately 2/3 of this decline has already been incurred in the first half of the year, with the majority of that having been in the second quarter as we had anticipated. And the remaining 1/3 is expected in the second half of the year and primarily in the third quarter.

We continue to expect that the year-over-year headwind will abate by the fourth quarter. Excluding emergency medicine, core sales in our Pharma segment grew by 8% in the quarter, demonstrating resilience of the portfolio. Let me break that down by market. starting with our proprietary drug delivery systems. Prescription core sales decreased 7%. Excluding emergency medicine, prescription core sales increased 8%. The central nervous system and asthma COPD therapeutics were drivers of growth in the quarter.

Consumer Healthcare core sales increased 15% due to strong demand for nasal decongestant eye care and dermal solutions, supported also by strong tooling sales. Injectables core sales increased 9%, with strong demand primarily for elastomeric components used for GLP-1 and biologics and vaccines. Services also contributed positively in the quarter, and we continue to see strong pipeline build for X1, GLP-1 and biologics projects. And for our active material science solutions, core sales decreased 2% in the quarter.

Growth in probiotics and oral solid dose sales partially offset the decline in diabetes test strips which reflected customer inventory normalization following robust growth in the prior year. Pharma's adjusted EBITDA margin for the quarter was 33.6%, a 180 basis point decline from the prior year. The margin decline was anticipated and driven by short-term unfavorable product mix, primarily due to the decline in high-margin emergency medicine sales, while royalties and productivity initiatives continue to positively impact margins. Excluding emergency medicine, the adjusted EBITDA margin for the segment would have improved year-over-year.

Moving to our Beauty segment. Core sales increased 1% and as demand for beauty dispensing systems and the pass-through of higher input costs more than compensated for lower tooling sales. Looking at the 2 largest end markets for beauty, Fragrance, facial skin care and color cosmetics core sales increased 2%, primarily due to strong sales growth for prestige fragrance pumps and color cosmetics. Our turnkey indie beauty business also continues to perform well, benefiting from the growth of Indi brands, which continue to capture consumer interest across the beauty market.

Personal Care core sales were flat. Applications for hair care continued to show good demand but did not offset lower tooling sales from the prior year. Beauty's adjusted EBITDA margin for the quarter was 12.2%, and which, while improved sequentially from the prior quarter, represented a decline of 190 basis points year-over-year. This was primarily attributed to lower product volumes, unfavorable mix and the timing of resin pass-throughs. Moving to the closure segment. Core sales increased 4% compared to the prior year. Strong volume growth, particularly in beverages and the pass-through of higher input costs more than compensated for lower tooling sales.

Looking at the 2 largest end markets for closures, Food core sales decreased 1%, primarily due to lower tooling sales, which was partially offset by continued demand for our sauces and condiments dispensing closures. This end market also faced a challenging comparison from the prior year period of double-digit growth. Beverage core sales increased 14%, primarily driven by increased sales of bottled water and functional sports drinks. The segment's adjusted EBITDA margin was 14.9%, a 200 basis point decline over the prior year. These results were temporarily impacted by the ramp-up of new production lines and by a previously reported maintenance initiative that continues to make sequential progress. Selling, research and development and administrative costs, or SG&A, increased in absolute dollars, largely due to currency effects. -- and the impact of acquisitions.

Excluding currency effects and acquisitions, SG&A dollars were flat year-over-year. SG&A as a percentage of sales decreased from 15.6% in Q2 2021 and to 15.4% in Q2 2026, a 20 basis point reduction year-over-year. These amounts include approximately $4 million in legal expenses for nonordinary course litigation, which did not exist in the prior year period. As I noted earlier, adjusted earnings per share of $1.42 were down 15% year-over-year at comparable exchange rates. This was due to lower sales of emergency medicine products in pharma, operational issues in beauty and closures as well as higher depreciation and amortization expenses associated with our capital investments and acquisitions.

Interest expense also increased from higher interest rates and a higher average debt balance. Our due -- the tax rate for the quarter was 23.7% compared to the prior year's 20%. In the prior year period -- the tax rate benefited from the realization of a deferred tax benefit as well as greater excess tax benefits from share-based compensation. Moving to our year-to-date performance. Reported sales increased 8% and core sales increased 1%. Strong growth in consumer health care and injectables offset the emergency medicine destocking, while beauty and closures also saw growth on a year-to-date basis.

Adjusted EBITDA remained consistent at $401 million, while adjusted EBITDA margin decreased by 170 basis points to 20%. Adjusted earnings per share decreased 12% and to $2.61 compared to the prior year period, including comparable exchange rates. Free cash flow year-to-date increased by $8 million to $99 million, comprising cash from operations of $222 million, less capital expenditures net of government grants of $123 million. Over the last 6 months, the company has returned $212 million to shareholders through share repurchases and dividends.

So far this year, we have repurchased 1.1 million shares for $150 million. Finally, we ended the quarter with a cash balance of $190 million net debt of $1.2 billion and a leverage ratio of 1.49x, reflecting a very strong balance sheet. Now on to our outlook for Q3. We -- we anticipate third quarter adjusted earnings per share to be in the range of $1.45 to $1.53. This assumes an effective tax rate range of 22.5% to 24.5%. And and a euro to U.S. dollar exchange rate of 1.14. For full year 2026, we continue to expect capital investments to be in the range of $260 million to $280 million, and depreciation and amortization expense to be between $310 million and $320 million.

Before I hand the call over to Gail, I want to take a moment to address the fun. Stephane, it has been a pleasure to partner with you during an important chapter in Aptris history. I joined Aptar because of its unique strengths, a rich history, a strong foundation that you have helped to build its culture and values, and importantly, the robust opportunities that lie ahead. I've enjoyed working with you and appreciate your partnership. Stephane, thank you for your leadership, your contributions to Aptar and the solid foundation you leave for the future. We wish you and your family all the best in retirement and don't be a stranger.

With that, I will turn it over to Gael to provide a few closing comments before we move to Q&A.

Thank you, Vanessa. As I prepare to assume the role of CEO on September 1, Alusa is a great confidence in Aptar's future. We expect growth across all 3 segments supported by strong broad-based demand in pharma across injectables and consumer health care and prescription applications, excluding emergency medicine as well as continued momentum in closures and improving trends in beauty. Before we open the call for questions, I'd like to take a moment to recognize Stephan on his final earnings call as CEO of Aptar.

Over the past 9 years, Stefan has laid Aptar through a period of significant transformation, strengthening our position in pharma, expanding our global footprint, advancing our innovation capabilities, and reinforcing our leadership in sustainability. [indiscernible] Aptar, a stronger company with a robust pipeline of opportunities, leading market position and an exceptional team that is well positioned for the future. On behalf of our employees, customers, shareholders and Board of Directors, I want to thank Stephan for his leadership partnership and dedication to Aptar has been a privilege to work alongside him, and I'm grateful for the strong foundation he leaves behind.

And now I'd like to open up the call for Q&A.

[Operator Instructions] The first question comes from the line of George Staphos with Bank of America.

Hi, everyone. Good morning. Thanks for the details. Gael, congratulations again to you. Stephane, It's been an absolute pleasure covering -- after and the time that you've been CEO. Not many CEOs can move as deftly from tachycardia to the latest and catch-up squeeze technology or have the buy side or sell side taking over Anders on the references to systemic nasal drug delivery references on the call, but you've done a great job, no matter the rating, you've helped to reinvigorate the growth you're on the front foot and remain so on sustainability and you built a -- and continue to build a great bench. So congratulations and enjoy retirement. Stefan. Best of luck to you.

In terms of my questions, first of all, it looks like some have noted some weakness in the Brazilian market. Have you seen that at all relative to your beauty or personal care business? And then unless on Beauty & closures, I know there's been improvement, but beauty has, in particular, lagged an improvement for a number of periods. When should we -- and Gael, obviously, feel free to step in here, too. When do we see Beauty actually be a sustained grower both of volume and earnings.

George [indiscernible] very nice comments. Thank you for that. Much appreciated. On your questions, yes, we've experienced also weak sales in Brazil. This is [indiscernible] cycle, and there are really 2 main customers that trade shares. So we experienced quite some weakness in Brazil. On your larger questions, Yes. If I zoom out, certainly, there's always more to do. And certainly, the beauty bottom line performance, in particular, is something that's left to do for Gael. As you remember, it's a story of 2 halves or 2 or 3 hemispheres.

On the 1 hand, we're very proud with the turnaround we've achieved in Europe, and I won't repeat all the things we did with shutting down plants, improving cost base and Europe is firmly in the target range. Asia has done very well and is well above that. But we have fallen short in the Americas for different reasons. We've fallen short in North America and still wrestling with operational issues. And now came this Brazil situation. So with respect to the future, time certain, I certainly made the mistake. I'd give a time certain so, but I'll leave it to you, [indiscernible].

Yes, the 1 comment I will make, Sean. Last time I worked in Jilinsometimes ago, more than 8 years with pharma. What I'm doing right now is really focusing on making sure we have a fresh Q1 perspective as we look ahead. So we've been reengaging more with the business, visiting factories our team around the world and more importantly, I mean to engage with customers. And what I can tell you is that we've got -- we've got all the ingredients. We've got deep customer relationship, and they are really looking at Aptar. It's not just being part of their supply chain, but being part of their success.

So looking ahead, what I'm going to be looking at. And for sure, I mean, we're going to look at building on what works, adjust on cost correct needs to be corrected, protect met at our special and to really focusing on delivering on our commitment and preparing the company for future growth.

Okay. Look, I just want to step in quickly here, and I'll turn it over. time certain we've been patient, you're investor have inpatient. And look, the track record of APRA has been quite good over the years. So no complaints with that. But within beauty, does it come a time where you actually take action in the next year to do something more structural to fix the performance there .

Yes. Maybe I'll jump in first. Look, we, of course, have -- we are not taking the situation as it is, and we have clear ideas on how to also address short fall in the Americas, but it's too early to commit to that. .

I mean is open-minded approach and looking at best interest for our customers and our shareholders. And I will come back to you, Aman, due course.

The next line comes from -- the next question comes from the line of Paul Knight with KeyBanc Capital Markets. .

Congratulations out. The -- as I look at the quarter, the gross margin was not the driver of expansion in Q2. It was the off margin line. with a big drop in SG&A. Going forward, I think it's implying margin expansion. Is it more the gross in line that we should talk about modeling Vanessa on what's already been a good margin expansion period in Q2?

Paul from Bank -- let -- thanks for the question. We're actually quite happy when you think about the emergency medicine pullback was the largest in quarter compared to the prior year, and pharma was still within the long-term guidance range. So we certainly, as the emergency medicine situation normalizes, we expect the company margin to get back within its guidance range and not just the -- within its long-term target and not just the pharma business.

We didn't quite fully understand the rest of your question. Maybe you can repeat and then Monese will address.

Should we expect gross margin expansion in the second half of the year? Or is it still below that line item?

Yes. As we had said earlier on previous calls, okay, thank you, Paul, that we understand the question. So a lot of what you're seeing on the gross margin line is the emergency medicine dynamics that we previously discussed. And that dynamic was strongest in the first half. So 2/3 of that year-over-year headwind was incurred already in the first half. which will have the greatest amount of pressure on the gross margin. And so as that starts to ease in the back half, I do absolutely expect gross margins to improve from where we've been in the first half.

Also Q2 was the biggest quarter of that EM headwind as we had previously communicated. So that's the compression that we see .

Also, we see progressive improvement both in beauty and enclosures. -- codes are already progressive impot improvement but will continue as the maintenance issues abate -- and we also expect a progressive improvement in beauty. .

And then lastly, on pharma, really solid 8% quarter of growth. Is that momentum continuing here in rest of year? .

Yes, I can take that question. So we said that we are confident with our long-term targets. And 2026, it's in the story on the emergency medicine as we explained to you -- we've got a strong pipeline. Pipeline plant conversion is robust. The underlying market strong and customers really are looking at us to be the partner of tract support them from early stage to market launch.

So confident to be in the long-term target.

The next question comes from the line of Ghansham with Baird.

Congrats on our end as well. I wish you the very best along with you, Gil. It's been a pleasure working with you Stephane. -- early. I guess during the first quarter, if I remember correctly, Rx was down by 10% and roughly half of that was emergency mitigation related was part of the improvement in 2Q then just related to the catch-up from the previous shortfall in Rx. I'm just trying to get a sense as to what the underlying growth is in Rx suggesting for obviously a lot of noise with the destocking and comparisons and so on. .

Yes. Again, Sam, when you look at the pharma business, I mean, we are present in different categories. The Asman market has been a great market for us, I mean, in the quarter. And you know that the market is going to transition to a new propellant and Aptar is well positioned in that transition. You know that we are supporting the FDA and defining the guidelines for proper and switch approval. If you look at the press release recently, Chiesi announced the very first [indiscernible] and COPD price using the new propane gas in U.K., we Aptar solution. So the underlying performance of prescriptions is also announcement COPD or performance.

And for my second question, first off, can you confirm if there's any benefit from any sort of tariff refunds and so on and so forth? And then, Gil, back to you, obviously, core sales in pharma have been below trend for 2 years now, different reasons for that last year versus this year, but it has been 2 years. And you've expressed confidence as a company as it relates to the secular growth there and so on and so forth.

In 2027, is there any reason why we should not expect growth in pharma at this point to be within your 7 to 11 core sales growth sure.

You know that I'm not guiding -- we are not guiding for the year. So -- the long-term target of Aptar in the 711 ones coming from the underlying robustness of our pipeline. -- and the market positions we've got with our customers. So confidence is there. Yes, some years, we're going to be up some years, we're going to be down. If you look at the past performance for the last 8 years, I mean, I would say we have pretty much deliver on our long-term targets.

So the team remains focused on what delivering on our commitments, continuing to sharpen to strengthen our capabilities in order to become or to stay the leading company in our respective market. So this is with confidence there.

And Ghansham, I can absolutely confirm to you that there is no P&L benefit in our quarter from tariff refunds. The beat to our guide was purely operational coming from the strength of pharma as we discussed earlier. So in fact, you may recall, our guidance was at 118% and astoexchange rates came up 16%. So we in fact had Edward a couple of things that we had to absorb. So the beat was all operational, none of it was tariff refunds or anything else of that nature on 1 nature.

The next question comes from the line of Matt Roberts with Raymond James.

Good morning, everyone. Stephan. So congratulations as well, similar to my introduction with Aptar to begin in France. I hope he send off is capped with the shares of only Francis finest. -- and congratulations and welcome. For my first question, perhaps it's a right of passage to ask, but as you step into the role after roughly 10 years of strong growth in pharma, as we sit here, 2Q pharma margin is still in the mid-30% range. On the other end of the spectrum, beauty and closures are in that low to mid-teens range.

So what benefit do you see from either an operational or cost standpoint as you look to allocate capital, would you do it differently than your predecessor? Ultimately, is the coexistence of this business is something you feel is necessary and should be maintained.

So first, Matt, let me express my excited to step in the role and to stand on the shoulders of my predecessors. I know the company in and out for the last 30 years, and I'm very confident on the company. So as I've said earlier, I'm really focusing to reconnect and refresh my approach with the different businesses. I've been a unique guy for years, have been a closure accounts for years, but that was almost a liter ago. So I need to update my perspective as we look ahead. As I step in the role, I mean, commitment to deliver on our number, that's going to be #1 priority; number two, to be very disciplined on execution and such whatever segment for the company, and last to be extremely thoughtful in our resource allocation.

So keep on working, protecting what is making up our special and focusing where we can create more value for customers and our shareholders.

I appreciate the comments there. Next question, Vanessa. You gave good color on emergency sounds like it was still 2/3 of the impact in first half, but given this man down 7% to up 8% in Rx, can you say what the dollar impact was in 2Q? And then also on core sales -- how much was the resin pass-through benefit in 2Q? And how is that split by segments? Any benefit you're expecting in 3Q on that?

So Matt, I think the most I can say on the emergency medicine is 2/3, 1/3. We didn't guide it by quarter. But I will say that the quarter was really in line with where we expected. And of course, as we -- as I mentioned in my prepared remarks, the full year is also tracking as expected, and this should fully bake Q4. So everything is tracking there. In terms of the rest of pass-throughs, indeed, we did pass on resin and other inflationary pass-throughs. We did pass that through, as we had said last quarter, and we did that successfully in every segment. The impact -- I'm not going to break down the impact by segment, the 1 that -- and you will know that the hospitals tend to be bigger in closures because of the resin percentage that's used in closures. That being said, without the resin pass-throughs, closures had strong revenue and volume growth, as I mentioned in my prepared remarks. So that is not the driver of growth.

And then the other piece I'll mention is in the context of beauty margins, we did have, and I mentioned this in my remarks as well, we did have a delay a lag in the beauty segment. So every segment passed through including Beauty, but we had a bit of a lag, which was a bit of a detriment, probably about 90 basis points of margin undue the impact of that delayed pass-through in the quarter, and we expect that to be resolved in Q3.

Your next question comes from the line of Matthew Larew with William Blair.

Okay. And Sean, congratulations on your retirement. I wanted to ask on consumer. It has now grown for 3 consecutive quarters after that period of decline. So it does seem like destocking perhaps has worked its way through. But 15% growth is very strong. Was that a function of just easy comps? Or was there any sort of pull forward in the quarter? And based on those 2 dynamics, how does that kind of factor into the Q3 outlook?

Yes. I will hand to Gail here. But obviously, destocking at run its course, I think we've already confirmed that in the previous quarter, and it's been a strong quarter, as we said. -- especially in decongestions but maybe Gail, I don't know if you can give more color on Consumer Healthcare. .

Yes. Consumer and scale, I mean, we've seen the terminal being nosy, the organic play that we are converting some of the market, the block in 1 market to a multi-dose preservative-free formulation continue to be solid and solid across the regions and the all the economies is positive for us. So that's the kind of color I can share with you for -- Moving into Q3.

Yes. And please go out and get some Theraflu great new gesture. .

Well, it's cool starting again. I imagine I will be a customer rail. The -- I wanted to say actually on injectables, again, a strong growth here. you obviously referenced the NX1 opportunity as you have. Is there any way you can kind of describe how that funnel has started to build as a new growth driver and then also it would be great to get an update on Partners just in terms of how you've been building into capacity and how that plan is scaling up?

So we didn't quite hear your last question. .

Yes. Sorry. Just on Congress -- Yes, exactly. .

Okay. So I mean if you look at our pipeline in injectable GLP-1 is an outcome GLP-1 by definition is part of the growth for the division. But not only we've got the biologics being strong and robust, not only in the performance, but also in the pipeline that biologics right now, more than 50% of the pharma world research and development. [indiscernible] also, the regulatory compliance being raising the bar after year. I mean, they are really looking for players having the ability to be fully compliant with the NX one.

So this is some of the drivers driving the growth for Injectable. As far as Congers, I mean, -- we are done with the what we call the big box investment. We are satisfied to be positioned from an injectable perspective, not only in Europe, but in the U.S. and in Asia, is China, specifically for Congers, I mean we've got validation of our implementations. So customers, at inspection, parred and helping us to deliver the growth that we are facing.

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

Two questions for me to wrap. On the 1 hand, can you talk, Gael and Stephan about the collaborative framework you mentioned, I think, in the opening remarks regarding injectable therapy, what's behind it? What do you get out of it? How does it help your shareholders? I'm guessing it's part of the more surface oriented approach Aptar has been taking to become something more than just a device company. And then switching gears to fourth -- third quarter, Vanessa, what should we assume is FX based on your guide, kind of a $0.04 headwind there? .

Yes. So let me take the first question, Jose. The job for us is to make validation and qualification by our customers, we're easier. So instead of getting our customers qualifying, I mean, components on each component, we are working with the different players. -- let's say, the different PFS players in the market in order to come with a fully integrated validation. So they know the performance, not only the longer but the longer with and the rest on the complete device that a customer is going to acquire -- so they've got day 1, all the validations, all the key elements for entering into their process on a better ship.

So we are making their process and their validation way easier. And it's giving us also some color regarding the kind of very close relationship we've got with the order players in that space.

And then George, I think you were asking what's our what does our Q3 guide us to for FX, we're assuming 114.2 so that's a headwind, a quarter-over-quarter headwind. And these days were trending about $0.04 annualized for every penny that we're off of the U.S. to euro exchange rate about a $0.02 quarter-over-quarter headwind.

George, before you leave. I also just want to recognize I just wrote down in front of me. I think you're the only one who now follows 5 of the 6 CEOs of Aptis a public company, starting with Karl, Peter, Steve, myself and Nakae. So you can be relied on the keepers in our toes. So -- thank you for that. .

We'll be here. Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Gail for closing remarks.

Before we conclude, let me have you -- let me leave you with a few thoughts on the quarter and the past ahead. For the second quarter, we delivered a solid performance, driven by better top line performance across all 3 segments, strong productivity improvements and disciplined cost management. And we delivered adjusted earnings per share above our guidance range. Across the broader pharma portfolio, we continue to see engaging demand trends in areas such as the biologic, the TLP 1, the systemic meso truck delivery, but also consumer health care and other attractive markets.

Beauty benefited from continued strength in prestige fragrance, while closures delivered strong beverage growth and continued momentum in food. Aptar credit foundation built on differentiated technologies, but also deep customer relationships, leading market positions and very talented people. We are what I call an indispensable partner to our customers, helping them to innovate, grow, succeed across attractive end markets. And everything we do is ultimately focused on improving patient and consumer out cuts, whether it's expanding access to therapies, improving adherence, enhancing safety and reliability are creating a simply better unuser experience, our solutions bring meaningful value to the people who use our products on a daily basis.

That combination of a strong foundation, trusted customer partnerships and a clear focus on user outcomes did meet tremendous confidence in their ability to create sustainable growth and long-term value for our shareholders. And I stepped into the CEO role September 1, I'm excited about this tremendous opportunity, and I believe my priorities are clear: drive profitable growth execute consistently and our capital fully. Based on the demand trends we see and the momentum exiting the second quarter, we are confident in our outlook for the third quarter and our long-term prospects. Thank you for your continued interest in Aptar and I so on the road in the coming months.

That concludes our call. Thank you, everyone.

Good afternoon. I'm Gabe Hajde, Wells Fargo's paper and packaging analyst, I'm joined by my colleagues today. I think maybe 1 of them might be in the room, [ Bailey Gordon ]. [ Richard Carlson ] as well, we'd like to welcome you today to AptarGroup. Representing the company is CFO, Vanessa Kanu, who has been with the company for about 18 months. And also attending from Aptar is Mary Skafidas in the room as well.

As many of you may or may not know, Aptar is the global leader in dosing, dispensing and protection technologies for drugs and consumer products. Pharmaceutical is by far its largest segment in EBITDA terms with the other 2 segments being Beauty and Closures.

Thank you all for attending, again. This is intended to be a fireside chat to the extent folks have questions in the room, don't hesitate to ask. And with that introduction of, Vanessa, I think you guys have a couple of slides and prepared remarks to go through.

We have a presentation which -- let me just make sure this clicker works. Are you ready?

And yes, I'd love to hear everything about Aptar today.

Okay. Fantastic. Well, thank you, Gabe. Thanks, everyone, for joining us on, and thank you for describing what we do. I think if I were to synthesize this, really just means that we are an expert in the end user. So we create experiences for patients, for consumers. At the core, we are a technology company. We create -- we own the IP of everything that we manufacture. So we're not a contract manufacturer. We're truly global, operating in about 20 countries across 4 regions. The lion's share for us being in Europe.

And as you can see here for the year ended 2025, $3.8 billion in revenue, about 46% of that from Pharma; Beauty being 35%; and Closures 19%. And you can kind of see there as well what the split of our adjusted EBITDA is by segment.

I'll also add, as you kind of look at our segments across all of these end markets, we've got really good growing end markets and really good growth potential. We have a strong balance sheet. Our leverage is actually towards the lower end of many of our peers, if not most of them, so feeling very proud about that. And really, that strong balance sheet is also very helpful to us, particularly for our pharma customers as you kind of think through the long development cycles in pharma, our customers want to make sure that they're dealing with a partner who is very financially strong and can stay through the course of those long development cycles as well.

Also very proud of our capital allocation and return of capital to shareholders. In the last 5 years, we've returned about $1.2 billion to shareholders through dividends and through buybacks. And of course, we're very proud of our sustainability credentials, we get a lot of awards for sustainability. I won't go through all of them that you see on the slides here, but certainly, this is a differentiator for our customers, particularly in the consumer businesses and also for our employees in terms of retention -- attraction and retention of our employees.

This really just looks at technologies and industrial capabilities and how these are shared across our different end markets. So when you look at the verticals here, you see the different end markets that we play in and the horizontal kind of show you how we share these technology and technology platforms across our end markets.

So for example, whether it's dispensing fine mist pumps or frankly, airless systems or even aerosol valves and bag on valves, you see how we share these technologies across different end markets that we serve. And you look at the different industrial capabilities, precision injection molding, high-speed assembly AI-assistant quality control. These are all areas where we share these capabilities across our entire footprint. And you may also know that our Pharma business rather was actually born from our Beauty business, speaking also to the synergies that we share across our different end markets and platforms.

I mentioned earlier that we are a technology company, and we own the IP of everything that we manufacture. And this really gives you a little bit more color around that. So we've got about 7,300 patents across our portfolio. You see there pharma being just around 2/3 of that. And for us, though, these patents are obviously know-how, trademarks and patents. And this is really important to us, really, really important to us, and this is why we defend our partners when we need to because clearly, from our perspective, this is what differentiates us relative to a lot of our competition.

Innovation is how we drive change and growth across all 3 of our segments. And frankly, it's also a lot of the time also reprice and price support is through coming to market with new innovative solutions. And so patents and IP being a key component of that. I mentioned earlier that we are in growing end markets. And I really like this slide because when you think about any market, the first question is what are the secular trends in that market, right.

And when you look across our 3 businesses: Pharma, Beauty, and Closures. You can see the size of our TAM on this slide, but you can also see here, these are market growth rates, not Aptar growth rates, but we are in a pharma packaging end market, that's $165 billion, and the market growth is 7%. You can see what the market growth there is for Beauty as well as for Closures. And I will say, going back to my earlier comments around innovation, when you think about Closures, for example, we have consistently grown better than market, higher than market, and that's through category conversion. And the category conversion comes through driving innovation and new innovative products to the market. So this is what makes us, frankly, excited about our long-term growth potential because we are in markets that do have secular tailwinds.

And also, it's a highly diversified model. So as we typically say no single product is going to make or break our long-term target. Of course, on a shorter-term basis, you'll have some products be stronger contributors than others. But when you look at the over longer-term picture, no one product is going to make or break our overall long-term trajectory.

I talked a bit earlier about capital deployment and $1.2 billion return to shareholders. When you look at our capital allocation and you look at the last several years, typically about 2/3 of our capital has been reinvested back in our business. Why? We are a growing business. And we also get really good returns. And these are investments, both organic capital investments as well as M&A. So really good returns. And of course, we preferentially allocate capital to Pharma given the higher growth, higher profitability profile of Pharma relative to other segments.

And then of course, as I mentioned earlier, about 1/3 of that being returned to shareholders, 32 years of annually increasing dividends. And of course, we also do some share buybacks. We've been very active in share buybacks, particularly over the past 12 to 14 months. And again, that remains a more discretionary element of our capital allocation framework. And then we already talked about sustainability and all the different awards that we see there.

So just taking a little bit closer look at Pharma. This is the growth engine of our business and will continue to be the growth engine of our business. And we are differentiated here not only through our very, very strong patent portfolio, but also the know-how that we've built over the last 4 years. When you look at the key strengths and we've been so deeply involved in this market over the last 40 years through a lot of technical regulatory know-how. And that's what we help our customers with. And we help our customers through the life cycle both from -- obviously from the very beginning where we start earning service revenues right through to different parts of the drug development cycle. So a lot of know-how we've built here over the last 40 years, a lot of engineering and scientific know-how.

And when you look at the customers that we serve, we are serving a lot of the big pharma companies and also delivering to their larger CMO partners as well. This shows drug sales by delivery route. And we like this slide because it's a good way to sort of characterize the end market. So $1.7 trillion in the end market, oral being the largest part of that in market followed by injectables, respiratory, which is where a lot of our revenue comes from today is a smaller part of the market, but actually a market that we do very, very well in.

When you look at the margins across our portfolio, we actually make very strong margins in that part of the business, respiratory, nasal, but we're also doing quite well in ophthalmic solutions. Our injectables business is growing really well. and doing quite well from a margin perspective as well. And we also play a role in the oral route of delivery through our active materials sciences portfolio. This gives you a sense for our historical growth trajectory.

And I think it's important to level set on this because, obviously, we've got some near-term headwinds with emergency medicine. We've quantified that to investors. And -- but these are near-term headwinds. When you look at over a longer period of time, we've got long-term target growth of 7% to 11% in Pharma. When you look at the last 10 years, you see here, we've done 9% CAGR. Not every single quarter was in that range. Not every single year was in that range, but it's a CAGR. And this is why, again, when we look at our targets, these are long-term growth targets, and you'll see that they are very much anchored in our historical growth profile, which we've achieved and also in our pipeline, which we're very excited about.

So speaking of the Pharma pipeline, the pipeline here, you'll hear us say Pharma is a pipeline business. It's all about -- and it's a numbers game for us, right? We want a pipeline that, there's a lot of attrition in the pharma cycle. So we won a pipeline that is big, that's growing and that as that pipeline converts, that obviously contributes to revenue growth. When you look at the pipeline over the last 5 years, it has grown significantly, not only in terms of scale but also in terms of scope. The pipeline has become a lot more diversified.

This goes -- this shows you what the top 8 areas are therapeutic areas in our pipeline. I won't go through all of them. But you can see here fairly well diversified. It was very exciting to us because, again, no single product is going to make or break that long-term growth profile. Top 3 items, respiratory, biologics and systemic nasal drug delivery, SNDD, which is essentially delivering medicines through the nose to get to brain, a very exciting area of growth for us in the future. We're seeing more and more drugs being administered nasally, which bodes very, very well for us.

Given what I said earlier in terms of our participation and really our level of experience in easily administered therapies. This slide is really important because it really shows you how we actually grow over the life cycle of a drug. In the early days, we typically provide services to our customers. So we are earning revenues from the early days. And then it shows you what happens when the drug goes to originator to generic to over-the-counter. So you can see there how we generate revenue in those early days with the originator. Drug then goes off patent, it's the API that goes off patent. We are part of the drug master file. And so when the generic comes online, they tend to use our products as well. Why? Because if they don't, they have to go back through because we are part of the drug master file, they have to go back through clinical trials.

So that adds a level of stickiness to our revenues. And our margin profile doesn't change when we go from originator to generic, which is pretty exciting. And then, of course, when the drug then goes over the counter, market expands, volumes continue to expand and our delivery devices are also part of that. And so volumes expand we participate in that volume growth and our margin profile doesn't change. It's actually the same and sometimes even better, depending on the particular product. So this tells you how our revenues tend to grow and compound over time.

And again, this is just really adding more color to my earlier comments about how we support a number of our customers through the drug development life cycle. And again, this also speaks to all the different therapeutic areas that we're seeing growth in our pipeline. And the key message here is diversification. Diversification, no one product, no one area, and this is what really excites us, particularly in the nose to brain area.

Very quickly touching on Beauty, $1.3 billion business. Beauty, we went through a destocking cycle, particularly with high-end fragrance in the last couple of years. We're now seeing growth again in beauty. We saw growth overall, 2% core sales growth in '25. We ended 2025 with positive growth in Q4. We also just had a good growth in Q1 of this year. And as we've said, on our last earnings call, we do expect to see strong growth in beauty also through the rest of 2026. So we're very excited about that.

We do have some short-term operational challenges that we talked about last quarter. We're impacted by a certain supplier, and we're working through some of those issues. So we do expect the margins to improve, particularly as we get through the balance of 2026.

But you can see here, again, the diversification not only geographically speaking. And by the way, the 60% that goes to Europe, our customers tend to ship that to other regions as well. So that's just where we're shipping to the customer. They tend to actually ship that outward. So a very globally diversified business for us. And you can see all the very large names and brands that you'll recognize in terms of the customers that we serve in Beauty. Also a very diversified portfolio from fragrance pumps to airless systems to turnkey solutions that we provide for our customers.

And then last but not least, Closures, which is a newer segment for us that was created just a few years ago by consolidating our food and beverage business. And some personal care out of our Beauty business. That business is doing quite well for us. We continue to have very good product growth in Closures margins have generally been at the lower end of our long-term target range.

We also had some operational challenges there in the last couple of quarters, which we are working through, but we see good growth potential in Closures, and also the opportunity to get our margins more consistently in the long-term target range. And again, here, a very diversified portfolio, just looking at the breadth of all the different products that we bring to the market in this part of our business.

And so key takeaways, I think it's very clear. The fundamentals of our Pharma business, we've been very, very strong. What excites us is, frankly, the pipeline. So it's good that we -- our growth historically has been consistent. But as we look outward, very excited about the breadth of the pipeline and the growth in the pipeline as well. Injectables is doing very well. You would have seen from the last few quarters of our earnings call, double-digit growth in injectables, and so we're excited about that.

Innovation, a key driver of our growth, not only in the past, but also going forward. And of course, the strong balance sheet that I spoke to, which is something that we're very proud of because it gives us the flexibility to invest back into our business but also return capital to our highly valued shareholders.

So with that, Gabe, let me stop there. That was a quick fly by. Thank you, Mary. That was more than a couple of slides.

Well, I appreciate it. So it's a general session and it's an equities conference here at Wells Fargo today. We recently got more constructive on the name, March 20. And then part of it was the strong balance sheet and the resilience of your Pharma segment. There's a lot of detail in here that, it's tough to walk through everything that you do for your customers.

We'll start on the negatives first. You mentioned this emergency medicine destocking. That's been a little bit of a nagging issue. And you talk about hitting singles and doubles, I've covered the stock now for close to 20 years. And that's historically speaking, been the case. That singles and doubles you consistently deliver. Narcan and naloxone as a little bit of an exception to that. And you kind of framed up for us that is going to be down about 35%, maybe 40% this year, going from maybe 87% of revenue to 5% of revenue.

Can you just talk about how that's kind of the cadence of that through the first half, is it playing out the kind of what you expected? And then from a profitability standpoint, I think it tends to be 1 of the more attractive areas within your portfolio. Operating leverage, deleverage. Is there anything unique about that product relative to everything else that you'd like to call out for us?

Yes. So maybe just stepping back, Narcan naloxone. Pharma generally has a pretty long cycle. It takes a while to bring these products to target because -- so let's talk about why we saw such rapid growth in a short amount of time. Clearly, we're in a crisis opioid crisis and the FDA accelerated the time lines. And so we saw a very large amount of growth over a much, much truncated cycle. And it got to a point where we did start to see that inventory was likely building up, but this is a channel that is very, very opaque. There's not a lot of data, third-party external data. You can't go to IQVIA. You can't go to Nielsen and you can't go to other credible sources of external data to say, oh, just plug these numbers into my model and just see what it spits out, right? And we just -- that's a very opaque channel.

And frankly, what's the channel for these products, hospitals, fire departments, libraries and so on. And so there's not really one single source of information. But we started to see that we thought inventory was building up. And of course, our customers, however, because where B2B kept on ordering. And of course, you're going to fulfill your customers' orders. You're not going to tell your customers, no thanks, I'm going to hold your order. I think you might be building up inventory. So they also had some of their data possibly incorrect.

So we suspected that we're building up inventory, and so we started to put our own information together and shared these concerns. And were able to quantify it, to your point, Gabe, and we did quantify that Q4 of 2025 would be a pretty big impact, and we shared what that was. And then for 2026, we said it was about a $65 million full year headwind is what we expected. And we also said roughly 2/3 of that would be the first half impact and about 1/3 of that would be the second half impact. And we are so far tracking pretty close to those estimates.

So partly good forecasting on our end, partly luck, because we can all take the credit for everything that goes well. But it's tracking pretty closely so far. So that all bodes well. To your point, this is a very high-margin part of our portfolio. Emergency medicine, saving lives, controlling the dosage, [ 99.999% ] of reliability and quality. And of course, in Pharma, these are the kinds of medicines that come at a pretty high price points. So very, very good margins for us. And so as we experienced these headwinds to the top line driven from Narcan, of course, that is having an outsized impact to the bottom line.

With all that being said, we're super proud of the fact that even in Q1, when we looked at the year-over-year impact, pharma still was in its long-term target margin range. And so I think that also speaks to the strength of the rest of our portfolio. But also other mitigating factors that we're taking internally just so that we're not seeing all of this flows straight through to the bottom line.

I would agree with that. Just maybe specifically on emergency medicines or however you guys kind of track that internally. What would you consider that, I mean, anecdotally, what we hear from first responders is that, unfortunately, it's still something that they're using on a day-to-day basis. And oftentimes, they administer 3 at a time because you may not always necessarily get the response you want after the first one. But just any sort of dialogue with customers that would suggest this will be a stable-ish growing product line for Aptar or is it too soon to tell?

Yes. I mean, certainly, we want to get with the destocking dynamics. We think that the destocking should be behind us at the end of this year. And back to my earlier points about we're tracking to that. Now the question is what happens after, right? There was a period of uncertainty around the funding climate, that seems to have stabilized. And funding is important for this product because it's largely funded by the government. That's how states and locals get the budget to buy these life-saving products.

So funding is really important. And we've kind of -- we had a period of early last year, there's a lot of uncertainty. Is it cut? Is it not cut. And then we got some clarification from the administration. And so that climate is now stabilizing. And in fact, I think the funding expectations for 2027 are looking pretty healthy based on what we're seeing right now, which is good. And so once we pass these destocking dynamics, unfortunately, the crisis is not behind us, right? And so the need for these life-saving medications will continue. And the originator in this space has certainly said publicly that they do expect this to be a high single to mid-single-digit grower over time. And for us, we think that's the right range once we're past this period.

So fairly consistent with kind of the portfolio overall.

Yes. Yes.

Okay. One question that I'm trying to ask all the companies that are at our conference. I think it's relevant. How would you compare this recent acceleration in input cost to what we observed during the pandemic or 2021, 2022 time frame. I mean, obviously, everyone's pretty laser-focused on oil, petrochemical derivatives, which are somewhat impactful for your business from a raw material standpoint. But obviously, day-to-day transportation, diesel, those types of things. Internal meetings or however you characterize it? How are you thinking about that? And then relationship with your customers, your ability to recover that?

Yes. I would say we're just -- we're better organized, having experienced it before, what's different this time is we're better organized. At least from our organization, we were able to hit the ground running relatively quickly, because we had already developed this muscle internally through COVID, through our periods of inflation, but frankly, also through tariffs last year. Just kind of name your inflation. There's been a lot of inflation in the last few years, right, and tariffs were similar to that extent.

And so this time, we didn't see a lot in Q1. We started to see it towards the tail end of March. So it didn't a lot in our commentary in our Q1 earnings, but we did talk about it in terms of Q2 and beyond, and we are seeing a significant amount of inflation. For us, the biggest impact is resin. So resin prices, particularly in our Closure segment. Why closures? Well, Closures just has a higher percentage of resin in the actual product itself compared to, say, Pharma and Beauty. Closures is the biggest impact.

And in Closures, we have indexation clauses in our contracts. And so we pass that on to customers. The company has also done a really good job learning from those earlier experiences, game, where we're not passing that on a much shorter time lag than before. So if you go back many, many years, you would have seen a bit of a time differential where we incurred the cost, but we didn't quite pass it through right away. And so you saw some margin degradation and then we caught up I think it's a lot smoother this time. So we've built up that muscle internally, which is great.

And then in Beauty and in Pharma, where we don't quite have the same level of indexation, just again for reasons I just mentioned, we're actually passing those cost increases through as discrete line items as surcharges. And so it's raw materials cost, but frankly, it's also transportation, I mean, energy prices are higher across the board, which has ripple effects across a number of things, and we've been passing those through. And again, so far, so good. Nobody likes getting a price increase. I don't like getting a price increase, but we're very transparent.

And again, that's because we've built that muscle over time where we're showing them and sharing with our customers exactly why and where the cost increases are coming from.

No, I think the muscle memory is an important distinction. And what's interesting is, I mean, you see that over time, these companies develop that. And things have changed for sure, I think, in terms of how kind of go-to-market used to be versus where it is today. So that's good to hear. And what we also hear is your product typically as a portion of the -- whether it's the retail price on the shelf or think about a drug is typically a small fraction. So they're focused on some other items.

That's correct. Yes.

Tariffs, I've got a different question about it. But just -- we kind of have this [ 103 days ]. I think now we're focused on Section 301 tariffs is how we're going to get this through. But as you kind of look at the business, is there anything that jumps out at you and I'm thinking more maybe in the closures or beauty segment where -- whether it's to get ahead of price increases, whether it's -- we've got some certainty on tariffs where customers may be trying to sneaky build some inventory? Or is that not something that...

We haven't really seen that. And we were watching for that. Is -- are people going to prebuy to get ahead of expected changes in tariffs. And we were very acute in looking for this even last year, but also now we don't really see that. We may have a couple of anecdotal cases where we've heard that, okay, maybe that could be a driver, but we have not seen this as anything sort of notable across the board. So not really any big impact there.

Okay. I want to get to the exciting stuff because Aptar is 1 of the few stocks in the group when you look over a long period of time, that is a compounder, and it's been driven by the investment in pharma. So you mentioned pipeline in your prepared remarks, nasal delivery is a big part of that. Injectables is a big part of that. I think other folks this is not a health care conference. But to the extent that we're seeing more and more biologics and biosimilars that are out there in the marketplace for a variety of different treatments.

When you look at the pipeline, and I'm looking at things that are out there in the public domain that we know about, [indiscernible] neffy, things that are more -- it's easier for -- from a patient compliance standpoint, getting back to that 7% to 11% growth which seems to be sort of a [ linchpin ] for the stock. Are those the types of drugs and introductions? Number one, are there other ones that I'm missing? And then number two, you kind of gave us that flow chart, which almost looks like it was, I want to say, 17 to 20 years. When you kind of go...

I think it was 30 years.

30 years. Okay. As you look out maybe over the next 12 to 18 months, we feel good that we can get back into that range assuming a normalized backdrop, whatever that looks like.

Yes. Yes. So let me just maybe start with the range is a long-term range. So it's not a 12-month range. But I think -- so -- but -- so again, emergency medicine, you kind of get this onetime effect, but when you look at over a longer-term period, absolutely expect to continue that compounding that you just described. And honestly, Gabe, I think a lot of the examples you gave are just exactly the reasons why we're very excited. The examples give us neffy, Enbumyst and so on. These are cases where an existing molecule was taken where the molecule was delivered in a particular way.

So in the case of neffy, it's epinephrine which is, we all know, you jam it into your thigh as an injection and now being nasally delivered. You've got a big part of the population that may not miss my children to start with, right? They don't like needles. And so they would be perfect case studies for why neffy, for example, is a very exciting development.

Now it takes time in pharma. It's not just you don't launch the product tomorrow, and all of a sudden, it grows like gangbusters, these things do take years to grow insurance companies adoption and so on and so on. But this is a very exciting development for us. And some of the other items that you mentioned as well, right, where, again, existing molecule, new method of delivery, nasal administration it's a lot more efficacious. It's a lot more convenient.

When you think about the broader population and demographics, but also other broader pressures across health care. So aging population but also the cost of hospitalization is very, very high. It's 1 of the biggest problems that we have. And so this move towards self-administration. Patients can treat themselves at home without a nurse or some kind of a supervision you can administer through the nose versus having somebody help you with an injection or God forbid you do it wrong, because you're so careful about your fears around needles and so on. So this is a lot more convenient and efficacious, right? So these are broader trends that actually work in our favor.

And we're also seeing more and more research around the nose to brain overall. And depression is a key area. Also, other diseases such as Parkinson's, Alzheimer's, all of these areas being researched for nasal administration of the drug. So very, very exciting for us as I kind of shared that slice of the market that we play so well in. This is all just fantastic. This is exactly our sweet spot.

So at risk of...

[indiscernible] that grows very good for our margins as well.

I think you shared a press release on May 28. And unfortunately, [indiscernible] was not here is CEO elect at a pharma. So maybe he can speak a little bit more eloquently about this. But I think it was kind of like patent applications for preclinical data supporting intranasal delivery for or pulmonary of GLP-1.

Yes. Semaglutide? Yes.

Which a lot of people are really excited about it. Again, we're not at the health care conference. But so again, just from the packaging guys perspective, presumably, people -- patient compliance may go up, maybe adoption could go up, and there's a lot of, I guess, net benefits of that. But -- is this something where the molecule has already proven. Can you walk us through maybe some of the technical aspects. Is it a truncated time line that we should think about as like or...

So this is not going to deliver revenue tomorrow, but it really speaks to our level of innovation, and it comes back to the whole nasal administration, right? This is GLP-1 being delivered not only as an injectable, not only as an oral, but potentially through the nose. And Aptar, just given our know-how in this space, we just filed patents on this to gives point a couple of weeks ago. And we're very, very excited about this. Clearly, we're not a pharmaceutical company. So we're not going to start developing the drug to sell, but we could -- there's so many different potential routes to market for this licensing many other opportunities that may come along with it. And of course, you got the device sale as well.

So this really shows our innovation in this area, really leading in this area. But also, this is something that could unleash a lot of potential future revenue for us. And the other -- it goes back to the nasal administration. But it's also interesting, back to the innovation thing, as we talk about GLP-1, maybe getting a little bit less questions now, but a quarter or 2 ago, it was all about what's going to happen to your injectables, because now GLP-1s are going to be through oral? And we always said that this is -- there will be a market, right? We don't see this as being cannibalistic to the injectables portfolio.

We do think that it expands the market. And there will be coexistence of oral solutions to injectable solutions. And now we're looking at potentially delivering GLP-1 through the nasal truck. So very, very exciting, and this is exactly the area where Aptar is, frankly, leading the pack.

Well, I guess if we were in the business of [ Tuning Horns ], you guys are the only company out there that can do all 3. You have active packaging for oral, [ dose ] right? You have injectables and you also have the...

100%. 100%. So very exciting. And then the other thing is, I would say just to -- as we think -- as we talking about no injectables, GLP-1s are, of course, very important, but that's not the only driver of our injectables growth. Biologics are a huge driver of our injectables growth. When you looked at the slide on the pipeline, just a few slides ago, we saw biologics being a big part of that. It's in fact, I think it was a the second biggest area in our pipeline. We're very excited about that. And so while we will participate in GLP-1 growth. It's not the only driver of growth in our injectables business, [ X1 ] also being a big driver. And so these are all areas to your earlier question, Gabe, that we are quite excited about and we think supportive of that long-term 7% to 11%.

I want to ask a general corporate question and then maybe 2 on the other businesses. Stephan told us that he's going to be retiring in March. He was an outside CEO. Now like I said, Gael, who heads up Pharma is an internal candidate. Just a fresh set of eyes. You've worked with him now, obviously. I think at least maybe for me, it seemed he was kind of being groomed. I think it's going to be a good internal promotion. Are there any things that you see that during the Touya era that might be in focus operationally, commercially or anything like that you'd call out for us?

Yes. I mean, yes, Gael is -- has been -- so first, we wish Stephan the best in his retirement. He chose to retire. He is very excited about its future plans with his wife, they fly planes, they go hiking, I mean he's got the whole -- frankly, the rest of us are just jells about all the things, the fun things he plans to do when he retires. But we're very happy for him. He certainly deserves it. And now we welcome Gael. And as you say, Gael is a very, very strong leader, very well known and very well respected within the organization.

And I think one of the unique things about Galas well is not only an internal candidate, but he also knows all the segments very, very well. And I think that's important, and obviously has run the Pharma business for the last 10 years and has been quite successful in running the Pharma business for the last 10 years.

I think Gael, I've worked with them very closely for the last 18 months since I joined the organization. And of course, even more closely now since the Board made its succession decision as is now going through the transition with Stephan. You'll find in Gael, a very sort of -- Gael is -- he likes to study things. He's very much data-driven, very thoughtful. Once the facts, which as a CFO, goodness gracious, thank you. Let's only talk facts. But you'll also seem Gael a very, very strong drive for innovation. And I think you're going to see that from him as well.

But I think you're going to see being somebody who's been with Aptar for a long time and loves the organization, a very strong focus on culture, values, I think that's going to be important. But also performance, right? Gael holds his team accountable. He's looking for excuses. He's looking for show me the data, show me where you're growing and let's dig into the details. He's very detail-oriented, which, again, I think for CFO, I couldn't be more grateful for that because I think those are all the attributes that will bode well as we go forward. So excited to have him on board and looking forward to what potentially comes next.

Data-driven.

Data-driven.

Beauty, I think Q1 growth was in the 3% range. margins a tick below. You talked about having to requalify a supplier on some particular applications. Target is 15% to 17%. You're pretty close. Do we need that -- you also mentioned...

We're also close. That's the frustrating part, Gabe. Let's just call it [indiscernible]. We're really close.

No. You're close. I wanted to ask about -- you mentioned destock, high-end fragrance versus kind of mass -- do we need that incremental volume bump to kind of get in that range? Or are there things that we can do internally to get there?

We've done a lot, which is -- my comments about the frustrating part is we've done so much and we've come so close. And then, of course, we saw some of these operational challenges, which set us back a little bit. So that's the my comments around just being frustrated. It really is within distance.

If you look at the work we've done in Beauty for the last couple of years, we've shut down 10 plants. We've rightsize the labor force to the tune of 10%, 11%, 12%. So the organization has not set back, has done a lot of work around cost management in Beauty and continues to do a lot of work around cost management in Beauty. We did go through this destocking cycle, which obviously was a headwind to the top line.

And in manufacturing, volumes matter right? Volume is more -- for your absorption and all those different things, right? So we are excited that we're now seeing volume growth in beauty after that long period of destocking. So we saw growth in Q4. We start saw growth in Q1. The margin is just -- they don't just rebound in your first quarter of growth. So we do need to see this consistently, but we are absolutely optimistic that we will start to see improvement in the Beauty margins, and we need to get through these short-term operational hiccups that you mentioned, like the fire and the new supplier and having to incur additional costs. And that should all be behind us, we think, by the end of the first half. And hopefully, we're expecting to see sequential improvement in the margins as we go forward.

And similar -- last question for you, a similar line of questioning for Closures. Just kind of the path forward for profitability. Starting the year, I think food and beverage at least customers were optimistic they can promote. We're hitting another wave of inflation. How should we think about that?

Yes. Closures, again, newer segments, as I mentioned earlier, and we've been pretty good from a growth perspective in closures. Our products, again, that reported growth tends to -- depending on rest and pass-through and so on. But if you just kind of strip that out and just look at what happened to the products revenue and Closures, we've done pretty well. and we've typically grown better than market, as I mentioned earlier, through innovation, converting categories and so on. And we actually expect that to continue. We're expecting 2026 to be a good growth year for Closures.

There, again, as we kind of look at the last 12 to 18 months, we've been at the lower end of our target margin range. We have not been in the last couple of quarters because of some operational challenges, some maintenance issues that we've had to deal with. The Closures team continues to work pretty diligently through those issues. And again, we did say that we expect that to continue into the first half. But again, we expect sequential improvement in the Closures margins going forward.

Perfect. I think that wraps it up. Unless there's any questions from the audience.

You asked all the questions.

We tend to do that. Thank you very much.

Thank you, Gabe. Thanks, everyone.

Good morning. I'm Dan Rizzo from Jefferies Equity Research. Up next, we've got AptarGroup. With us today is CFO, Vanessa Kanu; our President, Alex Theodorakis, with the former division; and Mary Skafidas, who is VP of IR. There will be a 20-minute presentation followed by time for some Q&A. So without further ado, one of you guys want to kick it off?

Great. Let me just make sure I know how the clicker works. Fantastic. Thank you, Dan, and good afternoon, everyone. Thanks for taking the time to join us today and learn a little bit more about the Aptar story. So if you haven't heard of us previously, then who is Aptar? We are a leader in drug consumer product, dosing, dispensing and protection technologies. And what that really means is that we are an expert in the end user.

We really do help to create the patient experience and the consumer experience. We're also at our core technology company. We own the IP of everything we manufacture. We're truly global. We operate in over 20 countries around the world across four different regions with Europe being our largest region. And for the year ended 2025, as you can see here, we generated about $3.8 billion in revenues across our three primary segments.

You can see here, Pharma was about 46% of revenue, about close to 70% of our adjusted EBITDA. Beauty was about 35% of revenue and about 18% of our adjusted EBITDA and Closures was about 19% of revenue and 13% of our adjusted EBITDA. Today, we'll focus a lot on Pharma, but I'll also give a few key highlights across Beauty and Closures as well.

Across each of these segments, the key thing to note is that we serve attractive end markets with really good long-term growth potential. Additionally, I would be remiss not to mention we have a very strong balance sheet. We're currently operating with leverage at about 1.4x EBITDA, which is amongst the lowest end of our peer group. And I would also add that having that strong balance sheet is, in fact, a competitive differentiator when you think about the long development times in pharma.

Our customers want to work with a partner who they know is financially strong and has the balance sheet ability to work with them through decades of development and commercial cycles. We're also very proud of our track record of consistently returning capital to shareholders. In the last 5 years alone, we've returned about $1.2 billion to shareholders through dividends and share buybacks.

We're currently in our 32nd year of annually increasing dividends, which we're very, very proud of. And last but not least, we're also consistently recognized as a sustainability leader. And again, this is something that both our customers and our employees really highly value, and you'll see some of the awards here at the bottom of this slide. So let's talk a bit about our technology and industrial capabilities across our end markets.

So what you see in this slide here is, vertically, these are the different end markets that we operate in. And then you see horizontally how our technologies are leveraged across each of these verticals, whether it's fine mist pumps, which you can see from Beauty to Pharma across the board. And some of you might already know actually that our Pharma business was actually born organically from our Beauty business. And so you can kind of see how the technology gets leveraged across the different end markets.

Again, whether it's fine mist pumps or dispensing closures, as you can see here, aerosol valves, Bag-On Valves, et cetera. And then when you look at the industrial capabilities, what you see here is precision injection molding, high-speed assembly, AI-assisted quality control being a key defining feature across every single one of our factories, irrespective of what segment we're talking about.

Let's talk about the market opportunity. I did mention in the opening slide that we do serve markets that are attractive with long-term growth potential. I think that's really important because when we look at industries, one of the things we look at is what are the secular trends in that industry. And when you look at the markets that Aptar serves, we've got secular tailwinds in these markets.

Starting with the Pharma market, pharma packaging market, the total addressable market there is $165 billion. And the market projected growth rate is about 7%. Now that's not our forecast. That's the market projection in terms of that $165 billion. Beauty is a $38 billion TAM projected to grow at about 4%. Closures is a smaller TAM, $7 billion, but still important, projected to grow at 2%. And historically, when you look at our numbers, we've traditionally in the closures business actually beat the market growth rates, largely driven by our innovations, which actually helped to convert the market overall.

Pharma, when you look at our historical growth profile, we've actually beat the market growth. And again, we see some great opportunities in Beauty as well. And so when we think about Aptar being a growth company, you can see here that we are already serving very attractive markets with long-term growth potential. I also mentioned earlier that in the last 5 years, we've returned $1.2 billion of capital to shareholders.

When you look at our capital allocation, we are, I would say, pretty well balanced between investing in our business. As you saw from the previous slide, we are a growth company. So we do invest in our business, very important to generate that growth. And those are organic CapEx investments as well as M&A. And preferentially, we actually allocate a lot more of our capital to the Pharma segment, just given the higher growth, higher profit attributes of our Pharma business. We, of course, invest also in Beauty and Closures, but preferentially most of our capital goes to Pharma, just given those growth attributes.

And then -- so that's about 2/3 of our capital when you look at the last few years. And then roughly 1/3 is returned back to shareholders through dividends as well as share buybacks. Share buybacks continue to be the most discretionary part of our capital allocation methodology. And so you might see some years where we're a lot more aggressive in share buybacks and other years where we're a bit quieter in share buybacks.

That's a lever that we pull on as and when required. All right. So let me just spend a quick minute on Beauty. So our Beauty business, a fairly material business. You can see here, $1.3 billion of revenue for the company. When you look at 2025, we had about 2% core sales growth and 12% adjusted EBITDA margin. Very global in nature. You'll see there about 60% of our revenues in Beauty are actually in Europe. That being said, a large part of those sales in Europe actually do end up in other countries as our customers ship those products elsewhere. You'll also see that we're fairly well represented in North America, in Latin America and Asia.

And Asia continues to be a really good region for us as well in terms of future growth potential. And then you can also see here that we do serve a lot of the large brands that I'm sure you know and recognize, L’Oréal, P&G, Unilever, to name but a few. We do expect, as we said on our Q1 earnings call, that we will see some growth in Beauty in 2026. We've done a lot of work around cost measurements or cost reductions rather in the Beauty segment.

And we did have some short-term timing impact in terms of some supplier impacts that impacted our Q1 margins. But we certainly expect the 12% margins to be improved as we get into the sequential quarters for 2026. On the Closures side, this is actually a fairly newer segment. Closures was formed in 2023 by combining our food and beverage and personal care elements that were previously managed elsewhere, and we combined that and created a new segment called Closures, and it's actually been doing fairly well.

You can see here for 2025, we had 1% core sales growth. Closures' core sales growth is impacted by the timing of resin pass-throughs. And so in 2025, we have lower resin pass-throughs. That's going to change in 2026 with all the raw material cost increases, which we actually tend to pass through, and we are passing them through. But if you sort of look at the pure product sales in closures in 2025, they were actually up 4%, which, again, going back to what's the market opportunity, it's a higher growth rate than the market, right?

So we've been doing pretty well in Closures. EBITDA margins at the low end of the long-term target range, and we continue to work with the Closures team to actually see margin improvements as well over time. Again, you'll recognize a lot of these names in terms of customers that we serve, Kraft Heinz, PepsiCo, et cetera. Okay. So now let's talk about pharma. Let's focus on Pharma. Pharma is our core growth engine. It's the largest of our segments, the fastest-growing, most profitable part of our portfolio.

And really, our market leadership here is anchored by our proprietary drug delivery systems, and that's what Alex will talk about a lot more momentarily. That's about 70% of the revenue in Pharma, followed by Injectables at about 19% of revenue and active materials solutions at about 10% of the revenue. We have decades of regulatory and technical expertise in this part of our business, which have made us the partner of choice to bring a drug from formulation straight through to patient.

We also have over 4,500 active and pending patents in Pharma, and that's something that we're very, very proud of going back to my earlier comments around, we being an IP-driven company and innovation tends to be how we differentiate ourselves across all our segments and even more so when we look at our overall Pharma segment. And then as you can see here, we deal with all the leading pharma companies on a direct basis, and we often also supply their CMO partners as well.

So -- our differentiated position here is, again, built on intellectual property, being deeply involved in the regulatory process, which ultimately leads to lock-in of our devices, right, in the Drug Master File. And that is a key differentiator for us. That's what makes our revenues in Pharma very, very sticky is that lock-in in the Drug Master File. Again, Alex will talk about that momentarily. And also as a manufacturer, the engineering and the science and the know-how of how we make our products, but also how they interact with the drugs, ultimately, how they also help patients is absolutely critical, and that's part of the moat that we've built over time in this part of our business.

And that's based on 40 years of expertise and again, starting the business up organically from our beauty business and then augmented by acquisitions over time. And this gives you an additional view of how the portfolio has also evolved over time. This slide gives you a view of total drug sales, how they break down by route of delivery. And we have a very strong position in inhalers. You can see respiratory, smaller share of the overall drug sales, but something where Aptar actually plays a very big role.

One of the things that our current CEO, Stephan often says is, if it goes through the nose, Aptar is involved, and he's absolutely right. So smaller slice of the total pie, but we have a very big share of that pie. And then, of course, we're also present in dermal, ophthalmic and of course, Injectables, which I talked about earlier. And oral, we are present through our active material science solutions.

So the end result of all of this is a very attractive growth rate. So when you look at the revenue for pharma over the last 10 years, we're looking at a 9% CAGR, fully supported by our 7% to 11% long-term target growth range, which is anchored in our historical performance, but also supported by what's currently in our pipeline, which Alex and I will talk about also momentarily.

And then you look at the adjusted EBITDA, which has also grown meaningfully over time as well. When you look at 2025 and 2026, we've talked a bit about some temporary headwinds that we're facing in emergency medicine, a destock. We quantified that destock impacting 2026 by approximately $65 million. So that is definitely a temporary impact to our revenue growth outside of emergency medicine.

And by the way, we're tracking very, very strongly to that estimate. So no surprises at this point in time. Outside of our emergency medicine portfolio, we continue to see broad-based growth, and we're very excited about what our growth rate, excluding EM, will look like for 2026 and of course, beyond that. So with that, why don't I pass it over to Alex to dive a little bit deeper into his part of the business. PDDS.

Thank you, Vanessa. Thank you, Dan, for the invitation. As Vanessa said, I'm going to talk to you a little bit more about proprietary drug delivery systems. My role at Aptar is to look after our Prescription division and together with Consumer Health Care makes up the PDDS as we say.

The other 2 circles you see there, Injectables, I'll touch on that a little bit, even though that's not within my direct scope. Active Material Solutions is an interesting acquisition we did several years ago, a company called CSP that provides barrier container technology to scavenge to protect drug products and food from various elements.

You actually see those three pictures encompass fairly well what we do in PDDS. The first one is in nasal spray, with the example being of -- NARCAN, a pretty high-profile nasal spray that's come out recently, an aerosol inhaler, in this case, Ventolin that delivers drug to the lungs to treat asthma COPD. And then third, an eye dropper.

So those are the main families of product technologies that we offer and the types of therapeutic areas that are being addressed with those delivery systems, allergy, pulmonary. This is where -- really where we got our start many, many years ago. And more recently, things like systemic nasal drug delivery, eye care, I mentioned. Dermal is a different one. I could have shown a picture of a dermal container there. That's a smaller segment for us, but nonetheless, it's part of Aptar Pharma as well.

This slide shows you the life cycle of a nasally delivered molecule over a pretty long period of time. We're not naming the drug, but if you do a little homework, it won't be that hard to figure out what we're talking about. What's interesting about this life cycle, first of all, this is not an exceptional example. We have quite a few of these, but it shows pretty well the longevity and the growth of the revenue that we see over time. First thing to know about our delivery systems is that it takes a fair amount of time to develop.

And so we're in contact with the customers early on. This particular case shows 6 years. That's actually at the short end of our development cycles. It's not uncommon for us to take 7 to even 12 years from initial contact with the customer until the product hits the market. So at some point, the originator launches a product, in this case, enjoyed exclusivity on the market for 12 years, grew the product nicely over that time.

At some point, generics hit. In this case, the generics hit a few years after the patents expired. Why? Because nasal drug delivery is not easy. It's tough. So even though the patents expired, same things with dry powder inhalers and so forth. Just because the patents have expired, it doesn't give you a green light to get to market.

It's complex, and it takes them time. So generics come in, the brand comes in with a brand extension. Eventually, the originator goes OTC, then the generics go OTC. So all this long story to say that over 30 years, Aptar continues to not only generate revenue from this particular molecule from different sources, but that continue -- that revenue continues to grow to this day. So it's an example of how one single molecule can create sustained revenue over long periods of time.

How we got started with this, Vanessa mentioned that the origins of our product technology really came from the perfume cosmetic personal care market. In the 1980s, somebody decided to try to spray them in a vertical direction to get stuff into the nose, and they found it worked quite well. And our early pump systems were basically copies of the perfumery pumps. The first indications that were being looked at were allergy, asthma, COPD.

A little by little, we started getting into different types of things. People realize that spraying something up your nose wasn't just to deal with an issue in your nose, could actually get very effectively absorbed into the bloodstream and take care of problems throughout the body. Migraines were one of the first things that launched in that manner on the market. Not much happened for a number of years until probably 10 years ago, there was a renewed interest in what we call SNDD, so systemic nasal drug delivery, using the nose to deliver drugs that get absorbed into the bloodstream and work elsewhere in the body.

And in the past 5 or 6 years, we've seen an explosion of launches on the market for products that use exactly this pathway. And what this shows is that our next block, nose to brain, I'll talk a little bit about that next. We keep adding blocks of technologies to grow. So it's really an incremental accretive type of business that we're in.

Speaking of nose to brain, it's not easy to get drugs even if you give them intravenously to get them into the brain. There's a blood-brain barrier there that's specifically there to protect the brain from external sources. And so to get a drug into the brain to do its thing on certain types of diseases is a real challenge. What scientists have found is that there seems to be a connected pathway, a bypass, a shortcut directly from the nose to the brain, bypassing the blood-brain barrier completely.

This offers extraordinary opportunities to deliver all kinds of drugs to the brain to treat diseases that have been notoriously difficult to get at, specifically for that reason. I mentioned here, Alzheimer's, Parkinson's, all kinds of neurodegenerative disease, Parkinson's depression and so forth. So for us, we really see this as the next big thing.

It's obviously still in the early stage. The basic science is being looked at, and we're taking part of that. One thing you need to know about Aptar is we don't just supply devices. We also get involved in the science. We've partnered with Wake Forest to demonstrate that intranasal insulin, as an example, can be delivered successfully directly to the brain through this pathway.

Over the years, Aptar has acquired several different tuck-in acquisitions, mostly service entities that allow us not just to be present at the very beginning with the customer to give them samples and later on to commercialize, but throughout the drug development processes. So whether it's formulation development, analytical method development, clinical trials, regulatory filings, we now have entities that are able to assist the customers throughout that process.

These are not extremely meaningful revenue generators for us. But obviously, it allows us to work more closely with the customer from an early stage to understand what they do by better understanding your customers, better -- you're able to be a better partner to them.

And this is just -- it's not -- we didn't throw every possible disease on this chart. Every disease you see listed there, there is an active project in our pipeline that tries to deal with these diseases. Just a couple of years ago, I could have never dreamed of putting a slide like that on there. Some of these products have launched and are on the market recently. Just last year, 2 products were launched to treat heart diseases.

We have a product that was launched to treat depression a couple of years ago, but people are working with our device on all these different therapeutic areas. So a very bright future for systemic nose delivery. Just a quick word on injectable solutions. Here, we're talking about componentry, elastomeric components, stoppers, plungers, rigid needle shields. So a bit different than the fully integrated device solutions that we offer in PDDS.

But nonetheless, this allows us to step outside of our niche and be exposed to the injectable world, which allows us to understand the customers, the markets, the requirements and so on. We've increased capacity significantly in the past couple of years. The FDA has been pushing for over a decade now to significantly upgrade sterile manufacturing conditions here in the U.S., Europe followed more recently with Annex 1.

It's pushing everybody to upgrade their plants, but also to upgrade their packaging and their componentry. So we invested significantly not only in capacity, but specifically on what we call high-value premium services and components, rapid transfer bags, ready-to-use components, anything that will allow our customers to remove the operator as much as possible from their process.

And speaking of high-value products, GLP-1s, obviously, is one area where there's a tremendous amount of excitement and activity. Just to give you an idea of what our revenue has done in the past couple of years. Granted, we've started from a fairly small base, but we've nearly doubled our revenue from GLP-1s just in the past couple of years. If you take all of our high-value products in general, lumped in with the GLP-1, that revenues increased roughly 60%.

So the base business is growing nicely. But in addition to that, we're able to get on new products and transition customers to higher-value products at the same time. I think we said that, Vanessa, you were going to take this on. But I think this is something that I've already presented, right? So these are the top therapeutic areas in our pipeline today. And you see that respiratory, which I didn't talk about an awful lot, but inhalers for asthma and COPD are at the top of our pipeline in terms of opportunities.

There's an important propellant switch that's going on right now that we're very much involved in. Biologics in second, systemic nasal delivery first. So the takeaway here for us and for you guys is that there's a significantly diverse pipeline in terms of therapeutic areas where nasal sprays are no longer just used to treat allergic rhinitis and decongestant, but for a wide variety of diseases. We have a large and growing pipeline and Injectables is taking an increasingly important role in our revenue and our growth.

Do you want to take on the last slide?

Why don't I do that? For the stat team. And I really do hope that the slide on the pipeline composition resonated because I think that is really, really what gives us confidence in our long-term growth.

And as you know -- and I really want to highlight the diversity, as Alex said, right, of this pipeline. It's respiratory, biologics. I mean, the list goes on. And the way this pipeline has evolved in the last 5 years is really significant. So when people ask what makes you confident that you can -- yes, thank you for showing us the last 10 years and your 9% CAGR.

What have you done for me lately? It comes back to this. This is why we feel confident in the 7% to 11% long-term growth rate. So the key takeaways are clear. The Pharma fundamentals are quite strong. You've seen the pipeline. It's really -- what's really underpinning that is the breadth of our pipeline, which really continues to grow in both scale and scope.

Injectables doing really, really well. And you may have heard us talk about we see this business on a long-term basis being high single digits to low double digits in growth. And if you look at our historical results, particularly in the last year or so, you're seeing that we're really capitalizing on that and posting some really good growth rates in that market, which we expect to continue.

You've heard a lot about our innovation overall, and that's backed by a fairly robust IP portfolio. And of course, we continue to expect to participate in this growth. Beauty, Closures, we do expect improved performance, particularly as we get into sequential quarters of 2026. And last but not least -- coming back to the very strong balance sheet. And that strong balance sheet gives us a lot of optionality and the ability to not only invest back in our business, which is so critical for us, but also to return capital back to shareholders and meet our commitments.

So with that, I'll leave it there, Dan, and can open it up for any questions.

Okay. So we have about 4 minutes for questions. If there's anything from the audience, please let me know or I can just kind of go ahead here.

So I guess just to start, guys, you've actually doing some capacity expansions in the past few years, but seeing what the opportunity is in GLP-1s with Neffy and with biologics. I was wondering if there's any necessity for more investment in manufacturing or just capacity expansions to meet what should be a fairly robustly growing business over the next few years?

So maybe I'll take that. Absolutely. As you called out, we've seen growth in GLP-1. Biologics, you saw the pipeline, right, where biologics in the top 3, I think it was in the second spot, so a key driver of future growth for us.

In terms of capacity expansions, we've made quite sizable investments in the last few years. We call them big box build-outs, which is the big factory build-out. We've done that, and we don't see that being necessity in the near term.

Of course, we'll continue to add lines as required. We continue to invest in CapEx in automation, driving more automation on the factory floor, driving more efficiency in our manufacturing processes. So there is CapEx, but we don't foresee any sort of the big build-outs as we've done historically.

And then one of the things you did also point out was the kind of the opportunity from Annex 1 compliance. I was just wondering what your products do specifically that address the needs for that new regulation?

Alex, do you want to take that one?

Sure. In terms of Annex 1, the whole idea is to try to get the operator as far away from the product and the process as possible. So what does that mean for us is we can deliver ready-to-use components to get bags, port bags and simply connect them into their clean rooms. That's one area. They're also expecting cleaner components. So we have different types of processes that are able to offer PremiumFill type components.

And so one of the things that's interesting is the services or the digital health component of your business. Do you see this as a growth opportunity? Is it more of a thing where it's just an value-added service that kind of increases the moat for your products? I guess, is the way to think about it, is it more about growth or more about just protecting and stopping competitors?

Definitely the latter. Today, it's too small to provide meaningful revenue or profit to the company, but it's an extremely strategic acquisition for us a couple of years ago to increase the moat, to deepen the moat, as you said, but also it gives us access to a completely different level of people at our customers.

Decision makers.

Yes. Oftentimes, with the devices and components, we're talking with R&D guys, formulators, purchasing people. Here, you have access to C-suite people at the pharma company. Even from a small entity like our digital health group, they want to talk directly to us. So there's a lot of other things that I could talk about. But to me, the C-suite access to key decision-makers on itself -- on its own makes this acquisition valuable to us.

All right. We have 1 minute. Is there any questions from the audience?

Can I ask about the Injectables unit specifically, the sort of growth between GLP-1s -- hopefully, that's better. So my question is about the Injectables unit and just trying to get at, I think you guys grew on an organic basis, 11%, for full year '25 and 20% or so in the first quarter, so pretty good growth rates. How much of that growth is driven by GLP-1s versus ex GLP-1s in the Injectables unit?

Do you want to take that Alex? I can add color, if needed to.

Yes. I think that the first thing to know is maybe compared to our competitors, GLP-1 is still a relatively small portion of our business. So we're not as exposed. And we're talking -- one number I could give you is in the past 3 years or so, we've practically doubled the sales of our GLP-1 associated components. And then even more if you include also our high-value products for biologics, Annex 1, et cetera. So we don't communicate specifically specifics on GLP-1.

From a small base.

Yes. From a small base, we've nearly doubled.

All right. Thank you, guys. We are out of time here, and we really appreciate you guys coming today. So thank you, and thanks, everyone, for listening.

Thank you.

Ladies and gentlemen, thank you for standing by, and welcome to Aptar's 2026 First Quarter Results Conference Call.

[Operator Instructions]

Introducing today's conference call is Ms. Mary Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead.

Hello, everyone, and thanks for being with us today. Joining me on today's call are Stephan Tanda, our President and CEO; Vanessa Kanu, Executive Vice President and CFO, and Gael Touya, our CEO Designate; and President of Aptar Pharma. Our press release and accompanying slide deck have been posted on our website under the Investor Relations page.

During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for the reconciliations of non-GAAP measures to the most comparable GAAP measure discussed during this earnings call.

As always, we will post a replay of this call on our website. I would now like to turn the conference call over to Stephan.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. As previously announced, I will be retiring later this year and we will welcome Gael Touya as Aptar's next CEO on September 1. I will still lead the Q2 earnings call on July 31. So please hold any roasting remarks for that call. Gael and I are collaborating closely during the transition period. Gael is joining us today and would like to say a few words to kick off the call. Gael?

Thank you, Stephan, and good morning, everyone. I'm pleased to join the call today and so grateful to the warm welcome I have received as CEO of Designate. I'm very much looking forward to connecting more closely with our investors and stakeholders over the coming months, and happy to be here with you today.

Thank you, Gael. Everyone. Again, please save your roast comments until the second quarter and the tougher questions you can keep for the third quarter when Gael officially takes over as CEO. Now I'll begin my remarks by highlighting our first quarter results. And later in the call, our CFO, Vanessa Kanu, will provide additional details on the key drivers for the quarter. Overall, the quarter unfolded largely as we expected. Reported growth benefited from favorable currency movements. However, underlying performance reflected a mixed operating environment, driven primarily by the anticipated emergency medicine destocking following exceptional growth in quarter 1, 2024 and quarter 1 2025. Across the broader portfolio, demand trends remain healthy, and several of our core growth platforms have continued to perform well. Our Pharma segment continued to see growing demand in key areas, including GLP-1 biologics, systemic nasal drug delivery, nasal decongestions and ophthalmic dispensing, reinforcing our confidence in the long-term growth profile of the business. Consumer dispensing also contributed positively with volume and mix improvements across both beauty and closures. In beauty, demand was supported by strength in prestige fragrance and select personal care applications.

Closures benefited from high product volumes which was offset by the passing on of lower resin pricing. Across both segments, our teams remain focused on disciplined execution, portfolio optimization and overall operational resilience. Before I turn the call over to Vanessa, let me turn to our pharma pipeline, where our core business has continued to deliver. Systemic nasal drug delivery is accelerating and injectables now accounts for a greater portion of our opportunity set. The decline in emergency medicine dispensing systems negatively impacted core sales by 3% in the first quarter.

Over the past several months, multiple programs have advanced through key clinical and regulatory milestones, many of them leveraging Aptar's market-leading nasal and drug delivery technologies. Across intranasal delivery, our platforms are supporting a range of Phase II programs, including ENA, respiratory -- virus agnostic respiratory therapy. These programs rely on the precision, reliability and scalability of our delivery systems supported by Aptar's integrated formulation and regulatory capabilities in reinforcing our role as a trusted development partner.

I also wanted to share a few approval updates regarding Neve, the emergency treatment of type 1 allergic reactions, including anaphylaxis. Recently, the U.S. Food and Drug Administration approved an update the prescribing information for Neve, remove the age criteria. In addition, Health Canada granted approval for [indiscernible] along with the Emirates drug establishment in UAE. In the prescription market, Cipla recently announced that they received the U.S. FDA approval for the first AB-rated generic therapeutic equivalent of Ventolin using our metered dose inhaler valve.

This medication is used to treat or prevent bronchospasms in people who have reversible obstructive airway disease and is another example of our technologies being used on the original drug and then playing a key role in the approval process for the generic version. I also want to highlight a few more products that launched in the quarter. Our [indiscernible] components for injectables are featured on a blood derivative medication in the U.S. Our ophthalmic dispensing technology is being used for an eye care product in Latin America. And in Europe, our [indiscernible] on well spread technology is featured on a nasal saline for infants. Finally, our recent partnership with Enable Injections integrates Aptar, digital health, connected life cycle ready digital solutions with the Enfuse on-body delivery system, supporting patient engagement, patient adherence and data insights from clinical development through commercialization.

In Beauty, one of our newest prestige fragrance pumps is featured on Dior Addict by Christian Dior. Also, as brands move toward more alcohol-free water-based formulas, they need pump specifically engineered to dispense higher viscosity or by face liquids, while delivering the fine mist consumers expect from a perfume.

There's also a growing trend for skin care infused fragrances those at hydrate, sued or even protect, along with microencapsulated fragrances where molecules are suspended in the formula to offer controlled fragrance release. Several of our pumps are engineered to address these growing consumer demands and the associated dispensing challenges, including our spray technology for the European launch of [indiscernible], alcohol-free hybrid and microencapsulated line.

In skin care and makeup following the success of [indiscernible] double serum, [indiscernible] has launched Double Serum Foundation featuring our patented dual dispensing technology with progressive dosage. Lastly, [indiscernible] is using our custom actuator on its daily air spray in North America highlighting the value of early customer engagement where rapid prototyping and application-specific engineering can accelerate product launches.

Turning to Closures. Our dispensing closure that's often used for Asian sauces is now featured on [indiscernible] own barbecue sauces. Lastly, I want to highlight our technology that's turning beauty and personal care products upside down similar to what we did with ketchup and other condiments. We've launched our inverted [indiscernible] closures for single-handed dispensing that can be used with shampoos and conditioners, body washes, baby soaps, motions, pet shampoos and more. This technology is already being featured on a pet care shampoo line and additional versions have been successful in the home care and hair care markets.

It features our patented simply squeeze flow control valves and reflects our commitment to converting categories and making daily routines easier for consumers around the world. I also want to provide a brief update on our ongoing litigation with ARS Pharmaceuticals. The case continues to progress, and we are pleased that the court denied ARS motion to dismiss. We are now well into the discovery phase, and we have also filed the motion to dismiss the Southern District antitrust case or alternatively to have a transfer to New York where the underlying trade secret case is pending. As these matters remain ongoing, there is nothing further that I can share at this time. Now I would like to turn the call over to Vanessa to share more details on the quarterly results. Vanessa?

Thank you, Stephan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Our reported sales increased 11% and core sales, which adjust for currency effects and acquisitions, were flat compared to the prior year. We achieved adjusted EBITDA of $189 million, an increase of 3% from the prior year. And adjusted EBITDA margin of 19.2% compared to 20.7% in the prior year primarily due to less favorable product mix and operational challenges in beauty and closures. Adjusted earnings per share were $1.19 compared to the prior year's adjusted earnings per share of $1.30 at comparable exchange rates.

With those high-level comments, let's take a closer look at segment performance. Our Pharma segment's core sales decreased 1%, primarily due to less favorable product mix. Going into the year, we expect a challenging year-over-year comparisons due to an anticipated decline in emergency medicine. On that note, our previously communicated estimate that emergency medicine sales would decline by approximately $65 million in full year 2026 and continues to track. In Q1, the decline in emergency medicine dispensing systems negatively impacted pharma core sales by 3%.

Let me break that down by market. starting with our proprietary drug delivery systems. Prescription core sales decreased 10%. The decline in emergency medicine dispensing systems negatively impacted prescription core sales by 5%. Additionally, as previously noted by Stephan, Q1 2025 was a strong quarter for this division across a number of application fields, which created a challenging comparison. Looking ahead, we expect continued growth in key end markets as we progress through the year. Consumer Healthcare core sales increased 4%, primarily due to an increase in sales for eye care and nasal decongestant products. Injectables core sales increased 20%, with strong demand primarily for elastomeric components used for GLP-1 Biologics and antithrombotics.

Services also contributed positively in the quarter, and we continue to see strong pipeline build for NX1 and Biologics projects. And for Active Materials Science Solutions, core sales decreased 1% in the quarter. Growth in oral solid dose sales was not sufficient to fully offset lower sales in probiotics and diabetes test trips. Pharma's adjusted EBITDA margin for the quarter was 33.3%, a 150 basis point decline from the prior year. The margin decline was anticipated and driven by product mix and volume, due primarily to a decline in high-margin emergency medicine sales, while royalties continue to positively impact margins.

Moving to our Beauty segment. Core sales increased 3% with improving volumes in the quarter. Looking at the 2 largest end markets for beauty, fragrance, facial skin care and color cosmetics core sales increased 3%, primarily due to double-digit sales growth for prestige fragrance pumps as well as color cosmetics. Sales from masstige fragrance technologies also grew in the quarter, offsetting a decline in skin care.

Personal Care core sales increased 6% with broad-based growth across all regions. Applications for both body care and hair care continued to show strong demand. Beauty's adjusted EBITDA margin for the quarter was 11.1%, and a decline of 100 basis points primarily due to less favorable product mix in North America, and we are still feeling the impacts from the fire at a supplier that we reported last quarter, although we did see the margins improve sequentially from Q4, 2025.

Moving to the closure segment. Core sales were flat compared to the prior year. While volumes were up, core sales were impacted by the pass-through of lower resin pricing. Looking at the 2 largest end markets for closures, Food core sales decreased 3%, primarily due to the resin impacts I just mentioned, partially offset by continued demand for our sauces and condiments dispensing closures.

Beverage core sales increased 10% primarily driven by increased sales for dairy drinks and liquid coffee creamers. This segment's adjusted EBITDA margin was 13.1%, a 270 basis point decline over the prior year, primarily due to previously reported maintenance issues, which our closures team continues to work through and temporary plant closures as a result of extreme weather conditions in North America during the quarter. Additionally, we wrote off a minority investment in the quarter. At the total company level, consolidated gross margins declined by 210 basis points in Q1 year-over-year primarily as a result of the aforementioned factors. Selling, research and development and administrative costs, which we abbreviate as SG&A increased in absolute dollars, largely due to currency effects and the impact of acquisitions. Excluding currency effects and acquisitions, SG&A dollars were flat year-over-year. SG&A as a percentage of sales decreased from 17.5% in Q1 2025 to 17.1%, a 40 basis point reduction year-over-year. These amounts include approximately $4 million in legal expenses for non-ordinary course litigation, which did not exist in the prior year period.

Adjusted earnings per share of $1.19 were down 8% year-over-year at comparable exchange rates due to higher depreciation and amortization expenses associated with our capital investments and acquisitions and interest expense of $17 million, a $6 million increase from the prior year due to higher rates on current year borrowings. Our adjusted effective tax rate for the quarter was 22.6% compared to the prior year's 25.8% due to a more favorable mix of earnings and greater excess tax benefits from share-based compensation.

Moving over to cash flow. Free cash flow more than doubled year-over-year to $53 million for the quarter, comprising of cash from operations of $119 million, net of capital expenditures of $65 million. We repurchased $100 million worth of shares in the quarter and paid $31 million in dividends, returning a total of $131 million of capital to shareholders. Finally, we ended the quarter with a strong balance sheet, once again, reflecting a cash balance of $223 million as of March 31, net debt of $1.1 billion and a leverage ratio of 1.43. Before we move to outlook, I'd like to touch briefly on the impact of the Middle East conflict. For Q1, the impacts on our results was minimal. As we look ahead to Q2, along with others, we are seeing significantly increased input costs. most notably raw materials, transportation and energy. We are largely passing these higher costs through to customers, supported in some cases by index contract clauses for resin.

While we have not experienced any material supply chain disruptions to date, we are monitoring the situation very closely. As a reminder, as costs are passed through, margin percentage will experience some compression. Our focus is on neutralizing the impact to our overall earnings.

Now on to outlook for Q2. We anticipate second quarter adjusted earnings per share to be in the range of $1.32 to $1.40 per share and an effective tax rate range of 22.5% to 24.5% and the euro to U.S. dollar exchange rate of 1.18. For full year 2026, capital investments are expected to be in the range of $260 million to $280 million and depreciation and amortization expense is now expected to be between $310 million and $320 million.

With that, I will turn it over to Stephan to provide a few closing comments before we move to Q&A.

Thanks, Vanessa. Regarding our outlook, looking ahead to Q2 and excluding the impact of destocking in emergency medicine within pharma, we anticipate a solid quarter with growth across each of our segments. As a reminder, the first half of the year is challenged due to the emergency medicine comparison, which should ease in the second half. Within pharma, outside of the emergency medicine end market, we expect our prescription division to return to healthy growth. We also anticipate continued growth across a number of pharma end markets driven primarily by strength in our injectables and consumer health care businesses. Beyond Pharma, we are expecting a strong quarter in closures, supported by solid demand and continued growth in beauty with particular strength in fragrance.

As we head into the quarter, we remain mindful of potential supply chain uncertainties and cost volatility as we continue to operate in a dynamic environment. While we are managing these conditions actively, we're staying disciplined and focused on what we can control as we execute through Q2. The demand we are seeing across a number of end markets is very positive. Our pipeline continues to build in pharma and in beauty and closures, we see a healthy order book activity. And with that, I would like to open the call up for your questions.

[Operator Instructions]

Your first question comes from Paul Knight at KeyBanc.

Thanks, Stephen. Well, I'll save the remarks until July, as you suggested. The comments you made at the beginning around Nepi being approved for any age group U.S. and also in Canada, along with some other highlights are those events and approvals enough to say, my visibility for 2026 is higher.

All right. Let's try again. Does this work?

Can you hear me now?

Operator, can you hear me?

Loud and clear.

All right. Sorry about that. We have a new system. So a reminder, no single product really moves the needle substantially. I guess the exception is NARCAN in any quarter. And these incremental approvals are more proof points that over time, we expect this to be a successful product, clearly being able to expand the market to children over 30 kilos, I think it is. and additional geographic approvals obviously bode well. But I would not translate that to significant impact on a quarter or even the balance of the year. And having said that, we feel very good about prescription growth for the balance of the year. Clearly, quarter 1 had a very tough comparable but we are already in Q2, expect strong growth in prescription excluding emergency medicine.

And then last, are you adding GLP-1 capacity in the elastomer business?

We made substantial investments. And right now, we've got plenty of capacity, and we do have the ability to creep additional capacity by just putting in additional equipment in the existing large building.

Your next question comes from the line of Ghansham Panjabi.

Congrats to you, Stephan, first off, on a great run, and to you as well, Gael. Our team wishes you the very best in your new role. I guess first off, on the Rx component, I think you said down 5%, excluding the naloxone destock, if you will, you called out tough comps from a year ago in the first quarter of '25, but the comp for 2Q is also pretty tough from what I remember. I think it was up 10% in 1Q '25 and plus 8% in 2Q. What is the expectation for Rx naloxone in 2Q? Is it -- I know you don't give specific guidance, but do you expect it to grow year-over-year based on the tough comp as well?

So thanks for the congrats. And the short answer is yes. So yes, the comps are also demand, if you want in Q2, but we expect very solid growth for Rx in Q2 and excluding emerging medicine, of course.

Okay. And then consumer, you said plus 4% in 1Q '26. But from what I remember last year, you had a pretty easy comparison, just given the destock that was occurring in certain whatever was cough and cold, et cetera. So was that in line with your plan in terms of consumer? And then if I could just ask a broader question as it relates to some of the comments about supply chain uncertainty. And was there any benefit in any parts of your businesses across the portfolio as it relates to any sort of prebuy just given customer uncertainty as it relates to supply chain, et cetera?

Yes. Let me take the second one, and then Gael, maybe you can comment on consumer health care growth. We really don't see a lot of prebuying. And to be perfectly honest with the bounce back of demand there several product lines that we couldn't even fulfill the demand of prebuying. So it's rather limited. But I understand the question. Consumer Health care, Gael?

Yes. Consumer has care, I mean, we are back on a positive trend for second quarters in a row after a good Q4. So it's in line with expectations. We continue to get a very strong of talc business with a good pipeline conversion, Deal trucks is doing well. And from a cough and cold, I mean we are -- we've seen the inventory adjustments. And we know that in certain countries, something that was a low cold-and-flu season, especially in the U.S.

Your next question comes from the line of George Staphos at Bank of America Securities.

Congrats to Gael and to Stephan. Again, we'll say the roast for July. Congrats on the quarter 2. A point of clarification to Ghansham's question, I'm sorry, because I'm doing dual calls here. Did you say pharma will grow even with the impact from emergency medicines or just Rx will grow ex the [indiscernible] impact? How should we think about that?

And Yes, it's the latter one. It's the latter one. So we just wanted to highlight, and I know you all took a lot of comfort that Pharma x emergency medicine grew 10% in quarter 4 and it's a little bit less this quarter, but we expect, again, good growth in quarter 2. So don't read too much into a single quarter here.

Okay. Growth in pharma ex e-med.

Correct.

My question is just one on pharma and one on closures. Stephan, Gael, is there any though in terms of what you're seeing with GLP-1s recognizing it's not a huge driver of your business that nonetheless, maybe there's some pipeline filling occurring somewhere. How do you work against or peer into that if that's a risk. And then on closures, when do you expect that we'll be back to normal margins in this segment? And are you seeing any kind of uptake because of maybe a little bit stronger-than-expected barbecue season because of America 250? Are any of your customers talking about that? Or is that at this juncture, it'd be nice, but we're not baking it in.

All right. I haven't heard the America 250, although it's worthy cost to celebrate. That's for sure. So let's all have some barbecues on that. Coming back on GLP-1. I mean demand is very strong. I still hear anecdotally that consumers have to wait not for weeks, but maybe a few days to get the prescription filled. You also release very strong result, with Stephan, I think, being up 80% or so. So clearly, as people see other people losing weight, they want to get in on the fund, and there is strong demand for the product. Gael, do you hear anything about pipeline build?

There is a very healthy pipeline, I mean, as we speak because obviously it's attracting a lot of players.

No. I mean inventory build.

No, no, no. There is no intent to that. I mean this is -- No, that's all what we are hearing from our customers.

On closures, let me start and maybe Vanessa can also jump in. Clearly, let me not beat around the bush disappointed with some of the maintenance issues that we had and the two dozen tornado warnings that break out on our phones in the Midwest haven't helped as we had to shut down plants and people take shelter adding up to 11 days. So my expectation would be for the second half to closer to return to normal margins. But I look to you, Vanessa.

Absolutely, Stephan. You're absolutely right. I don't think I have much more to add to that. We did have some challenges, which I did call out in my prepared remarks. And we do expect to see sequential margin improvement in closures, and that's baked into our guidance.

Your next line comes from Matt Roberts at Raymond James.

Emergency, just going back to the 3-point headwind in 1Q even on a dollar amount as well or maybe I'm afraid my calculator is broken so just a sanity check, it seems a bit lower. But then how did emergency growth specifically compare in 2Q '25 to 1Q '25. And any other considerations within the pharma category that decelerated in 1Q worth mentioning? I noticed asthma, COPD wasn't in the prepared remarks, but just seeing if anything else was going on there?

Yes. I think on your specific question, I would ask you to follow up with Mary. I think it's a very specific question that we probably don't have at our fingertips. In general, let's just reconfirm that the 65 million is still the right number. About 2/3 of the impact we expect in the first half of this year and the balance in the second half, so by the time Q4 comes around, this should be almost washed out. And certainly, with Q1 '27, we'll have a clean comparison. So in the first half, the bulk of the 65 million will have been done, and we feel now reasonably confident that this is the new level. If you deduct the 65 million is the new level from which we expect to grow from [indiscernible] low to mid-single digits according to our customers. Other movements, I don't think we want to get into those specifics.

I appreciate that's, Stephan. And we were on pharma, on the margin at least down, it was still within the range despite the mix impact, I think down 1.5 points versus the 3 points you saw last quarter that had an emergency in there. So given what you saw in 4Q and 1Q is the long-term range still achievable in '26? Or how do you think about the progression through the year? And in 1Q specifically, like I said, despite the mix was still within the rain. So any other drivers of that, whether it was cost performance? Was there any change in royalty revenues in the quarter or injectable margins have improved that much? Just any color there on what you're seeing on the margin?

I mean pharma is a great business. And of course, emerging medicine is very profitable hands, a somewhat lower margin, but still within the range. So to answer your first question, yes, we do expect pharma to be with this a long-term EBITDA margin target for the year. And as the year progresses to return with the top line growth. I think we said also last time that we expect the company to be with its long-term EBITDA margin target for the year, which is -- usually, we don't give guidance for the year, but that is obviously a consequence of pharma being there. So beyond that, Vanessa, any else?

Yes. I think the only update I would add to that is as we look at sort of full year and this really relates to the pass-through of higher costs that we're seeing. And I did mention this in my prepared remarks that as we pass on these costs, it does have compression as a margin percentage. But clearly, our focus is to neutralize the dollars impact on our bottom line. And so you might see at the segment level of some compression based on the pass-through of these costs.

Your next question comes from the line of Matthew Larew at William Blair.

Maybe just following up on the margin point. The 6 prior quarters before sort of the [indiscernible] destock occurred. Corporate gross margins averaged around 38%. And then obviously, the last couple of quarters below that because of the destock you've also had, as you referenced the operational issues in beauty and closures. But all of those things as we get into the back half are improving. So just -- is it fair to think that you can get back to that range for gross -- corporate gross margins by Q3 or Q4.

Yes. I mean, Matt, we're guiding for Q2. We're not guiding for Q3, Q4. But I think directionally, that all aligns to what Stephan just shared and what we shared in the last call as well. We do -- and really, it's a gross margin story that the overall EBITDA margin impact is a gross margin story because you would have seen in Q1, we're pretty tight from an SG&A perspective. And so no issues there. And so the -- it's really gross margins, right, which is coming from the mix impact, which is coming from the operational issues that we've had to deal with in duty and closures and all of those will start to sequentially improve starting in Q2. So directionally, you're absolutely right.

Okay. And then maybe just following up on the the kind of operational issues, the maintenance, which is something sort of you can control and the fire at other suppliers, which is that you can't control as much. But just would be curious how those progressed in the quarter? And I guess, what your expectation is to when you'll be closing the loop on those things.

Yes, I think we -- I can only repeat what we said earlier, certainly expected in the second half for these issues, both in beauty and closures to have passed with sequential improvements.

Your next question comes from the line of Daniel Rizzo at Jefferies.

Just on the Narcan, I was wondering if after we get through this initial kind of destock or this issue, if over the long term, we're going to see this again where emergency services or buyers of this product kind of re low, so to speak, you see a huge surge and then it kind of flattened identity declines. Is it going to be lumpy like that? Or was it just I don't know, just over ordering the first go round. How should we think about it?

Yes. Dan, I certainly would expect the first one. I mean, this is such a unique set of circumstances where you have the originator more than a handful of generics, over-the-counter approval and all this money from the settlements converging on this inhalation or everybody getting ready to do battle to win contracts. Now it's a much more -- not organized, but it's a competitive market. People win once they lose another state I don't see the same kind of dynamics repeating.

Now will you have lumpiness. I'm sure there is no business where you don't have that. And this 1 has less visibility than most because we can't track inventory levels at the end user. But since we have 50 states being in this game that there should be some evening out and you have more than a dozen competitors. So this should even out. I don't expect this kind of magnitude. I shouldn't say ever again, but in the foreseeable future.

No, that's helpful. And that's kind of what I assumed. And then also -- so you mentioned that there was no prebuying for amongst your customers. I was wondering if you guys have stocked your own inventories or planning to just to kind of, I don't know, smooth things out and make sure that you have security of supply, given the volatility with logistics, with input costs or just with everything.

Yes, Dan. Absolutely. So our purchasing teams, our supply chain teams are managing this very, very tightly, securing safety of supply, looking at -- obviously, how do we balance geographically and monitoring the health of some of our suppliers just to see what the impact of rising energy costs we have on those suppliers overall health. And so we will actually increase some of our safety stock. So I do expect that we'll move to a bit of a trend in rising inventory, but for all of the right reasons, and done intentionally to make sure that we're well managed through the Middle East crisis and it's longer-term [indiscernible].

Can you remind me, did you have to do that after COVID like the COVID logistical issues after COVID. Was this something similar to kind of unfold?

Not really that I can remember. Remember the main challenges in COVID were U.S. labor availability as we came out of COVID, and people still had government money in their pockets and weren't really coming back into manufacturing. Europe, companies kept running because the companies had the support from the government, not the individuals. So it returned pretty smoothly. So it's very different.

[Operator Instructions]

The next question comes from the line of Gabe Hajde from Wells Fargo.

I wanted to ask about active this quarter. I know you guys talked about probiotics. And I think another headwind for test strips. On a go-forward basis, I know we're talking a lot about GLP-1 for injectables, but I think there's some solutions that you all have for oral solid dose of GLP-1. Anything that you can highlight in that arena for us.

Yes, I certainly would not put too much into active film, which is the kind of the film that goes into the blister of -- let's say, sensitive drugs in the GLP-1 drugs. I think it's too early. I know we have 1 in the pipeline here, but it's too early to kind of make any calculations on that. I think the active material business is a very exciting pipeline, for example, on nitrosamine reduction. That is a much bigger topic that the FDA is cracking down on and we're maybe the only solution where you can reduce nitrosamine and not change anything else. I think the other dynamic that played out this quarter is that the further transition from the finger prick with diabetes test strips where we make the vial for the test is to more glucose monitoring and continuous glucose monitoring.

As you know, we are involved with Abbott Libre and LINGO. So it's more a matter of the decline of the first one was the growth of the second one, how it balances out in any given quarter. But overall, we continue to be bullish about active [indiscernible]. But I wouldn't hang into an oral GLP-1.

Understood. Vanessa, I don't think you called out a specific headwind and generally speaking, historically, you all have been able to catch up pretty quick on price/cost headwinds. But -- is there something specifically baked into Q2 on resin lags or anything else from transport, et cetera, that you're behind on that you would expect to get back in the second half?

Not anything material to call out, Gabe. This is something that -- so yes, so I'll go back and just start with, yes, of course, we are going to see the impact of rising resin prices. We've already been feeling that in our business. Our closures business is actually where we see the biggest impact from a segment perspective. But of course, it does impact all segments. Closures, we are generally protected by indexation and beauty and Pharma, a little bit less so. But even there, we pass it on to customers. We've done that in other periods of rising costs.

So this is something that we have a good muscle for. And then in terms of impact to Q2, we've already started with those cost pass-throughs and we don't expect any net material impact to our overall Q2 results, and that's already baked into our guidance.

I guess good to see. The last 1 was, you did mention an answer to a prior question about maybe yourselves building a little bit of safety stock. Is that on the raw material side, finished goods side? And I'm just thinking about overhead absorption to the extent that things deescalate here and we're, I don't know, 9 months from now, that you may be underproducing in some product lines. So just curious if there's anything specific. I think, Stephan, that you may have mentioned where you're I guess that buildup a little bit the safety net.

Yes. No, that's on the raw material side. And just to make sure that we don't run out of any critical inputs.

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

Just a couple of quick ones. First of all, Vanessa, if you've mentioned it, I had missed it. Can you talk about what the minority investment write-off was, what the amount was and what was behind it? And then with the discussion on closures and obviously, you're managing through operating issues and you'll resolve them in the second half. Can you remind us how the [indiscernible] plant has been doing? I know that goes back over 10 years, but how has that performed after you put it up for food and beverage? And in general, how you view your operating network in closures now? And how is Lincoln been doing in particular.

Let me start with the [indiscernible] and Vanessa, maybe he can address the other question. [indiscernible] is doing fine, like any other plant, it has sometimes an issue here and there, but overall, it has grown up to be a good performing plant. It had also that some of the weather issues that we talked about. It wasn't just in the Midwest also in the South. I think we had some snow there. But other than that, actually, quite happy with Lincoln some of the maintenance issues we talked about actually more in the Wisconsin plant. And then Vanessa, maybe you talk about the venturing.

Yes. Yes, absolutely. And George, I didn't talk too much about it in my remarks. I did just -- I just -- I comment that there was additionally a write-off of a minority investment. It was not the most material item. Stephan just mentioned, the maintenance challenges, the weather issues. And this was yet another factor that impacted closures, unfortunately, negatively in the quarter. He was not a big amount. It was a minority investment. It was a venture investment that we made a few years ago. And as we do with all investments, we assess the recoverability of the investment and we chose to provide against it. it probably had about -- again, it was not the most material impact, but another thing that impacted closures margins in the quarter, but not material to act overall.

I mean, overall...

A few million bucks, $100,000, any way to size it bigger than ?..

About 50 or 60 basis points in margin impact year-over-year. So important to call out, so I wouldn't spend too much time on it.

I mean, overall, actually not to be [indiscernible] too much. We have a venturing program that has served us very well to complement our in-house innovation by taking positions in leading-edge companies that do innovation, and we trade a few million investments often against the Board seat and get some dips on the technology. And overall, the portfolio has been returning quite well. But as venturing goes, you don't win them all, and those that you don't win, you have to write off.

There are no further questions at this time. Mr. Tanda, I turn the call back over to you.

Great. Thanks. Let me sum out and summarize the call. Number one, thanks for holding off on the roasting. Appreciate it. On the quarter, the team performed solidly overcoming some of the unexpected challenges in delivering a good EPS number. As we move through the last 2 quarters, the visibility of the destocking trajectory of emergency medicine has improved, and we have confirmed our estimate of the 65 million and about 2/3 of that will impact the first half of this year with the balance of the second half. We talked about that Q1 was a tough comp for prescription in particular, but we expect prescription excluding emergency medicine to return to solid growth in quarter 2 adding to the growth of injectables in consumer health care. We didn't talk about it much, but we continue to be very excited about the growing pipeline in pharma on the back of ever-growing numbers of systemic nasal drug delivery projects and higher participation in injectable projects, including GLP-1s, biologics and NX1 driven projects.

As a reminder, pulmonary biologics and systemic nasal drug delivery remain the top end markets in our pharma pipeline on a risk-adjusted basis. And as I mentioned in my remarks, more and more of our customers choose to disclose their collaboration with Aptar, also a credibility builder for them in their early development phases, which allows us then to give you progressively more color on the kinds of things that are in the pipeline.

As we look to Q2 and the balance of '26 emergency medicine side, we are well positioned for broad-based growth across all 3 of our segments continued strong growth in pharma, of course, excluding EM, with solid momentum across injectables, systemic nasal drug delivery, consumer health care. Beauty has returned to growth and in closures, we expect continued innovation driving more category conversions, including in personal care applications.

We are executing on our rigorous productivity road map not only to address the short-term headwinds, including now the impacts from the Middle East conflict but also to drive further efficiencies across our operations and supply chain networks as well as SG&A. Last not least, our strong balance sheet gives us strong optionality while investing in the business and returning capital to shareholders. And with that, we look forward to talking to you in the coming weeks.

Thank you. You may now disconnect.

Good afternoon, everyone. Thank you for joining us in the coveted after-lunch slot. My name is Matt Roberts, the Packaging Analyst here at Raymond James. I am pleased to welcome back Aptar. We have Vanessa Kanu, CFO; and Mary Skafidas, of course, SVP of Investor Relations and Communications. You might be familiar with Aptar's products. If you've been sick, have allergies or have asthma, you're probably also familiar with their beauty products if you're getting ready for a night out and using your favorite fragrance.

And you're probably also familiar with Aptar with everything in between, whether it's an upside-down ketchup bottle, [indiscernible] or even my favorite dish soap that fills my pantry. So it's really there for all parts of your life, both good and bad -- but ideally good. So thank you all again for coming. Vanessa, you have a couple of slides to start us off. So I'll let you do that, and then we'll get into questions.

Thank you very much, and thanks for joining us. Matt, thank you for that intro. I think you just did my presentation for me, which is fantastic. So after lunch, I'll try my best to keep the tempo up just so that you don't start falling asleep here. We think we have an exciting story to tell. But thank you for joining us and for your willingness to learn more about Aptar. Aptar is a -- as Matt mentioned, we are a global leader in the design and manufacturing of drug and consumer products, dosing, dispensing and protection technologies.

And really, what that means is at our core, we are a technology company. We do manufacture -- everything that we manufacture is actually our own IP. We are not a contract manufacturer. And we are a truly global company. We operate in about 20 countries across 4 regions around the globe with Europe being our largest region. And for the year ended 2025, as you can see here, we generated about $3.8 billion in annual revenue across 3 primary segments. Pharma, which is our fastest-growing segment and the most profitable segment, accounted for about 46% of our revenues and nearly 70% of our adjusted EBITDA for 2025. Beauty accounted for about 35% of revenues. And as you can see here, about 19% of our -- 18% rather of our adjusted EBITDA. And Closures was about 19% of revenue and 13% of adjusted EBITDA for 2025.

And I will get into a bit more detail about each of our segments momentarily. Across each of these segments, we also serve very attractive end markets with long-term growth opportunities, and I'll talk about that as well momentarily. We are additionally consistently recognized as a sustainability leader in our industry. You'll see some of the awards at the bottom of this slide. And then lastly, I would say we have a very, very strong balance sheet with leverage in the low end of our corridor. We have a corridor of 1 to 3x EBITDA, and we're about 1.38x as of the end of last year.

So very much at the low end of our leverage corridor and frankly, amongst the lowest in our peer group. So the strong balance sheet is certainly something that we're very proud of and frankly, is also a competitive advantage, particularly in a Pharma business where the development cycles are quite long. And then maybe lastly, what I'll mention is our track record of consistently returning capital to our shareholders. In the last 5 years, we've returned about $1.2 billion of capital to our shareholders through dividends and share buybacks, and we'll talk about that as well in a little bit more detail later on.

So I did say earlier that at the core, we are a technology company. So let's talk a bit more about our technologies and industrial capabilities across our end markets. So what you see here vertically are the different end markets that we play in. And then it shows horizontally how we leverage technologies and capabilities across each of those end markets. You see that the business shares a lot of technology platforms, right? Whether it's fine mist pumps, airless technology, aerosol and Bag-on-Valve. And you see how that's shared across the different segments and end markets that we serve.

And some of you may already know if you've been following Aptar for some time that our Pharma business was actually organically born from the Beauty business. So again, a great example of you take a fine mist spray that's used in beauty, you adapt that technology and now you've got a nasal spray that is now a category leader in our Pharma business and frankly, a very, very high-margin products as well. And then leveraging these technology platforms across the business, but we also practice common industrial processes, as you can see here. So precision injection molding, high-speed assembly, AI-assisted quality control, just to name a few. So let's talk about innovation. I did say earlier that we own the intellectual property of everything that we manufacture, right? Because we're not a contract manufacturer.

And for us, that IP includes patents, specialized know-how and trade secrets. And so protecting that IP is very fundamental for us. We hold, as you can see here, about just over 7,300 patents across the portfolio. This strong foundation of innovation is what we believe makes Pharma and frankly, Aptar highly attractive to our customers. Additionally, over the years, we've also expanded our expertise to include service capabilities, human factors knowledge and further strengthening our overall value proposition end-to-end for our customers.

I also mentioned earlier that we serve attractive end markets. And we think that we're very well positioned for long-term growth just given the markets that we serve. What you see here is across our 3 segments, Pharma Packaging has a total addressable market of about $165 billion, and that market is projected to grow at a 7% CAGR. That's not our growth target. That is the market projected growth target, 7% CAGR for Pharma Packaging. The Beauty segment, about a $38 billion total addressable market, projected to grow about 4%. Closures, relatively smaller from a TAM perspective, but still not a small TAM at $7 billion, projected to grow about 2%.

But of course, over time, we've actually demonstrated that we've grown Closures even better than the market through some of our category-defining innovations, some of which Matt actually mentioned, for example, the Dawn soap and the upside-down Dawn soap and the ketchup. That's how we've been able to grow our Closures business better than some of those market projections. And so as you can see here, certainly, when we think about our long-term revenue growth target in terms of 4% to 7% total revenue growth, that is very much supported by the markets that we serve, the total addressable market and the projections for market growth.

And again, we have demonstrated our ability in certain of these markets to grow better than the market growth rate. So of course, we're focused on execution. And what I like about this is as you kind of look across our portfolio, it is a highly diversified portfolio and no single product or one single geography will define the overall long-term target growth rate. So you also heard me say earlier that we've returned about $1.2 billion of capital to shareholders over the last 5 years. If you look at the split of our overall capital from 2017 to 2025, what you see is that roughly 2/3 of that has been reinvested back into our business, organic CapEx investments as well as M&A.

And just given the higher growth and higher returns attributes of Pharma, we obviously preferentially invest in Pharma. We also invest clearly in our other segments, but of course, we put more of our investments to the Pharma segment. And then roughly the other 1/3 of our capital has gone back to shareholders through dividends. We're now in our 32nd year of annually increasing dividends and, of course, share buybacks. I will say the buybacks are a more discretionary element of our capital allocation framework. Certainly, we like the flexibility that it gives us. You would have seen in the past year, we certainly have been a lot more opportunistic in our approach to share buybacks than we were, say, in the years. But that really doesn't change in policy. That really is just being opportunistic and using the flexibility that, that discretionary lever does provide us.

And I won't go through all the awards here, but sustainability leader, so many awards. And while we have some of the more recent awards shown on these slides, what I will say is that this is -- certainly not a new or recent phenomenon. This goes back many, many, many years where Aptar has been receiving awards for its leadership in sustainability. And certainly, that really does help us in terms of our value proposition to customers. Believe it or not, there are many, many customers who do care about sustainability, and it's a differentiator for our franchise. And additionally, it also helps us to attract and retain talent, particularly younger talent as well, who also tend to take very importantly, sustainability and what companies are doing on that front.

Okay. So with that general overview, I'll just -- let me quickly turn to each one of our segments, starting with Pharma. So Pharma is our growth engine. As I mentioned earlier, it's the fastest growing and the most profitable of our segments, as you would have seen in the first slide. Our market leadership here is very much anchored by our proprietary drug delivery systems, which, as you can see here, was about 70% of our revenues last year, followed by Injectables at 19% and then Active Material Science solutions at about 10% of revenues.

We have decades of regulatory and technical expertise that we've built here. And that really has made us the partner of choice to bring a drug from formulation to patients. You saw in an earlier slide that we've got about 7,300-plus patents, of which about 62% is Pharma. So that works out to about 4,500-plus patents across the Pharma portfolio, and it's a very diversified portfolio. And then as you can see here, we deal with all of the leading pharma companies on a direct basis and often also supplying their CMO partners.

So -- let's talk about what differentiates us in terms of Pharma. And I would say our differentiated position here is, again, built on our intellectual property and being deeply involved in the regulatory process, which ultimately leads to lock-in of our devices in the Drug Master File. And our services, of course, have also been built up over time and Digital Health also brings offerings that allow us to really embrace our customers early on in the journey, which also makes our devices a lot more sticky from an overall Pharma perspective. Of course, as a manufacturer, the engineering and the science and the know-how of everything we do is, of course, very important.

And all of that is based on 40 years of expertise that we've built up, starting this business, as I mentioned earlier, organically from the beauty business and of course, applying that technical know-how over time and then building up that deep regulatory expertise. And we've also built not only organically, but we've also added to that through well-placed acquisitions over the course of time as well, and that gives you an idea of how the overall portfolio has evolved over time. This slide here, not our TAM, but it's a good indicator of how drug sales break down by the route of delivery. And what you see here, so we have a very, very strong position in inhalers.

We've also developed a strong position in eye care drug delivery and dermal drug delivery. We, of course, we've built out capability in Injectables, and we're seeing that growth in our results as well. And in the oral route of delivery, we also have our Active Materials packaging where we also see strong growth potential as well. And then when you look back at the performance of our Pharma business over the course of time -- When you look at our Pharma business over the course of time, over the last 10 years, which is kind of what we show on this slide here, we see 9% revenue CAGR and 9% adjusted EBITDA CAGR as well. Obviously, not every single year has grown at 9%. That's a CAGR. We've had years where Pharma has grown 10%, 11%, 12%. We've had years where Pharma has grown 5%, 6%.

But when you look at a longer-term period, the CAGR has been 9%. And again, when you think about our long-term target revenue growth of 7% to 11%, clearly, you see that we have historically demonstrated that. And we also just saw the market opportunity as well in terms of 7% projected market growth, and we've consistently grown better than the market, right? So when we get asked why are you confident you'll get to a 7% to 11% CAGR? You can look at 10 years of history, and that we only showed 10 years here. You can look at the market projections going forward, and you can look at some of the other diversified therapies and delivery devices that we have in our portfolio, which I'll talk a little bit about.

So speaking of that, our pipeline is really what drives our business in the long run. And in Respiratory, of course, low-GWP propellant transition is one part of our growth in the pipeline, biologics for Injectables, and what we also call systemic nasal drug delivery. Systemic nasal drug delivery really just means that you're using the nose to administer drugs, and that's a growing field. And basically getting into the bloodstream via the nose, which has proven to be a very efficacious route of delivering medicine versus going through the GI tract or direct injection into the bloodstream.

So the nose has been discovered as this drug delivery vehicle directly to the bloodstream, very efficacious, as I said. In addition to that, bypassing the blood-brain barrier and going directly to the nose with targeted drug delivery, which opens up a really great new category of growth for us. Again, that's what we're seeing in our pipeline, and that will also support our future growth given our experience and track record in that sector. Of course, we talk about small molecules, traditional injectable opportunities, ophthalmology, allergic rhinitis, et cetera, dermatology, all of those round out the top things that we're seeing in our overall very diversified pipeline.

As we look at a deeper dive of proprietary drug delivery systems in our pipeline, the main thing here I'll call out is that these therapeutic areas are actually very diverse, very, very diverse. They're not overweighted towards any particular therapy. And as you look across here, we're seeing a tendency towards more complex, smaller volumes and higher-value products, which means that more focus and more stickiness on delivery systems as well as more opportunities for complementary services and royalties.

And again, this just really highlights the diversity that we see in our overall pipeline and the drug delivery. We're also seeing a variety of neurological disorders and neurodegenerative diseases that are showing up, Alzheimer's, Dementia, Parkinson's, we're seeing that show up as well in the pipeline. On the cardiovascular side, we have 2 heart medications that were just approved in the last 2 to 3 months, I would say, one for edema, the other one for tachycardia as well.

And this is where you take your heart medications through a nasal spray versus, again, taking a pill or even an IV, for example, in the hospital, right? So we've got all of these things show up in our pipeline and increasing contributors to our pipeline as well. And of course, oncology, even GLP-1s. We don't talk a lot about it. I know there's a lot of talk around oral GLP-1s. But guess what, somebody is actually working on GLP-1s delivered by a nasal spray, also in the works. Maybe we'll talk about that in 2 years from now. We'll see.

All right. So that's the diversity of our pipeline and where we're seeing the growth in the pipeline come from, which, again, all of those things are what gives us confidence in terms of that longer-term 7% to 11% compared to the historical 9% that we've seen. One of the things here is -- I really like this slide because it really talks about the life cycle of a molecule and the journey that we, as Aptar go through. You see this is a molecule that was first prescribed in 1994. Prior to that, there was a development phase. And then started -- was prescribed in 1994. We've been with the originator since then, we were specified into the Drug Master File.

During the development phase, we do actually earn revenue through services, so we don't just lose money. We work with our customers through that phase, but we actually earn revenue through services. Not a huge amount of revenue, but very profitable service revenues and also we have a royalty revenue stream as well. But you see here that we start earning revenues very early on. And then when the drug first goes prescription, we continue to earn revenue through the originator. The drug then goes generic. The originator loses a bit of volume, the generics start to increase volume, but they stay with us because we're expecting to the Drug Master File. The switching costs are pretty high. It's not impossible, but it's pretty high. So that revenue stickiness stays with us.

And of course, the drug goes over the counter, which also tends to open up the market, increases volume overall for that particular drug. And again, our devices are typically used, again, very high switching costs, right? So you can see how that revenue stream that starts from the development phase right through the entire life cycle continues to grow and accrue for Aptar, which actually is a very unique model. And one of the things that our CEO typically says is that he's never seen a business where you just keep on compounding revenue to that degree. And certainly, I would say that he's right.

So -- this looks at how we've built up our capabilities over time. And we've broadened our capabilities to embrace customers early on in the drug delivery process from design, formulation, creating insights, new patient insights, which our customers certainly really appreciate. And again, as we say, from design formulation, creating those insights with our service offerings and of course, adding to that also analytical testing, which are customers, again, another factor that they fully appreciate.

We've also added human factor design services. This is where we're using what is the best ergonomic design for that particular product and how is that going to be received by patients and consumers, particularly in our consumer health care business, very interesting and important to our customers. And all of this really just helps to build our moat in terms of creating additional stickiness for the eventual device sales that tends to follow.

All the way through to patient engagement in the initial medication. And of course, that all helps to build patient retention as well. So for 2025, if you look at our Pharma business, we ended the year at about $1.7 billion of revenue. Reported sales were up 6%. Core sales were up 3%. We did see strong growth. Our prescription growth was actually 5% in the year, and that was even inclusive of the emergency medicine resets that started in Q4 of 2025 that we had talked about previously and also had size in our Q4 guide and also have size for 2026 as well.

And I think that has been well baked in, but outside of that, we saw growth in central nervous system solutions. We continue to see growth in royalty revenues. We saw growth in asthma and COPD therapies. Consumer Health Care was down on a full year basis, but of course, we saw growth in Q4. CHC was up very nicely in Q4, and certainly, we expect that to continue. And Injectables overall had double-digit growth in Q4 as well, which we also expect to continue through the course of 2026.

All right. So very quickly touching on Beauty. In Beauty, we generated about $1.3 billion in revenue in 2025. And this is a segment that spans fragrance, skin care, color cosmetics, personal care and a very small portion that is home care offering. In Beauty, a significant portion of our sales actually come from Europe. As you can see here, 60% of the sales are based in Europe because that's where customers tend to fill their products.

However, roughly half of what we actually sell in Europe ends up in other places around the world. And so if you actually look at where the end product ends up, it's actually a lot more diversified than just Europe because there's a lot of -- our customers tend to sell that in other parts of the world as well. North America represents about 20% and Latin America is close behind. And of course, we're continuing to see growth in Asia as well. And we have -- you can see here, we serve many of the brands that you'll know and recognize.

Many of these brands we worked on -- worked with rather for the last 20, 30 years and even longer. And in addition to the big brands, we also serve a growing number of indie brands as well in our beauty business. It's a very diversified portfolio. And I would say the most -- this is another area where we bring products to life through innovation. Innovation is the lifeblood of our growth, not only in Closures, which I'll talk about, but also in Beauty and of course, in Pharma, as I just talked about. So again, a very diversified portfolio, as we can see here.

In 2025, we saw total sales grew about 7%. Core sales were up 2% in Beauty. Most regions actually delivered growth with the exception of North America, largely due to softer indie demand in 2025. Fragrance and facial skin care declined on a full year basis. And of course, in Q4, we did start to see some growth in Beauty coming off of more favorable comparisons. However, we are seeing some good indicators of demand growth, and we expect to see growth in Beauty in 2026 as well in addition to margin improvement in that part of our portfolio.

And then lastly, our Closures business is $700 million business. And as you can see here, again, diversified in terms of geographic diversification. Again, as you can see here, we serve all of the major brands that you know, Kraft Heinz, PepsiCo, L'Oréal, Coca-Cola, et cetera. And again, as we grow our Closures business, a lot of that has been through driving innovation, which helps to drive category conversion, which tends to generate very strong product revenue growth for us that is greater than what the CPG companies are themselves growing organically.

Diversified portfolio. In the interest of time, I won't get into all of these, but of course, you can see here, and as Matt mentioned earlier, many of these, I'm sure, are either in your pantry, your fridge or certainly in some of your cabinets. On a full year basis, Closures have reported revenue growth of 2%, core growth of 1%, but as we look at that and we isolate the impact of resin pass-through because we do actually pass through the price of resin. So when you isolate resin pass-through and tooling impacts, we actually had strong product volume growth for the full year, you can see here 4% and margins remain consistent at 16% EBITDA margin.

And as we get into 2026, we certainly expect, again, growth contribution coming from the Closures business and EBITDA margin improvement. I'm talking fast because I'm watching the timer go there. So just in terms of a quick high-level summary, fundamentals of our Pharma business very, very strong. Yes, we're going through an emergency medicine reset, but you just saw through the presentation that once you put aside the emergency medicine, we actually have seen strong growth in the rest of our Pharma franchise. And we've gone through what's in the pipeline, what's contributing to the growth -- future growth in the pipeline in terms of nasally administered medicines and the move towards that. And of course, given our market leadership in that, that will bode well for our future growth as well. Injectables is doing very well. And of course, as I mentioned earlier, expecting continued growth and margin improvement across Beauty and Closures as well.

All right. So why don't I stop there, Matt, and turn it to you if you have any questions.

Vanessa. Very thorough there. I enjoyed the presentation. Maybe on the presentation, I'll start with Slide 14. You don't have to bring it up. But Slide 14, I think it ranked the pipeline by the weighted average with Respiratory injectable and nasal delivery. I think those are the top 3. So maybe I'll ask on each one of those. So maybe when I think of my asthma inhaler, I don't necessarily think of growth there. I kind of just get refilled every year. But I think it was also 5% of the $1.7 trillion TAM that you had on Slide 12 as well. So maybe of that 5%, how much of that is within asthma, COPD that is then within Europe and exposed to some of the regulations around the powder meter dose inhalers and low propellant gas? Is it -- basically, how big is it? What type of growth are you expecting? Or is it more of a substitution from my existing inhaler into another one perhaps at a mix benefit rather than volume?

Yes. So this is the transition from high-GWP, Global Warming Potential propellant to low-GWP propellants for pMDI pressurized metered-dose inhalers. Certainly, I think from a -- that's a critical step for any Pharma company that's looking to obviously reduce their carbon emissions and of course, the negative environmental impact. And Europe did come out with regulation along this front, I want to say maybe 2 years ago now. And that regulation essentially mandated a gradual phaseout of high-GWP propellants from pMDIs. So it's a gradual phaseout and a complete phaseout by 2050.

And this is an area actually where Aptar has actually been very highly engaged. We've been very collaborative and demonstrated a lot of thought leadership in this area. We actually were contracted by the U.S. FDA to do a study around the opportunities and the challenges of this transition from low-GWP -- from high-GWP to low-GWP propellants and the impact on pMDI. So certainly, Aptar has played a very key role in providing thought leadership just given our market position around this space.

We also have our own products that actually make that transition easier. We have our own products that are compatible with the newer next-gen low-GWP propellant pMDIs. So that's good. But to your question, is it cannibalistic? No, it's not. Clearly, there are existing customers who are going through the transition because they have to or because they want to for climate reasons. But there's also newer customers that are showing up in our pipeline. So it's both.

And maybe we'll go next one down the list. Injectables, you've seen great growth there after you built some shiny new facilities. It was up 24% last quarter. You're guiding to, I think it was longer term, high single digits to low double digits. So maybe in the second half, maybe if you could help parse that growth or discuss the exposure between other GLP-1s or other biologics? And how much of a runway is there for the existing capacity you have? And how does that influence your CapEx decisions, whether it's you need a new facility or a new line or just how it changes as it grows going forward?

So we invested a lot several years ago. I would say from 2020 to 2022, we're probably the largest -- 2020 to 2023, we're the largest. And Stephan described it as -- our CEO calls it the big box -- which is the big factory build-outs, right? So those big-box build-outs are done. Of course, we may add lines as we deem necessary. We actually just added a mixer as well, which obviously helps from a capacity standpoint. So we think we've got capacity. And certainly, we're seeing the growth now in Injectables, double digits, as we said. So certainly, that investment thesis is proving out. The growth is certainly, GLP-1s were a big part of that in second half 2025, but it's not only GLP-1s. We've seen growth across biologics in general. We've seen growth in other immunotherapies, blood derivatives and so on. So it's really more broader based. But of course, for H2, it was driven by GLP-1.

And we're down here towards the end, but I'm going to go a little off script because I'm a Packaging Analyst. I don't get asked about this very often, but certainly in the halls, I heard this acronym AI out there. And I've never gotten to ask packaging company about it. But I think is there optimism from your customers or biotech companies that pipeline could accelerate or even shift upwards? Or have you had any conversations around that? Or how do you think about that topic?

For AI, -- that's a great question. Certainly, AI is important for our customers. And -- but I wouldn't say I'm seeing that be a direct contributor to the pipeline itself. I would say one of the trends that we are excited about, though, is, of course, Pharma companies, everybody -- data analytics, for example. So we have a Digital Health business inside our Pharma business. And that's part of our service wrapper that we include, which again strengthens our moat.

In that business, we're able to use AI to do a lot of advanced analytics for our Pharma customers. A lot of these big Pharma companies don't actually have great patient data. And so we are using our AI to give them additional insights, which actually is contributing to our service revenues. Again, it's not huge dollars right now, but we're actually seeing more and more demand around that. And ultimately, that is just part of strengthening our moat and ultimately pulling through additional device sales.

Vanessa, Mary, thank you all for coming again. There is a breakout in [ Cote d'Ivoire ] 2 for anybody that has further questions wants to hear more. Thank you all.

Stephan Tanda, CEO for the company; and Mary Skafidas, who does a wonderful job on Investor Relations. Here for Aptar. They unfortunately ran the gauntlet and ultimately could not be here live, but we are grateful that they're here virtually and that all the great work that our conference planning people have done to enable the meetings and the presentation for Aptar to go on as planned, it's just in a slightly different format. So welcome, Mary. Welcome, Stephan. How is the weather?

Excuse me...

Snowing in New York. It starts snowing again. So we're very, very jealous of those who are able to make it to Florida and are what I think is some cooler weather, but still better than New York.

Good deal. So maybe just to Stephan, if you can hear me okay, warm up. What couple 3 things would you want to remind investors on regarding Aptar and why it is the wonderful company that it is. And then we'll get into the meat of the questions.

Yes. Good to be with all of you. Thanks for making it happen like this, George. Fundamentally, we have a best-in-class leading proprietary drug delivery system business. And basically, if it goes through the nodes, it goes through Aptar. And that used to be true just for the [ sniffled ] analogies, but increasingly, it's true for almost anything that you need to get into the bloodstream to affect human health, which can be a lot. I think that's number one.

Number two, our consumer-facing businesses have been significantly improved. The Closure business is in and out of its long-term target range. The Beauty business has resumed growth. And many aspects of the consumer business benefits the Pharma business, for example, our leadership in sustainability that we've developed in the consumer business and now increasingly relevant for our consumer healthcare business. I think that's number two.

And number three, just a reminder, we're very global. We are -- our supply chain is set up in region for region. While we don't appreciate all the global tensions around trade and so on, we are well positioned to manage and deliver to customers and patients in every region because of our multi-region supply chain setup.

Understood. Thanks, Stephan. And some good meat to get into a discussion in a minute off of those points. And just I'm not sure if you can see from where you're sitting, but it's actually a very full room here, so a lot of interest in Avatar today. As always, the company is guiding me, we'll get to the first of the questions to $1.13 to $1.21 in the first quarter. To the extent that you can comment midway through the quarter, how are trends progressing and/or what were some of the key assumptions and/or some of the macro sort of guardrails, from what you can see, no guarantees in life relative to what you said a few weeks ago, how are things looking from those data sets for the first quarter?

Yes. Obviously, we're not updating our guidance here. But fundamentally, we are comfortable with the range that we gave when we announced Q4. And the exchange rate was at $1.18. It's still pretty much there. So we expect a good quarter across the board, obviously, with the exception of emergency medicine, primarily naloxone. So I think overall, nothing has really changed.

Okay. And what were the key reasons to the extent that you could talk that you expect it to be in your overall range for margin for the year, which I think is 21% to 23% for the company? And would that -- and remind me if you already talked about it, would that necessarily -- would that not necessarily mean that Pharma has got to be in its range of 32% to 36%. How would you have us on that ponder on that?

Yes. I think we expect Pharma to do quite well with the exception of emergency medicines. Now most of that impact will be in the first half. I think the good news is that with quarter 4, we could kind of confirm the $65 million impact that we had given you 3 months earlier. So I think we're kind of quarter along in honing in on that number and triangulating order intake, what we hear from customers, what little we see from customers' inventory. So that we boxed in that impact and most of that will be in the first half.

But apart from that, we see Consumer Healthcare being back to growth. We see, of course, injectable growing very briskly, including GLP-1, but not only also other areas. So -- and active materials doing well. So overall, we expect the Pharma business to do well. I will not commit to the range for the full year. But clearly, we expect improvement in the bottom line margins for the Consumer business and the Pharma to be doing very well for the company to be within its long-term range for the year, which we still feel quite comfortable with.

Thank you, Stephan. I want to switch gears just for a minute to Beauty and Closures, where the performance in the quarter was a little off from what we were expecting, a little off from what you were expecting. Certainly, one-off factors were at work. But I think speaking for some -- as someone who's covered the company for a long time, we'd love to see maybe a bit more steady progress on the margin -- towards the margin goals in Beauty. You've been getting better. Closures has been doing very nicely. How soon to the extent that you can comment, will you be back making more progress towards those goals in the first quarter? And then what in particular, went so well for you in the closures reorganization that really reinvigorated the growth and the margin. That was -- we said it before, that was more than we expected, better than expected and [indiscernible] you on that.

Let's start with that part. While we practice the same fundamental industrial processes across the company. Closures is very specific. It has by far the highest material content of any of our products. It's heavy-duty injection molding and a little bit of assembly. And the logic of that business is different than a nasal spray, and airless system and aerosol that we practice in Beauty and Pharma. So the industrial logic and the assets are fungible. You can make one closure one day, another closure the extra day, you just swap out the tool. So it is more of an operations-intensive business where you really need to watch capital intensity and you need to watch your cost base and you need to be close with customers both in the stock business and in the tailored business.

Hindsight is always easy 2020. It used to be the business structured that way. But in 2010, Aptar decided to go to the end-use segments and took some of the closures activities into different segments. And we just went back to saying, this is -- with this particular business, the better way to run it. And all the things that I said, the team has done. I'm very proud of what the team has done, drive capital efficiency, drive cost down, be on the front foot with customers. And of course, the market helps. I mean, let's be clear. Food and Beverage, which is a big part of this business is very resilient, whether the consumer is doing great, whether the consumer is not doing great, whether they buy private label or brands, whether they buy smaller formats or bigger formats. If they eat out less, it's even better for us. So a weaker consumer doesn't hurt that business, maybe helps a little bit.

So all of these factors have come together to get that business back to where it needs to be. Not perfect. We had some operational hiccups at one of our larger U.S. sites in the quarter that kind of made a tip out of the margin range, but we feel very good about the business.

Now coming back to Beauty. Beauty is more complex. It needed substantial renovation that you are very well aware of. We're kind of 80% done with that. But as you get done, you have additional ideas. And that's one thing. Two, we were quite heartened with the bounce back of demand that we saw in quarter 4. Now it wasn't 10%, 25% of that was tooling and some easier comparisons. But nevertheless, we see that the market come back, customers come back. But unfortunately, we did lose it with some significant operational hiccups. One, we lost an important supplier where we had to qualify last minute somebody else at higher prices and poor quality. And we had some onetime compliance costs at [indiscernible] facility in France. So the quarter 4 margin is not representative for what that business can do by any stretch, and we expect that business to progress along the trajectory we had before, and we will do more productivity actions in that business.

Thank you, Stephan. A little bit later on, we have a great presentation at lunch from a trade economist and attorney who worked for the administration. We're eager to hear what she's going to be talking about in terms of different regional hot buttons and things like that. And one of the things, obviously, and you touched on in your comments at the open that there can be pressure points depending on the region, but Aptar has long sort of navigated these well.

You as a company and probably more than most companies that we track have done a very good job of expanding in China and growing your presence there. Help us understand why you're comfortable with that strategy, particularly as regards Pharma? And then more broadly, and more specifically at the non-pharma businesses, are you seeing more competition from non sort of classic Aptar regions, making it a little bit tougher in Closures, a little bit tougher in Beauty? Or is that really not an issue for the company on a going-forward basis?

We could talk for hours on this one. I think the first one I would say is -- we've been in China since the mid-'90s. So that's now 30 years, and we during COVID, renewed our asset base to now be state-of-the-art, complemented with some acquisitions and joint ventures. So in this new geopolitical environment, I'm actually very happy with the competitive footprint we have there, primarily to serve the growing domestic market, but also especially for Beauty to help with accelerating development time lines, speeding up processes in Europe.

So take the pilot mold or getting product to market, used to take 18 months was the standard with the Chinese infrastructure, we can do it in 6 months, even if we produce it still in Europe, but the front end of that work prototyping and the prototype molding and so on is just faster. I've been on record geopolitics so side, just as a business person, the capitalistic nature and the just sheer will to succeed in the country is unparalleled, and that includes our own teams. So getting things done is just very quick.

Then when you talk about the domestic market, look, it's 1.4 billion people with increasing spending power. Thankfully, we address consumer and patient needs that are not sensitive to geopolitical issues or national security issues. So everyone wants us to succeed, our shareholders, the local government, consumers, patients. So there is no misalignment of incentives -- and we feel very comfortable. And the last point I would make, we have very strong local talent. You cannot run a multi-region business, especially in today's world without the strong local talent. We have at the senior level at the Executive Committee, Xiangwei Gong, who is very skillful and led the region, including China. So all of these factors make us quite comfortable.

Pharma is not so different than the other businesses. And in fact, when you -- those to pharma -- who follow the pharma industry, a tremendous part of the upstream development work happens in China, clinical trials happen in China. A lot of the biotech innovations happen in China and are now licensed to Western companies. So it's like in some other industries, maybe a little bit late in pharma has gone from "low" production to now being an innovation powerhouse that is important to feed into the global system. So it's -- yes, you need to run it in a different way than we ran it before geopolitics change, but we are well positioned to do it that way. And the profitability of our China business is on par, actually slightly better than our global company.

And just a quickie. There was a side bar to that question. Just more broadly, are you seeing more competition from producers in China, producers elsewhere in Asia in traditional closure markets and traditional beauty markets that's affecting margin, the growth outlook or no, not really. It's -- competition has been pretty status quo. And then I want to pivot to the Pharma business and get in a little bit more deeply there with our questions.

Yes. So it's actually interesting. One, the Closures business is very much in country or in region for region because what I mentioned earlier, the material content being so high, it's not something that you ship across oceans. So what you produce in China stays in China, maybe surrounding countries and so on.

In Beauty, there's more of that. And certainly, there's been a push of Chinese producers, especially into Latin America and into the U.S. and Europe. Given the geopolitics, that actually has been slowed down a little bit or has demanded more of the Chinese producers to kind of have boots on the ground, so to speak, in Europe and in the U.S. and in Mexico. And I sometimes say running a true multinational is not that easy, whether you're a U.S. multinational or you're trying to be a Chinese multinational. So having boots on the ground in Europe, making that work, making that work, there's a lot of fits and starts. So actually, I don't see increased competition, maybe even a little bit less. Latin America is still more of a trading business for them. So we see more competition there.

The other thing I would say, for the Pharma business, certainly, the less regulated markets, you see more Chinese presence there. And last not least, into Russia. We used to have a big Pharma business in Russia. Now it's a little smaller Pharma business and part of that is really share lost to Chinese producers where we couldn't get export license. And of course, the Chinese were happy to step in.

Thanks, Stephan. I want to switch a little bit more to Pharma now. So your investor decks show a multiyear increase in both the number and the weighted value of your pipeline opportunities, which is great. Could you bridge the pipeline by stage, preclinical pivotal validation launch and how that might translate? I know you don't give more than a quarter guide, let alone a year, let alone a multiyear, but how that pipeline might sort of evolve over the next 4 years across those categories? And then within the pipeline, we've noticed that the value trajectory has come back down and converge more to be in line with the unit in the pipeline opportunity in that chart. What's been driving that? So those 2 questions, please.

Yes. I mean we disclose what we're comfortable disclosing for competitive reasons. And I think you have seen us over the last few years to peel back the onion more and more on that pipeline. And the way we give the statistics on the pipeline is, as you would expect, risk-adjusted, obviously, things that are early in the pipeline carry much higher risk than as things progress towards the launch. Indeed, we had a big spike of activities during COVID vaccine opportunities and now the pipeline ratio has more normalized.

I think the big news on the pipeline that's really important to keep in mind, and we first discussed it at the Capital Markets Day in September. Maybe it was a little bit drown out with the Narcan story, but we gave you more visibility at JPMorgan and it's in the investor presentation for this event is the richness of indications in the pipeline. I mean you're talking -- you had asked me, George, 2 years ago, will you have these kind of things in the pipeline now, I don't think so. In fact, you may have asked me. But now we have peptides, GLP-1s in the pipeline with people working on neurodegenerative diseases, Alzheimer's, Parkinson's, dementia, with people working on mental health and with people working on cardiovascular indications. And in fact, we just had 2 important launches in recent time against edema and tachycardia.

So it's kind of an alternative to injection where to bring molecules quickly into your bloodstream in a defined manner. The industry has kind of woken up that it is a great way to repurpose all the molecules, whether it was naloxone or esketamine, but now it goes really across the board and the pipeline is just bulging. And that's really what we're super excited about because it's in the sweet spot of our profit engine proprietary drug delivery devices through the nose. In the inhalation space, also, we have a big transition going on to low global warming potential propellants. Last time that happened, that was very accretive for our business. And again, that is a big piece of our pipeline. So the richness and breadth and depth of that pipeline is really super exciting, and it's not about the sniffles anymore. It's about treating heart disease. It's about treating dementia. It's about maybe taking your GLP-1 through the nose.

Thank you, Stephan. Thank you, Mary. I want to make sure there aren't any questions in the audience. Any questions for Stephan or Mary? Okay. So then we'll keep forging ahead from our side here. Stephan, kind of a micro question to the extent that you can comment. I know you're not going to break out the revenue, but is there a way to talk at all about unit dose and how large it's been in your CAGR over time? If your CAGR in Pharma has been 7%, unit dose has been a point of that, 8 points of that, obviously, it's not going to be that. But any way to size how important it's been to your growth rate in Pharma?

Yes. We obviously don't disclose growth or sales by product line. Clearly, the proprietary drug delivery systems is the key driver. When you think about the Unidose and the Bidose and related formats, they are really controlling the dosing of a drug. And if you talk about life-saving drugs that you need to dispense with 99.999% reliability, basically, that Unidose device is an auto-injector that goes through the nose. It has a vial inside. It has a plunger inside. It has very precise dosing, same for the Bidose.

So those things will carry more value than a plunger in a prefilled syringe. So that's why -- that's really what's driving. But the same is true for an inhaler. I mean you want to get your asthma dose very, very quick. The reason our inhalation franchise is so strong is, again, it's treating chronic disease. And if this thing doesn't work, patients get in trouble. So precise dosing of medications is what PDDS is all about and Unidose is a part of that, and it's an important part of it.

If I could add before you look at -- Stephan mentioned that we had made available as the pipeline forward-looking for Pharma for prescription and not just prescription division, prescription, including injectables. And the top 3, when you look at them are pulmonary, so not Unidose, biologics, right, which is primarily injectables. And then you have systemic nasal drug delivery, which is a number of delivery systems, including Unidose, Bidose and others, as Stephan mentioned. So it's important, but it's not the only thing that's driving the growth or the only format that's driving the growth.

Thank you, Mary. Thank you, Stephan. Very, very clear on that. Can you talk a little bit about the tailwinds you expect to get from Annex 1, maybe perhaps related to biologics and also for GLP? And then second question, we've seen the growth in injectables. It's a very good business, but it is a little bit lower margin than the overall for pharma. Over time, how does that impact your longer term, that mix effect as that grows more quickly perhaps than your proprietary drug delivery systems impact your long-term margin target of 32% to 36% in pharma?

Yes. Well, let's start -- we are in the injectable business because injected medicines are really a major part of how drugs get delivered, especially modern biologic drugs that have been manufactured through biotech, meaning they are large molecules, they are sensitive molecules. You can't just punch them in a pill, maybe too big for nasal delivery. And the injected format is the format of choice for modern biologic drugs, whether they be biologics, biosimilars. And we wanted to be part of that, and we have the technology and the right to play. And by the time COVID came around, our technical capabilities have been developed so that they are on par with the market leader.

The market we didn't have, thankfully, the big COVID whiplash because we didn't have a large position in COVID vaccine. But the market continues to grow. You mentioned Annex 1. Annex 1 is basically a leaning in or a tailwind that convinces customers in case of doubt, go for the higher-value solution, go for the sterilized solution, go for a solution that is premium coated. And that means for us higher-margin products, and that means for the industry more a shift towards higher-margin products. GLP-1, obviously, is a very nice tailwind. I expect that to continue. I do not believe that oral will take away. oral will just expand the market, especially in countries with not gill distribution.

So overall, we're dealing with a growing market biotech is still at the beginning of its S curve. I mean, if you think of how we understand traditional small molecule chemistry or physics compared that to biotech, I mean, we're still many, many, many decades away from reaching the peak of the innovation cycle and many diseases to cure. So I would never bet against biotech drugs, and we want it and we now have a position in that.

Now on your margin point, clearly, we've invested $200 million in brand new state-of-the-art facilities, and they are now being filled. As they're being filled, we gain efficiencies, margin will improve as we shift the mix to more higher-margin products, margins will improve. So this negative mix effect that you've seen very pronounced in quarter 4 will be less over time. Will it ever go away? Well, probably not and why? Again, I come back to -- in life-saving medicines, we control the dose to save the life. That's a slightly different value add than the plunger in that auto-injector or that needle shield. Not saying that it's not important, but it doesn't demand the same kind of pricing as life-saving medications. So -- but certainly, we see margin expansion in injectables itself through both operational efficiencies, economies of scale and mix enrichment.

Stephan, you've been very candid over the recent years that GLP is nice. It's a nice to have. It's not the entirety for sure of your Pharma business. And that certainly investors like to come to Aptar because you have that full suite of products. With that being said, and you already commented on touched on it, why do you think oral winds up being something that expands the category as opposed to -- and also continues the growth in injectables as opposed to expand the category and maybe flattening out injectables? What -- kind of what takeaways have you had that you're laying with us here today?

Yes. So I see a number of reasons. Number one, what drives a big portion of the GLP-1 growth these days is weight loss. And there is nothing today that's better than Zepbound, tirzepatide. So if people are interested in weight loss, they're going to go for the one that delivers the biggest bang for the buck. I have not seen any data that all formats outperform tirzepatide injected. And Wegovy is close behind that semaglutide, number one.

Number two, there are many markets that do not have chilled distribution into the pharmacy or even chilling capability at home. And those tend to be markets with massive overweight populations. I think India, I think China, parts of Mexico. So that's where the oral dose will be the biggest fit because it's the first option people have because they don't have the injectable option. Clearly, there will be people who don't want to inject themselves who just have a phobia also in the developed markets in the U.S., and they will go to their oral format. I do not believe, again, until oral formats become more efficacious that they will rule the day. Glass is an economic argument. Most of the oral formats come from the same producers who have built tens of billions of infrastructure to deliver you more auto-injectors. Their economic strategies and pricing strategies will be such to take advantage of the installed capacity and not obsolete it. I think it's just economic sense.

And there is plenty of commercial strategies available to them. You just saw Novo cutting price 50% there is not a big strong relation between cost and price. So they have a lot of flexibility in managing the market so that they don't obsolete their investment base. Now I'm not talking about 20 years from now, but the kind of time frames we are interested in, we believe this business continue to grow. And anecdotally, consumers still have a hard time getting their injector when it's prescribed and often have to wait a week. So it's not an oversupply by any stretch.

Stephan, maybe you touched on it here a little bit. How much runway does Aptar have across its injectable capacity before additions have to be made and where might the bottlenecks be, whether it's mixing or coating, if you can share or remind us.

So think of investments in injectables really in several categories. One is do you have the building and those are massive buildings with the ability, all the utilities that you need to run clean rooms and automation. We just made a massive investment in a brand-new building in Normandy, France. Those come around every 10, 15 years, certainly nothing on the horizon but just finish. Then inside the buildings, you need the mixer, which basically creates the first step, the polymer, then the molding and then the finishing, whether that's coating, washing, sterilizing and so on.

Those are much smaller investment increments. Maybe the mix is a little bit larger than the others. And you can just creep capacity inside the existing buildings with doing that. So again, we think we are done for quite a while with the large investment and now just can creep capacity in the ordinary course as this business is growing.

Thank you, Stephan. Any questions from the audience as we're wrapping up here with Aptar, Stephan and Mary. Stephan, just a point of confirmation on emergency medicines, you remain comfortable that the destock will run its course based on the time line that you said most of it in the first half, based on the intelligence that you've got in the market. Just want to confirm that.

Yes. And that's more your territory, but what we kind of took away that the market felt somewhat relieved that we gave the same number 3 months later than we gave 3 months earlier. So it kind of tells you that we feel comfortable that we've boxed this in. Based on what we hear from customers, certainly don't see any reason to change that, $65 million, most of which in the first half.

You could be a securities analyst, Stephan. So it's your next game.

I'll stand in my lane.

Any last questions on Beauty, on Closures, on Pharma before we wrap with AptarGroup. Well, if not, we'll wrap it here. Stephan and Mary, thank you so much for your fortitude and being here even though you couldn't be. We appreciate everything that you do to support our research and the community's work on AptarGroup. So thanks very much. Everybody, join me in thanking Stephan and Mary for a great presentation.

Thank you, George.

Bye, guys. Good luck the rest of the day.

Ladies and gentlemen, thank you for standing by. Welcome to Aptar's 2025 Fourth Quarter and Annual Results Conference Call. [Operator Instructions]

Introducing today's conference call is Ms. Mary Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead.

Thank you. Hello, everyone, and thanks for being with us today. Our speakers for the call are Stephan Tanda, our President and CEO; and Vanessa Kanu, our Executive Vice President and CFO.

Our press release and accompanying slide deck have been posted on our website under the Investor Relations page. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. As always, we will also post a replay of this call on our website.

I would now like to turn the call over to Stephan.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our annual and fourth quarter results. And later in the call, our CFO, Vanessa Kanu, will provide additional details on the key drivers for the quarter.

For the quarter ending December 31, 2025, we delivered very strong top line performance. Reported sales grew 14% to $963 million, up from $848 million in the prior year. Core sales increased 5%, reflecting healthy underlying demand across our portfolio. Our adjusted EBITDA margin was approximately 20% impacted partially by a combination of higher-than-expected production costs in our Beauty and Closures segment as well as a shift in product mix, including the decline in demand for emergency medicine products that we discussed last quarter. Vigorous productivity measures will remain a major focus for us in 2026 and beyond. We are continuing to lean into our cost reduction initiatives and push further on back office centralization through our global talent centers. Vanessa will speak in more detail about these dynamics in her remarks.

Stepping back, our teams executed well. With all 3 segments delivering core sales growth this quarter. In Pharma, growth was led by continued strong demand for our last America components, ongoing momentum in our systemic nasal drug delivery technologies and a return to growth in our Consumer Healthcare division. Our Beauty segment delivered double-digit core sales growth with strong growth across each end market. Fragrance and facial skin care as well as personal and home care. Based on what we have heard from our customers, their holiday sales, especially the preholiday events such as 11/11 in China, and Black Friday in the U.S., very encouraging. And in Closures, we saw solid product volume growth, reinforcing the strength of our market positions. Vanessa will talk about the operational disruptions we experienced in Beauty and Closures which were clearly disappointing. Our teams are actively working through these issues.

Together, these results highlight though the resilience of our business the strength of our global technology platforms and the benefit of our innovation-led application portfolio.

Let me now take a moment to review our full year performance. For the year ended December 31, 2025, reported sales increased 5% to $3.8 billion compared to $3.6 billion in the prior year. Core sales were up 2%, reflecting steady demand across key product categories. On the bottom line, we also delivered growth for the full year. Reported net income increased 5% to $393 million, and reported earnings per share grew 7% to $5.89, up from $5.53 a year ago. Adjusted earnings per share were $5.74, a slight decline of 1% versus $5.81 in the prior year, including comparable exchange rates. We continue to take a disciplined and balanced approach to capital allocation.

In 2025, we returned $486 million, so almost $0.5 billion to shareholders through share repurchases and dividends. Capital expenditures decreased year-over-year and represented about 7% of sales which reflected our focus on efficiency and prioritization of high-return investments, a focus we fully intend to continue in 2026. Importantly, 2025 marked our 32nd consecutive year of paying an annually increasing dividend a milestone that speaks to our commitment to shareholders and the resilience of our business model. Overall, these results demonstrate our ability to deliver consistent performance, invest for long-term growth and return capital to shareholders, all while navigating a dynamic operating environment.

Before I turn the call over to Vanessa, let me turn to our very important pharma pipeline, where our core business continues to deliver. In 2025, systemic nasal drug delivery accelerated and injectables accounted for a greater portion of our opportunity set. Core sales for our Pharma segment, excluding emergency medicine, grew 10% in the fourth quarter compared to the same period in 2024. We fully expect our pipeline and recent launches to support our ability to deliver our long-term core sales targets of 7% to 11% growth with adjusted margins of 32% to 36%.

Our prescription drug pipeline spans a broad range of therapeutic areas across respiratory, injectable, ophthalmic and dermal drug delivery routes. The top therapeutic categories in our pipeline ranked by weighted value include respiratory, biologics in injectable formats, systemic nasal drug delivery, especially in central nervous system, pain management, emergency medicine, small molecule injectables, ophthalmology, allergic rhinitis and vaccines delivered both intranasally and via injection and dermatology.

The key message here is that we continue to build on a very well-diversified portfolio of medical indications and delivery technologies. Injectables have taken an increasingly prominent role in the pipeline, and the systemic nasal drug delivery has expanded nasally delivered central nervous system therapies has represented the majority of opportunities, which we expect to continue. Historically, our pipeline contributes about 10% of annual revenue while the remaining 90% is driven by repeat business. Within that repeat business, we anticipate pharma's primary growth engine continuing to be fueled by volume growth and mix enrichment.

So overall, our core business performed very well in 2025. Systemic nasal drug delivery has accelerated and injectables represented a larger share of the pipeline. We see this supporting our sustained growth across multiple therapeutic areas.

I would also like to highlight the exceptional progress across our pharma pipeline and the strong momentum we are seeing with our customers. Over the last few months, several important programs have advanced, many of which rely on Aptar's market-leading nasal drug delivery technologies. Starting with Cartamist, Milestone Pharmaceuticals breakthrough first and only self-administered nasal spray delivered through our Bidose delivery system for adults with acute symptomatic PSVT for the experts that stands for proximal super ventricular tucker cardia or in layman terms, a fast heartbeat that starts and stops suddenly.

This represents a major milestone for patients by offering rapid on-demand treatment that shift care from the emergency room to the home. The U.S. FDA approval in late 2025 makes this the first new PSVT treatment in decades and supports future development of AFib or ATL fibrillation with rapid ventricular rate. Piper Sandler also noted that with the U.S. launch expected in the first quarter of 2026, this product is projected to scale meaningfully over the next decade. Additionally, our Active Materials Science division designed the portable dual container system for [ CardoMist ] that safely housed 2 by-dose devices and prevents accidental activation at the moment of need.

In vaccines, our position as a partner of choice continues to grow. [indiscernible] Phase II study of its intranasal COVID-19 vaccine is using Aptar's LuerVax and spray divider platforms to assess mucosal immunity in roughly 200 adults. This collaboration underscores our deep regulatory and technical strengths in nasal vaccine delivery.

In ophthalmology, we signed an exclusive agreement with [indiscernible], for our beat the blink eye care delivery system, which delivers medication through a horizontal spray action. Internationally, regulatory milestones also validate our technologies. In Australia, for example, the Therapeutic Goods Administration, or TGA, approved nepi, the first needle-free epinephrine nasal spray for anaphylaxis, representing the most significant change in emergency allergy care in more than 20 years.

And finally, LTR Pharma initiated its Phase II pharmacokinetic study of [indiscernible], a rapid acting intranasal therapy for erectile dysfunction. The study includes both young and older adult cohorts, with data expected in the second quarter of 2026. This reinforces the broader shift towards fast, predictable intranasal delivery, an area we believe after is exceptionally well positioned.

Across all these examples, the message is clear. Aptar's innovation engine continues to enable major breakthroughs across pharma and our technologies are [indiscernible] core of some of the most important and exciting new drug platforms in development today. During the quarter, we also enabled numerous new product launches in Beauty and Closures. In beauty, Unilever selected a new high dose, all plastic pump technology for their Nexus hair care launch for all of their 13.5 ounce and 33.8 ounce shampoo and conditioner lines in North America. We also developed a custom version of our premium airless beauty pump solution for Chanel's hydro beauty Microsarum in Europe. And finally, a new skin care line from the Chinese beauty brand, Sibin features our ALS pump and reloadable solutions, providing also shipping durability. All of these recent examples are using higher-value technologies from our beauty portfolio.

Turning to Closures. McCormick launched a new condiment line called [indiscernible] using our flip-top poor spot closure, which brings a new level of clean and controlled directional dispensing to their line of flavorful sauces in North America. And in Beverages, Coca-Cola and Bonacowater and energy drinks in South Africa feature our spout closure with tamper-evident technology. Unilever has partnered with us on a custom 100% or consumer recycled resin or PCR, dosing closure for their comfort concentrated line of fabric softness in Brazil.

And finally, let me touch on recent recognitions received in the quarter. We are pleased to continue our global leadership in sustainability by taking measurable actions on climate and demonstrating a strong commitment to transparency. In 2025, over 22,000 companies disclosed environmental data through CDP. These companies represent more than half of the global market cap. And we are, again, part of the CDP Climate A List, placing among the top 4% of the companies with the highest score from CDP. In addition, for the seventh consecutive year, we are named one of America's most responders by Newsweek, ranking 56 out of 600 U.S. companies.

Now I would like to turn the call over to Vanessa.

Thank you, Stephan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. As Stephan noted, our reported sales increased 14%, and core sales, which adjust for currency effects and acquisitions, grew 5% compared to the prior year. We achieved adjusted EBITDA of $191 million, a decrease of 2% from the prior year. and adjusted EBITDA margin of 19.8% compared to 23% in the prior year due to a combination of less favorable product mix and higher than anticipated production costs in our Beauty and Closure segments. I will touch on these factors momentarily.

Adjusted earnings per share were $1.25 compared to the prior year's adjusted earnings per share of $1.62 at comparable exchange rates. With those high-level comments, let's take a closer look at segment performance. Our Pharma segment's core sales increased 4%. Let me break that down by market, starting with our proprietary drug delivery systems. Prescription core sales increased 1%, driven by strong year-over-year demand for dosing and dispensing technologies for systemic nasal drug delivery, especially for central nervous system and pain applications asthma and COPD therapeutics. This growth, coupled with growing royalty payments more than offset lower emergency medicine sales. Excluding emergency medicines, which declined 36%, prescription core sales increased 10% in the quarter.

Consumer Healthcare core sales increased 3% and primarily due to an increase in sales for nasal decongestant and cough and cold solutions. This marks a shift back to positive growth in this division after a period of inventory normalization at the customer level. Injectables core sales increased 24%, with strong demand primarily for elastomeric components used for GLP-1, antithrombotics and small molecules. Services also contributed positively in the quarter, and we continue to see strong pipeline build for [indiscernible] and biologics projects. And for our active material science solutions, core sales decreased 10%, driven by a challenging comparison from a large tooling sale in Q4 2024 that did not repeat. Pharma's adjusted EBITDA margin for the quarter was 32.4% a 330 basis point decline from the prior year. The margin decline was driven by product mix and volume due primarily to a decline in demand for emergency medicine.

Moving to our Beauty segment. Core sales increased 10% in the quarter, of which 1/4 of the growth was tooling. The double-digit growth in core sales provided a strong top line lift despite some operational disruptions. Looking at the 2 largest end markets for beauty, fragrance, facial skin care and color cosmetics core sales increased 7%, primarily due to higher sales from both masstige and prestige fragrance pumps as well as color cosmetics. Personal care core sales increased 17% with broad-based growth across all regions. Applications for body, hair and sun care continued to show strong demand. Beauty's adjusted EBITDA margin for the quarter was 10.2%, a decline of 220 basis points. The decline in beauty's margin primarily reflects certain customer projects, including tooling at lower margins.

Additional impacts included required environmental upgrades at 1 of our metal anodization plants. As well as operational disruptions at an existing supplier that required us to qualify a new supplier and perform additional quality testing. These impacts will abate through the first half of 2026 and we expect to see steady improvement in beauty's margin quarter-by-quarter.

Moving to the closure segment. Core sales increased by 1% compared with the prior year period. While volumes were up, core sales were impacted by the pass-through of lower resin pricing. Looking at the 2 largest end markets for closures, food core sales decreased 1% and primarily driven by lower sales of infant nutrition and granular powder. Beverage core sales increased 7%, primarily driven by increased sales for dairy and functional drinks. The segment's adjusted EBITDA margin was 14.9%, representing a 120 basis point decline over the prior year, primarily due to continued equipment maintenance that impacted production and higher tooling sales that are typically at a lower margin. Our closures team is working through necessary repairs and the maintenance issue is expected to be transitory. At the total company level, consolidated gross margins declined by 371 basis points in Q4 year-over-year as a result of the mix and production impacts I just discussed.

I also want to call out that Q4 2025 was a record quarter for tooling sales, culminating to full year 2025 being the second highest year for tooling sales in over a decade. Although tooling typically carries lower margins, this performance bodes well for customer retention and potential new business. SG&A expense in the quarter increased in absolute dollars, largely due to currency effects non-ordinary course litigation costs incurred in the quarter and the effect of acquisitions. SG&A as a percentage of sales decreased from 16.3% in 2024 to 15.7% in 2025 and a 60 basis point reduction year-over-year. Overall, consolidated adjusted EBITDA margins decreased by 320 basis points to 19.8%, reflecting the dynamics I just highlighted. Adjusted earnings per share of $1.25 were down 23% year-over-year at comparable exchange rates due to higher depreciation and amortization expenses associated with our capital investments and acquisitions and higher interest expense due to a higher average debt balance compared to the prior year. Our adjusted effective tax rate for the quarter was 19.4% compared to the prior year's 13.5% and which, as a reminder, included a one-off benefit related to an acquisition.

On November 20, we issued $600 million of 4.75% senior notes that are due in March 2031 and through an underwritten public offering. The notes which pay interest semiannually are unsecured and ranked equally with our other senior unsecured debt. And finally, during the quarter, we repurchased $175 million of common stock and returned $206 million to shareholders inclusive of dividends.

Now let's take a look at full year 2025 results. Reported sales increased 5% and core sales increased 2%. Adjusted EBITDA increased 5% and adjusted EBITDA margin remained consistent with the prior year at 21.6%. Reported earnings per share increased 7% to $5.89. Adjusted earnings per share were $5.74, a decrease of 1% compared to the prior year at comparable exchange rates reflecting, again, higher depreciation and amortization expense and higher interest expense year-over-year. The adjusted effective tax rate for the full year was 21.4% compared to the prior year's 20.5%.

Free cash flow was $303 million, comprising cash from operations of $570 million, less capital expenditures net of government grants of $267 million. Free cash flow was $64 million lower year-over-year, largely due to the timing of tax payments of about $44 million, along with higher pension contributions of about $10 million as well as some higher working capital. These were partially offset by lower capital expenditures. For the full year 2025, we repurchased 2.7 million shares for $365 million, the highest repurchase amount in the past decade and returned $486 million to shareholders inclusive of dividends.

Yesterday, we announced a new authorization from our Board of Directors to repurchase up to $600 million of the company's common stock. This new authorization replaces all existing authorizations. Finally, we ended the year with a strong balance sheet, once again, reflecting cash and short-term investments of $410 million net debt of about $1.1 billion and a leverage ratio of $1.38.

Before we move to the outlook, I'd like to briefly update you on our emergency medicine portfolio and reaffirm the guidance we provided last quarter. We continue to anticipate near-term headwinds extending through 2026. Based on what we currently know about end market demand, funding dynamics and customer inventory levels, our outlook remains unchanged. We Specifically, we expect the decline in emergency medicine to represent a 2026 revenue headwind of roughly $65 million. We expect the impact will be more pronounced in the first half of the year driven by challenging comparisons to 2025. And while we do not anticipate a recovery in the second half, the year-over-year impact should moderate as we move through the back half of the year.

Given the high-value nature of this portfolio, this dynamic will put some pressure on overall margins ahead of any mitigating actions we may take. This is a short-term headwind, demand for nasal drug delivery technologies continues to be strong as we expand to new therapeutic areas, and we are able to deliver larger molecules through the respiratory system over time.

Now on to our outlook for Q1. We anticipate first quarter adjusted earnings per share to be in the range of $1.13 to $1.21 per share. This reflects the higher interest rate environment and our bond offering completed in Q4 and an effective tax rate range of 21% to 23% and a euro to USD exchange rate of [ 1.18 ]. For full year 2026, Capital investments are expected to be in the range of $260 million to $280 million, and depreciation and amortization expense is expected to be between $320 million and $330 million. As I mentioned during our Investor Day presentation in September, we have sustained cost savings and productivity improvements well north of $100 million.

These savings are structural rather than onetime, resulting in a leaner cost base improved scalability and lower cost intensity. We continue to drive productivity through footprint rationalization and targeted investments in automation and advanced manufacturing technologies. Including AI, energy efficiency and continuous improvement initiatives. As we've noted before, structural actions are ongoing, and we regularly assess opportunities to optimize our global manufacturing footprint. Recent actions include further centralization of back-office and support functions into global talent centers enabled by greater standardization and process automation. Within our beauty segments, we are further consolidating our metal operations in France and rationalizing a U.S.-based beauty R&D office to better align and leverage resources. These actions reflect our continuous improvement mindset as we continue to pursue additional organization optimization opportunities.

With that, I will turn it over to Stephan to provide a few closing comments before we move to Q&A.

Thank you, Vanessa. Looking ahead to 2026, Aptar is well positioned for broad-based growth across all 3 of our segments. We expect continued strong growth in our Pharma segment, excluding emergency medicine, which has experienced a period of destocking. We continue to see solid growth momentum across injectables, systemic nasal drug delivery in our consumer health care solutions, all of which remain well positioned for growth. In beauty, improving demand in prestige fragrance is an encouraging sign that the category is beginning to return to growth. And in Closures, we expect a steady performance supported by ongoing innovation and continued category conversions. Our disciplined focus on productivity, together with our strong balance sheet, gives us the ability to return capital to shareholders while also retaining strategic flexibility and investing in the business to support long-term value creation.

And with that, we are looking forward to your questions.

[Operator Instructions] Your first question comes from the line of Paul Knight with KeyBanc.

The first question is great performance in the elastomer business with GLP-1 growth. Do you see any deceleration in GLP-1 demand and elastomers in general in 2026. And then the second question is for Vanessa, your EBITDA margin trends as we roll out through the year.

Paul, let me take the first one, and then Vanessa will come back on the second one. So overall, we see injectables to grow in the high single digits, low double digits. You always have fits and spurts if I go back a little bit as we constructed the new plant and validated equipment and put in ERP system and that we were kind of not being able to deliver everything customers want it now that we are able to deliver and really customer want and catching up with demand. We have some strong quarters and we expect that continue but steady state I would think about high single digit, low double digit. GLP-1 certainly is important for us, but let's put it in context, the overall of our pharma business. It's tens of millions maybe from the low tens of millions to the mid-tens of millions but it's still not the sole driver of the injectable growth. It's much broader based vaccines, other biologic projects, blood factors and so on.

Paul. And then on the second part of your question about margins for the full year, we certainly expect margins to be significantly more robust in the back half of the year, driven by a couple of factors. So first, as I mentioned earlier in my prepared remarks, the year-over-year impact of the emergency medicine decline will be more pronounced in the first half. And of course, that being a very higher margin portion of our portfolio. So therefore, the margin pressures will be stronger in the first half than the second half. We also expect sequential quarterly improvement in the margins for Beauty and Closures, as I mentioned as well as we progress through the year, and that's driven by increased volume. -- and also the production dynamics we saw in Q4 will start to abate as well. And then last but not least, across all the segments, as I mentioned, we are pursuing additional productivity measures that will help to partially mitigate the emergency medicine impact. And I would expect those measures to contribute more meaningfully in the second half of the year.

So all that to say, while we don't guide for the year, and we certainly do have some moving parts in terms of mix and other dynamics, I would expect the second half to be much stronger than the first half. And for the full year, certainly at a total company level to be within the long-term target range. I hope that answers your question, Paul.

[Operator Instructions] Your next question comes from the line of George Staphos with Bank of America. Please go ahead.

Good morning, everybody. Thanks for the details. I wanted to spend my two questions on Beauty and Closures and understand a little bit more about what happened since in aggregate, I think you would agree, the margin performance there was a bit disappointing. Vanessa or Stephan, I think you mentioned something about continued maintenance in closures. And I'm not really sure what that means since obviously, there's always ongoing maintenance. In Beauty, it seems like you were surprised with demand and that created some issues that then flywheel around the rest of the organization to lead to the margin that you had. Can you comment on some of the specifics and what happened for those 2 segments in terms of the fourth quarter? And then when should we expect margins to -- you said they're sequentially improving. When do they cross over and become positive again? Is that 1Q, 2Q? Any help you could give us here would be really appreciated.

It's maybe a tag team here. George, a number of topics, maybe a couple of things. One is, of course, very encouraged by the top line growth of Beauty noting a couple of things that Vanessa mentioned, about 1/4 of that growth came from tooling sales and fragrance coming back. And then the operational issues, I respectively do not agree with your characterization. Basically, we had some new environmental measures that were required in 1 of our annualization plans. Different permit levels and so on that required significant action, including 1 that hit the cost line, it's not ongoing, but it needed to be done to remain in compliance. And on the Closure side, I'll let Vanessa speak to that. But yes, I'm not happy with some of the uptime and unscheduled maintenance. And the team has a lot of work to do to -- or has work to do to address that. But maybe Vanessa you try to fill in here what I didn't answer.

Yes. And I don't know that I would add much more color to it than that. There's a backlog of maintenance that we're dealing with enclosures. The team is working through the repairs, as we speak. And so we do expect those issues to start to improve. George, I can't specifically guide you to what quarter we expect Beauty and Closures to hit the long-term target range, but we do expect steady improvements quarter-by-quarter. And...

Vanessa, but I wasn't asking about when you hit your guide. I want to know when you think you'll be up year-on-year, just to be clear. So -- but keep going. Sorry about that.

Yes. Yes, we're working through these issues.

Yes. Let's be clear, we expect a significant improvement in the margin in Q1, and these are not peak items. The supplier issue, just to give a little more color. We had 1 of our suppliers experience a fire. So we had to qualify another supplier with worse pricing and worse quality so that increase your cost. Now for the primary supplier to come back up, that it will probably take a couple of months, but the environmental issues are behind us. So you don't plan for these things, but on the other hand, I'm quite proud that we landed EPS, nevertheless, in line while overcoming these issues. And certainly, we don't expect them in quarter 1 to repeat at that magnitude.

Your next question comes from the line of Matt Roberts with Raymond James.

I appreciate the color given on emergency medicine, and it seems like it's unchanged from last quarter. But 4Q pharmacare sales were still up. So while that's good, can you provide additional color on the emergency comp in 4Q and what it will be in 1Q and 2Q in emergency medicine and that 10% ex emergency medicine in 4Q are the drivers of that sustainable in first half enough to again offset that tougher emergency comp you saw in 4Q? Or is it just that much harder and not expecting growth in first half? And then I'll go ahead with my second question.

When you look at the Pharma margin, I think it was down 3 points year-over-year. How much of that was due to the mix of emergency medicine over the past couple of years, 1Q generally is the lowest margin for pharma seasonally. Should we expect a similar 3-point decline we saw in this quarter? Or anything else that we should consider year-over-year? I think prior year had a royalty benefit as well, so maybe that was inflated. So just any additional color you could give there on the pharma margin for 1Q.

So Stephan, do you want me to start and you can chime in. I'm going to try to make sure I capture as much of your questions, Matt. Thank you very much. And thanks for noting. I mean pharma did have a strong quarter, excluding emergency medicine that overall revenues were up 10%, excluding emergency medicines. And that is just coming from strength in the other parts of the portfolio. We had really good demand, CNS, central [indiscernible] system. Sales were up in the quarter. asthma/COPD sales were up in the quarter. turning the tide on CHC, certainly was important because it did not create a drag to those -- to the other areas of growth. And of course, we've already talked -- Stephan has already talked about the 24% growth in injectables coming from GLP-1s, but also antithrombotics and other parts of the portfolio. So all of those items culminated to the 10% growth, excluding emergency medicine.

Now your question really then is, okay, well, are you going to see 10% growth ex emergency medicine for the rest of the year? And we can't come in to that level of specificity because we don't guide for the year, but certainly, we expect continuing strength across the pharma portfolio. We don't see that as being a onetime item for Q1. We expect that broad-based growth in pharma -- sorry, in Q4. We expect broad-based growth in pharma, again, ex emergency medicine going forward.

And then in terms of your question on margin, there wasn't really anything else on the pharma margin side besides the mix and volume of emergency medicine. So you're absolutely right. That was the biggest driver in Q4 and we do expect from our margins on a full year basis to again improve from Q4 levels.

Okay. That 3-point decline in emergency -- can you comment on that would be similar in 1Q? Or is the comp partner so we should expect a greater magnitude if you could give anything initial -- that would be great.

Yes. So we quantified $65 million as a full year headwind and most of that being in first half. I would give you maybe a rule of thumb as think 2/3, 1/3, H1 versus H2 70, 30-ish in that ballpark?

I just want to highlight that Vanessa said, for the full year, we do expect to be within the long-term target. So we can't really give you the quarter-by-quarter evolution. But looking at everything that we see, we remain confident in that.

Your next question comes from the line of Dan Rizzo with Jefferies.

Yes. I'm sorry. I'm having more technical issues. Can you hear me now?

Yes.

Sorry about that. I was asking about NARCAN after the headwinds from this year when things kind of stabilize and get back to maybe a more normalized environment, how we should think about growth over the long term? I mean, obviously, there's a big surge -- this is the offset of that. But I mean, how should it kind of shake out in the out years?

Yes. What we hear from our customers, Dan, is that they fully expect kind of a low to mid-single-digit growth rate from the new baseline. Where exactly that new baseline is. I think we all want to know very badly. But -- and the reason is quite simple. It's being used every day by first responders. Peoples lives are being saved on an everyday basis. Maybe still by far the easiest way to spend the harm reduction dollars at state level to spend the opioid settlement money. And if you compare it with some other things like whereas a fire extinguisher around me, whereas a defibrillator. Our customers see a lot of room for growth, making them available in break the glass boxes and buildings, on airlines, in buses. So there's a lot of room for this to keep growing. And then on that, of course, you overlay geographic growth, although we have to admit the U.S. is by far has the biggest issues in that category, but we see growth in Canada, in Europe and so on. So low to mid-single digits.

All right. That's very helpful. And then just with cough and cold with the nasal delivery. So you had a kind of a soft winter maybe a year or so ago, led to some destocking afterwards. When do you kind of know if the winter was strong or soft or how it's shaping up for the outlook. So I mean I'm assuming this year is actually pretty strong in terms of cough and cold. So would you know that by the second quarter? Or how does that read?

Yes, we certainly will be able to update you maybe as early as the Q1 call, but for sure the Q2 call, clearly, we see the consumer health care destocking behind us and back to growth mode and how rapid that growth will be impacted by how strong the cold and cough for flu season is. And yes, as we all know from our experiencing ourselves or those around us, it's a pretty strong season this year.

Your next question comes from the line of Matt Larew with William Blair.

First I want ask about was on margins. So leading to this quarter, you had improved your EBITDA margins, 10 straight quarters, reflecting the great operational performance there. And then there are a number of one-off at here, Vanessa, you called out the tooling mix, the maintenance issues, obviously, the loss of the Narcan business. Is there any way you could quantify those issues? Or were you able to internally to give you confidence that you still improve underlying margins. And it sounds like, Vanessa, based on your comments at the end of the call, that you still feel good about the trajectory and opportunity to expand margins from here?

When I was thinking about those numbers, let me just be -- we didn't lose any NARCAN business sole supplier to that opportunity because of the strength of our intellectual property. But yes, the destocking or whatever you want to call it, the strong comparable.

Yes. And Matt, I think you called it out. To be clear, we're not happy about the operational issues in Beauty and Closures. And you've heard that in Stephan's scripts. So we certainly don't want to trivialize that. But those should be transitory. Those should be nonrecurring, and the teams are actively working through those issues. So if I sort of isolate that and isolate the impact of the Narcan mix, the rest of the business is quite healthy margin. And as we progress through the year, as I mentioned earlier, I do expect margins to be stronger at than H1 and for the full year to still be within the long-term target range at the total company level. So absolutely, some of these items are isolated and to what we're going through right now, but should start to correct themselves as we proceed through the year.

Okay. On capital allocation, you did a small deal in like 2025 with the [indiscernible] plan. Maybe just give us a sense for capital allocation priorities and what you're seeing out there in terms of some of plaster other interesting areas of potential investment in 2026.

Well, let me take the last part and then maybe Vanessa can talk a little bit more about the buybacks. Clearly, our M&A algorithm continues to execute. We look at plenty of opportunities. You look at 10 deals, maybe you do one, and you guys know what we're looking for. We're looking for bolt-ons. They come with good management that wants to stay with us and continue to drive it. That's our sweet spot that our history and that's what we're looking for. In addition to that, we look for technologies that we can acquired to strengthen our intellectual property portfolio and/or leverage across the company and further build out our kind of more pharma packaging type business on building on the active material portfolio. And what we did in Brazil is certainly an indication of the kinds of things we are looking for. And in general, adding geographic breadth in the large markets is always of interest. And that's not only in Asia and the Middle East, although those are important growth regions for some of our pharma business, the U.S. is a very important growth region. So but we always look to add some geographic footprint. And then with that, I'll hand it to you Vanessa...

Yes. And Matt, on the capital allocation policy, we're not changing our policy. We we'll continue to allocate capital towards our own growth, and of course, return a portion of that capital back to shareholders. And we very much continue to see ourselves as a growth company. You've heard the numbers, Q4, the strength in pharma and so on. And so we'll continue to invest for growth. But the Board authorization gives us the flexibility for us to buy back shares when it makes sense. And we like the flexibility, but it is completely discretionary. And we'll pull on that lever when it makes sense as you saw us still in certain quarters of 2025.

Your next question comes from the line of Gabe Hajde with Wells Fargo.

Vanessa, you mentioned $100 million of cost savings and productivity. It sounds like there's a, I call it, a longer list of things that you guys are chipping away at. I feel like the last formal number that you've given us was $80 million starting in 2021, getting after some of these, again, productivity initiatives and things like that. First time I'm hearing a number -- can you tell us maybe how much you're going to get in '26 and what the runway is on that?

Yes. Gabe, actually, we went -- we did share those numbers during our Investor Day. At the time, we actually shared about $110 million of cost -- annualized cost reductions over the last couple of years. So that's not new. It could be that you heard the 80 perhaps a year earlier, we could, maybe, but what we shared in September was about $110 million. And of course, we continue to execute against cost reduction since then. So hence, in my remarks, I mentioned well north of $100 million. And that is really just was in reference to how much we've taken out, not necessarily a guide to what is to come. All of the items that I went through in my script really is just to give you an indication of the different levers that we're looking to pull and certainly, productivity is a big part of our we have a number of initiatives for 2026 and a big part of our priority for the year as well, particularly to help to combat some of the mix issues. But we haven't we're not guiding on a specific saving number for the year.

And maybe let me build on that. Clearly, as you guys know, we changed boys and rigor, some were in COVID around '22 to get much more serious on productivity. We've done a lot of work in terms -- in the consumer-facing businesses with in Beauty and Closures. And a lot of work on back-office streamlining, Vanessa talked about it earlier. It's funny. When you built this muscle, you start to get additional ideas. So we ended the year with a very robust productivity agenda. And not only to address these short-term issues, but really to further drive efficiencies across the network, and we have ideas for '27 and beyond. It really is now part of our toolkit and we've built the muscles and I'm very proud of the team that they come with additional ideas to reduce cost in place, so to speak, to further streamline the network, take less efficient operations off-line. Take advantage of more efficient operations and so on. So it's part of our DNA.

Okay. And I apologize, it struck me as something that was fresh or recently initiated. So apologies there. I wanted to ask about the [ Cardamist ] getting FDA approval. I know it's always tough with these things, but are you seeing initial pipeline fill in '26? Or do you expect to see you mentioned a 10-year runway in terms of ramping up to maybe its full potential. Again, I know it's always challenging when you have a new drug and getting physicians acclimated and then, of course, consumers using it, but maybe initial thoughts on even if it's offsetting some of the Narcan drag in the first half of '26?

Yes. I agree with you that it's not easy to kind of give projections on how a new drug will do in -- especially in the short term as you have to work through prescribers payers, supply chains and so on. And our normal way of being in this industry is that it takes several years to kind of establish a trajectory, Narcan certainly was an exception in terms of kind of steepness of the adoption curve and going generic and over count and all that. Other examples [ Trovato ] didn't go anywhere for 4 years and then took off and it's a blockbuster and continuing to grow. And everything in between. So [indiscernible] seems to be a no-brainer if you ask me, but it's not easy to go through all these hurdles from getting it prescribed, getting it reimbursed. And for me, this cardiac treatment also seems to be a no-brainer. But if you have it not go to be the emergency room just take above in layman's terms of cardiac medication, then there seems to be a no-brainer. But we will have to see how it plays out. And I think a quote 5% learn I certainly don't pretend to be smarter than them.

Your next question comes from the line of Ghansham Panjabi with Baird.

Can you hear me okay?

Yes.

Okay. Perfect. Just going back to 4Q and the emergency medicine component, did that come in in line with your initial view? I'm just asking the question because, obviously, you're going through a chaotic sort of destocking in the supply chain, et cetera, visibility to assume is low. Just curious as to how 4Q specifically track relative to internal projections?

It was in line.

Okay. And then in terms of 1Q guidance year-over-year on an EPS basis, we're within striking distance from a year ago. Is that a reasonable proxy for 2Q, again, given all the dynamics with the destocking, et cetera?

Yes. That's a difficult question to answer without getting into sort of the quarterly guidance. Maybe the best way I'll answer it, Ghansham, is -- we think when we look at what you guys have modeled for the full year, we think you guys have taken the input that we gave, we reaffirm today the roughly $65 million year-over-year headwind on Narcan because that's really where the headwind is coming from, which is roughly in line with what we had guided towards the end of last year. so we think you guys did capture that well in your models. We think your full year has captured that quite well. But getting into quarterly specifics, I think we can't provide any further guidance. Beyond the H1, H2 dynamic that I mentioned earlier, with H1 the most severely impacted in terms of year-over-year headwind.

Okay. That is helpful. And -- yes, go on, Stephan.

Yes. Just to add same in different words, maybe. We feel very good about the momentum with which we entered the year, emergency medicine aside. The rest of all the pharma businesses, whether it's Rx, CHC injectables, active materials is growing nicely. Units returning to growth closures. We expect to continue to execute on category conversion. So yes, we have to overcome that high margin, $65 million headwind. We also have to overcome some taxes and interest rate costs. But we feel very good about how we entered the year, and the full year should be for.

Okay. And just 1 final 1 on the $600 million authorization. Just to clarify, -- is that -- is it your intent to fund that sort of with excess cash from free cash flow? Or should we think about flexing the balance sheet just given where your leverage position is at this point? And -- and that's another lever that you can pull.

Exactly both Yes. And we have flexibility on that $600 million, as you know. We had announced at the end of Q3 that at the time, we had about $275 million left on our prior authorization, and we did say that we would use all of that before -- by the end of Q1, we used $175 million in Q4. So we have about $100 million of that, but that's been replaced by the refreshed authorization of $600 million. So we will -- we do have flexibility as to the exact timing of spending that.

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

So Vanessa, I was looking at the cash flow statement. And it seemed like there was a bit more of a build in working capital and generally the other balance sheet item changes this year versus last year, a bit more in the fourth quarter, if I'm not mistaken. What was driving that? And then not to pick on this, I just want to stand a little bit further, and I'll leave it here. Stephan, you said that you got behind on maintenance projects and closures. How does that happen? Is that just a function of there was a lot of demand, and that's where the focus was. Or how would you have us think about it?

So I'll start with free cash flow. And then, Stephan, if you want to give more color on the maintenance issues. In that plant in closures. On the free cash flow side, you're absolutely right, George. So we were down this year, about $64 million in free cash flow year-over-year, but most of that actually was due to timing of tax payments. So $44 million of the $65 million was driven by timing of tax payments. Another $10 or so million was driven by timing of pension payments. Pension contributions, I should say. And then the balance was sort of the net change in working capital. So when I look at working capital, I don't see anything there that really sticks out. Went up very slightly, perhaps by a day or so, our days of inventory came down very slightly by approximately about half a day or so. So I'm not terribly concerned on the quality of working capital or the quality of receivables. But certainly, the timing of that $44 million tax payment in addition to $10 million patient contribution did impact free cash flow.

Okay. No, that's helpful. And go ahead, Stefan.

Yes. On your second question, I don't want to make it too big, but this is at 1 site. In North America, where some large equipment was taken offline for a period of time and then did come back up the way it should. And this mind 35 years of industrial careers it happens once in a while, you're not happy about it. And said, we should have done this so is differently, but -- and the teams are learning from it and addressing it.

Your final question comes from the line of Matt Roberts with Raymond James.

I wanted to ask about the nasal respiratory pipeline. As in the prepared remarks, I believe you noted respiratory was the top ranked by weighted value, which is somewhat surprising given there's been such strong growth in the nasal reformulation side. So is that a function of growth rate or revenue base or maybe said differently, how do you think about the underlying growth rate of respiratory and nasal categories in the pipeline? Or is it a function of one, maybe a higher revenue base on 1 of those? And any themes or what's driving the respiratory drugs in the pipeline.

Yes. I mean first of all, it's a large and important business and that category is going through a change in propellent with lower greenhouse warming potential. So I think that makes it maybe disproportionately bigger without getting into all the specific projects. And we're extremely excited about the systemic nasal drug delivery -- but let's remember, a handful of years ago, that was a category was almost 0, so versus the existing base. So that is already that high up on the list is actually pretty good news. But innovation is an important part of our business.

Let me, operator, thank you. Let me summarize the call. Our teams delivered solid top line performance in quarter 4, with core sales growth from both segments. We feel really good about that momentum. Despite the unexpected cost challenges that we discussed, we struck the lending and EPS came in in line wrapping up strong year, especially when you consider the highly dynamic trading environment our customers had to navigate all year. We continue to be very, very excited about the strength and the diversity of our pharma pipeline. On the back, as we just discussed, of the ever-growing number of systemic nasal drug delivery projects and a higher participation in the injectable project in the industry, including, of course, GLP-1s.

We did talk about this pipeline and our excitement at the Investor Day in September, maybe was drowned out a little bit by the Narcan news. We gave you more color at JPMorgan last month. And again, the recent launches of 2 cardiac treatments, again, edema and [indiscernible], clear proof points of the power of that pipeline and today, we can give give you some more examples of the kind of clinical work that's going on and these are just examples that we can talk about.

As we enter '26, emerging in medicine side, we are well positioned for broad-based growth across all 3 of our segments, of course, continued strong growth in pharma, excluding emergency medicine with solid momentum across all the pillars, injectable, nasal drug delivery, consumer health care and active materials. Duties returning to growth and closures will continue to drive category conversions with innovations. We have a very rigorous productivity road map for the year and the years ahead. And not only to address the short-term issues but drive efficiencies across our operations and supply chain networks, networks as well as SG&A expense.

Last not least, our strong balance sheet gives us the ability to boast invest in the future and return capital to shareholders, while at the same time, retaining strategic flexibility to take advantage of any opportunities that may arise. With that, we look forward to talk to you on the road in the coming weeks.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the 44th Annual JPMorgan Healthcare Conference. I'm Sean Perkins, an associate in our Healthcare Investment Banking Group. I'm delighted to be joined today by Aptar, Stephan Tanda, CEO and President; Vanessa Kanu, CFO; Gael Touya, President, Aptar Pharma; and Mary Skafidas, SVP, Investor Relations and Communications. Please join me in welcoming Aptar to the stage. Thank you.

Thank you for this kind introduction. It's wonderful to be back at JPMorgan. Really great event. We've come here for many years and happy to update you on our progress. I'm joined by Vanessa Kanu, our CFO; and Gael Touya, the Head of Pharma on stage, and we'll be happy to answer your questions afterwards.

So a reminder, our Pharma business, by far the largest part of the company at 46%, dominated by the proprietary drug delivery systems business. And overall, Pharma delivers 2/3 of our EBITDA and rising, but we're also very proud of our Beauty and Closures business who are increasingly doing very well. Now we, of course, report out our financials as you see them in the verticals here, Pharma, Beauty, Closures and so on. That reporting structure was established around 2010. The business is really sharing a lot of common technology platforms that you see here.

I won't go through it from fine mist pumps to aerosol valves. And we practice common industrial technologies, precision injection molding, high-speed automated assembly and assisted -- AI-assisted quality control as just some examples. And we continue to build out this capability set to work with our customers.

Fundamentally, we are an IP-driven organization and IP really in the broad sense. It's patents, it's know-how, it's trade secrets. We've been around for 80 years. We know what we're doing, and we own the intellectual property of what we're selling.

We are a manufacturer of dispensing, drug dispensing solutions. We create the consumer experience when we work with consumer companies, deep, deep regulatory expertise, deep consumer insights and working together with our clients, we create medicines that are new to the world that improve patients' lives, sometimes even save patients' lives and improve the consumer experience all the way to human factor studies through one of our acquisitions a few years ago. We have large total addressable markets, in case you want to know what TAM stands for, and those markets are growing.

Pharma, obviously, leading at 7% growth rate. And I'm talking about the market, not about our growth rate, Beauty around 4%, and Closures around 2%. And we're really focusing our execution to address and take advantage of these large addressable markets around the world. Of course, with the superior returns in the Pharma business, we have allocated capital preferentially towards Pharma and have a very balanced approach to capital allocation, taking care of our shareholders with 32 years of rising dividends.

And I will certainly be not the guy to break that streak, and we don't need to because our growing cash flow supports an annually increasing dividend. We've been recently a bit more active in share repurchases, but have always been buying back some shares to make sure the share count stays in line. And of course, investing in our business and making acquisitions is how we create value for shareholders, first and foremost.

Maybe not so interesting to U.S. investors, but we are active around the world. More than 50% of our base is in Europe. We are a leader in sustainability in our industry, and it is a competitive weapon to attract talent around the world. And to retain talent, we certainly have become an academy company in our industry. And it is important not only to attract great talent, but to retain the talent. We're very proud of our sustainability efforts and especially our consumer-facing customers, including consumer health care, are very, very keen on upping up the sustainability credentials by working with us.

So let's deep dive into the Pharma business. That's why we're here. Again, proprietary drug delivery systems is the growth and profit engine, followed by active material solutions and injectables is increasingly gaining its stride. We deal with all the leading pharma companies on a direct basis, of course, often supplying their CMO partners. That is the growth engine of the company. And again, it's built on intellectual property, on really being deeply involved in the regulatory process, which ultimately leads to lock-in of our devices in the drug master file and our services and digital health offerings allow us to really embrace customers early on in the process.

As a manufacturer, the engineering and science know-how, not only of how we make products, but how they interact with drugs and ultimately, how they help patients is critical. And that's really built on 40 years of expertise that we've built up starting this business organically out of the beauty business. So today's profit engine has been started organically, of course, augmented by acquisitions over time. This gives you an additional view on how the portfolio has developed.

We often say if it goes through the nose, Aptar is involved, substantial position there and for good reasons, and we'll talk more about that. Very strong position in inhalers. We've developed a strong position in eye care drug delivery and dermal drug delivery and with an acquisition about 13 years ago, build out now a world-leading injectable business, clearly a distant #2 or 3 depending on the SKU to the market leader, but being a very attractive partner to our customers.

And in the oral area, we have some forays with our active material business. This is the end result of all this effort and capability and 10 years of very strong growth. And of course, -- if you go back the previous decade, same thing, and we feel very good about our 7% to 11% top line growth guidance for this business as well as the 32% to 36% EBITDA margin. When you look at our pipeline, we've started to disclose that as we came more often to JPMorgan because health care investors are interested in the pipeline, rightly so. That's what drives our business in the long run.

And you see since 2019, the average weighted value of our pipeline has increased 54% and the numbers of opportunities by 46%. So substantial increase in the pipeline. And what has been driving that, it is really a proliferation of indications that can be addressed with our kind of delivery items. In the respiratory field, of course, low GWP propelling transition is an important part of the pipeline, the biologics for injectable, and then I will dive deeper into what we call systemic nasal drug delivery.

Now for those of you who are not doctors, what that means using the nose to administer drug for the whole system. So basically getting into the bloodstream via the nose rather than through pill going through the GI tract or direct injection into the bloodstream. The nose has been discovered as this drug delivery vehicle to the bloodstream. And then in addition to that, bypassing the blood-brain barrier by going directly through the nose to the brain with targeted drug delivery, which opens up an amazing new universe for drug delivery. Then, of course, small molecule traditional injectable opportunities of ophthalmology, allergic rhinitis, vaccines.

We just announced recently a COVID vaccine through the nose in clinical trials and dermatology rounds out our top 8 in the pipeline. It is increasingly growing, increasingly diverse pipeline, but taking full advantage of our historical strength in drug delivery with our technologies. At the Capital Markets Day, we opened the curtain a bit more on all the things that go through the nose primarily in terms of when I talk systemic drug delivery.

And if you had asked me 2 years ago, whether I could show this slide is that you're crazy. But it is so has exploded from neurological disorders to neurodegenerative diseases. And anybody who has Alzheimer's or dementia or Parkinson, Huntington's in their family knows how important those indications are. Cardiovascular, we have 2 heart medications approved just in the last quarter, one for edema, one for tachycardia. So you take your drug medicines, your heart medications now through a nasal spray. And of course, vaccines I just mentioned, oncology, of course, GLP-1s.

I say, of course, now we have people working on delivering peptides through the nose. Dramatic, dramatic explosion of the pipeline. We know Pharma pipelines are long, but you see first products coming out of the pipeline, and we are extremely excited about that. I want to describe a little bit what gives us the confidence in that revenue stream. I don't know any other Pharma business that works that way.

Basically, we work with a client for 10 years to from an idea to formulate the drug to get the drug dispensed to create the clinical trials and then launch and hopefully have a successful launch. But that's only the start of it. During that 10 years of development, we make small revenues, but we are certainly not losing money. And then in the originator phase, the product grows nicely, product goes off patent.

What goes off patent is the API, not the combination medicine. So we participate then in the generic phase, just with more volume, same margin. And eventually, products go over the counter, same story, more volume, same margin. So basically, you have a growing perpetuity. And when you think about that, we have hundreds and thousands of products in the pipeline and maybe close to 100 products launching every year, you layer on one growing perpetuity after another, basically for alternative because we're dealing with treating chronic diseases and emergency medicines. That is the beauty of this business, that's the power of this business.

Over time, we have broadened our capability to embrace customers early on in the drug delivery process from design, formulation, creating patient insights with our service offerings and analytical testing, human factor, device design, but also how medicines get administered, all the way to patient engagement in the initial picking up of the medication and then patient retention, especially through our digital capability, all the way to consumer devices like Oura.

Recently, we announced a collaboration with Oura with the Oura Ring and our migraine body app. So this is really the profit engine, again, of the company that's growing, has a healthy pipeline. And you see just here some of recent examples. In addition to nasal devices, of course, we have also ophthalmic and dermal. This is another way of describing how this business has built up over time. We've been known for allergic rhinitis and dermal drug delivery, nasal saline and so on. But with the event of NARCAN, SPRAVATO, new preservative-free eye care medications, that business has grown and expanded substantially.

And with this additional pipeline with systemic drug delivery, nose to brain, new propellant, biologics, GLP-1, the business has just accelerated. In addition to achieving regulatory success by working very closely with customers until that combination medicine, and again, the combination medicine means the API, the formulation and the delivery device being then captured in the drug master file, for eternity.

In addition to that dynamic, with our 40 years of manufacturing, we've proven 99.999%, we call it the 9s of reliability in the field. So if you have a life-saving drug, you have a patient on the floor who is coated because of an opioid overdose, you use the NARCAN, it needs to fire with at least that reliability. Nobody else has been able to demonstrate that reliability based on real-world data. And this is really unique in the industry, and that's why people come back to us when they have an idea about the next nasally delivered drug.

In addition to getting in the bloodstream, I mentioned the nose has also been discovered to bypass the blood-brain barrier via the olfactory bulb and the olfactory nerves in the brain stem to get drugs directly delivered to brain receptors. We've partnered with Wake Forest School of Medicine that really targeted specific areas of the brain using insulin as an example molecule proving how we can get to targeted areas of the brain. It's really fantastic news for dealing with mental and neurodegenerative diseases, and it's the basis of many, many products in our pipeline.

Now on the consumer health care side, we continue to innovate. 2 recent examples. One is the award-winning sorry for the technical talk, lateral control system or LCS that we've worked with Haleon. In Europe, it's -- or outside of the U.S., it's called Otrivin. In the U.S., it's called Theraflu, a laterally actuated push button nasal spray, award-winning and just received a major award in the U.S.

A little bit longer in the market is our preservative-free eye drop dispenser or ophthalmic squeeze dispenser. And another example driven and lifted from our consumer business, a monomaterial nasal pump futurity that's been very welcomed by the consumer health care market. PureHale has been around for a while, but it's again, based on another technology platform that we share across the company, which is the aerosol valve and bag-on valve technology.

Just recently, we announced a beat the Blink platform. So what the hell does that mean? Basically, you spray it in your eye before you can blink. Not requiring that you tilt back your head and maybe -- the drop hits your eye or doesn't hit your eye, but it's precisely dosed drug delivery in your eye. And we have a partnership with Bausch+Lomb, and this is currently in final customer trials. Injectables, obviously, a very exciting area for us. We have invested in that business substantially.

All these capabilities with premium products are now ready and able to supply the market and the market is exploding. Of course, led by GLP-1. We are in most, if not all, the auto-injectors for GLP-1s, all the brands that you know, Zepbound, Mounjaro, Wegovy and a few more. but also vaccines, small molecules, antithrombotics that drive that business. And as you've seen with the Q3 print, very healthy growth rates, and we certainly see those growth rates continue for a while as all our capability has been recognized.

So what that business really goes through, I mentioned it's the least profitable part of our Pharma business to now, but we do multiple things, accelerated top line, mix enrich with premium coat and value-added products and drive the productivity in that business based on that new state-of-the-art technology with higher margins. So over time, this will be a much more meaningful part of the portfolio from an earnings generation point of view.

Overall, biologics in our business has grown 50% over the 2 years shown there with a significant margin expansion. The substantial investments in biologics and in injectable business is not only in Europe, but that got the brunt of the investment. We also significantly expanded our U.S. facility outside of Congress, New York and added a capability with the acquisition and build-out in China.

So our in-region, for-region supply chain strategy is also being materialized in the injectable business. And given today's supply chain challenges and geopolitical challenges, it is important that you have the capability in each region to supply customers, and we are very well positioned for growth in that business.

Last not least, active material science. It may sound a little different, but you go in their factory, they look like any other after factory, precision injection molded, automated quality control. But what they make is compounds that condition the atmosphere in whichever space they're in. They can be in a vial, they can be in a pill blister, they can be in a sensor pod for Abbott Libre or for DESCOVY for Gilead's AC drug. It's really nifty technology and customers beat their way to our door to when they have a problem to keep a sensor stable, keep a COVID test stable, keep a drug stable or keep a test strip stable.

So this is really a very unique technology, and we're building on that business with additional Pharma packaging acquisitions over time. We did a recent deal in Brazil, and you probably will see a few more there. Last not least, our digital business. Often people ask us, why is that important? Well, it all started with e-enabling our devices. If you are in clinical trials, you want to be sure that patients have taken the drug at the time they were supposed to take it in the way they were supposed to take it and track that. It then evolved into apps.

With the acquisition of Voluntis, we got the world leader in medical devices being software, tracking patient populations, creating patient trial, creating patient adherence and nothing is more valuable than the patient who keeps taking their drugs at the right time. And it is a key ingredient to engage with clients early on in the development journey around clinical trial following around patient engagement, about patient retention and then patient tracking of patient communities like with migraine body that's now has almost 4 million users and as we announced a partnership with OURA that I mentioned earlier.

So let me summarize. The Pharma fundamentals are very, very strong. We have a growing business, a growing pipeline and unique position in the market. having that deep knowledge in the regulatory field and the patient journey and being really -- have become a patient-centric drug delivery engine that customers really value.

And we are here for a reason, not to necessarily only talk to investors, but all our clients are here and they want to talk about this. They want to talk about the digital journey of their patients. They want to talk about how they can get their drug repurposed from an oral dose or an injected form to get it delivered through the nose. So it's a real strong engine. Then our injectable business is going now really hitting its stride.

All the investments have been put in the ground, have been validated and the market is booming, couldn't be better timing. I also might say that our business model is different than some of our competitors. and customers appreciate if their supplier doesn't compete with them. So that creates additional customer traffic.

Our innovation leadership is backed by really decades of experience, a robust IP portfolio and IP portfolio that we defend. It's the family jewels. If somebody wants to grab the family jewels, we don't take that lightly. Last not least, clearly, we have a reset in NARCAN sales after a pipeline explosion of NARCAN, but we see strong growth in Pharma with the exception of NARCAN this year, and we quantified it with Q3. But also our other businesses, Beauty and Closures are doing quite well.

Especially in Beauty, we see customers having run inventories pretty low and threatening us with more orders. And the closures business has really done a great job in getting in fighting shape and taking more business. Last but not least, our very solid balance sheet, near 1x leverage allows us not only to buy back our stock, but retain our strategic optionality and the strategic flexibility to further build the company.

With that, I'll hand it over to you. Looking forward to your questions.

I'll just quickly scan for questions in the room.

Can you talk a little bit generally about intellectual property? You have an issue that is currently in litigation. But can you just talk about how you think about costs of your business from that and return profiles and how you manage around that?

Yes. Fundamentally, as I said, intellectual property is at the core of what we do. We own the intellectual property of everything we sell. And that can be a form of patents that can be in the form of trade secrets. It can be in the form of know-how. We protect that with very clear confidentiality obligations with anybody we work with. And not often, but once in a while, people tend to forget what they have signed and then we go after that with a lot of vigor. It has happened to us. It's public information on the consumer side a few years ago with Kraft Heinz, and we prevailed.

And as always, with litigation, you litigate until you settle or you get a judgment. And the current situation is no different. In -- if you are in Pharma, if you're in biotech, Intellectual property disputes are daily bread. And while this is an extraordinary decision, you always have legal expenses, IP expenses, patent fees and so on. But every once in a while, it gets beyond that. But we are -- we feel very strong about our position, but obviously can't comment on any ongoing cases.

Touching on NARCAN again, you mentioned that you had detailed some of the impacts in Q3. Could you, for the benefit of us here today, comment on any of the underlying demand trends that you're expecting versus the channel adjustments that you spoke about and provide any additional color or perspective on how you expect NARCAN to recover or behave normally?

Yes. So let me kick it off and then ask Vanessa and Gael to comment. NARCAN is a fantastic medication. It is now in the public culture. You can't watch a COP show or anything where not somebody is being NARCAN being brought back to life. Because it is so important, the originator has been very -- and that's Emergent Biosciences has been very successful in kind of making the case for its importance.

The FDA has pushed very quickly for opening up for generic players that we, of course, also deliver and supply and making the drug available over the counter. And that was really critical because what's funding the NARCAN market for a big part is the settlement money from the opioid overdose settlements. And that is -- those are funds that are available at least for the next decade. They are administered through government, administered through and then at the state level, but the funds come from the opioid settlements.

And -- but they have to be spent on harm reduction and that it's not easy to find a lot of ways to spend that money on harm reduction and buying NARCAN at the state level for your harm reduction activities is an easy way of doing that. So as all of that came together, there was, of course, a bonanza, all these 6 players wanted to have products from us to be ready to bid on those contracts. But as happens with contracts, only one can win. So everybody is ready to supply, but not everybody gets to the supply, which led to a little bit of inventory.

Vanessa will quantify what we expect, but the fundamental fact remains it's a life-saving medication. It could be and should be in a lot more places. I would compare it to defibrillators. I'm sure if I go out in the hallway here, I find a defibrillator, NARCAN, really should be available everywhere. So we see good growth rate. We see good growth rates expected from our customers after this kind of initial launch [ Bonessa ] resets to a steady state level.

Maybe you give some numbers to that narrative, Vanessa.

Yes, sure. Just to add a bit of context, in the first half of 2025, we saw about 50% growth. in that part of our business. And as Stephan said, just due to the trends that we're seeing, we're seeing inventory buildup. Again, we're a B2B supplier. So we're seeing inventory buildup in the channels. And so based on that, based on the trends, our conversations with customers and all of the data that we're seeing, we projected that we would go through a period of normalization after that 50% growth that we had seen in the previous year and through the first half of 2025.

And so we quantified that as being about a $65 million year-over-year headwind, which would largely hit us in first half 2026. We're not in a position -- we're in our earnings quiet period. So we're not in a position to give you any update on that figure today, but certainly, we'll comment on that on the upcoming earnings call.

I don't have any other comment on that one. I mean the one I would like to highlight, I mean, normally moving from the originator to the generic player and then to go TCM index 10 years more plus, it took 24 months max. So we have massively supported I mean, all the players on the market in order to make sure that you've got NARCAN everywhere you cool.

And so we gave some color already that we suspect that some inventory are built in the supply chain, and that's reality where we are right now. So all the players basically are resetting their view on that one. They are extremely dynamic in pushing, I mean, new distribution center with the university, with the administrations and so on. So -- but that's the reality we are in by now.

Injectables, while a smaller part of your overall portfolio are fairly well understood by investors. Could you comment on the new capacity that's come online in 2025 and how you see that shaping the trajectory, mix and profitability of your injectables business over time?

Gael?

Yes. Okay. Okay. So thanks God, we invested a lot to prep the capacity. I mean if you look at the recent performance, I mean, Q2 and Q3, I mean, we've got solid double-digit growth. Without that capacity, we will have faced challenge to answer market demand. So we are more than happy. This investment is not only around capacity increase because we are in the U.S., we are in China, we are in Europe, but that's also leveling up our quality capabilities in order to answer an X1 requirements to get an environment even more cleaner than before.

So that's a mix between capacity expansion, new technology around the premium coat technology at par with the best in the market and quality environment in order to face tighter specification to answer some of the regulatory requirements.

The add -- kind of the longer trajectory I would make, the moment we take customers to our new brand-new facility, they kind of say, you don't need to talk anymore. I get it because we went kind of from generation 1 to generation 4 or 5 in one step. So these are state-of-the-art facilities with tremendous automation, additional automation potential.

So we will take -- have taken our capabilities really significantly forward. At the same time that we've upgraded the product technology with premium products that are on par with the market leader. And as I said earlier, if our business model is a little bit more customer-friendly, so whenever they can, they certainly will look more to doing business with us.

We learned a lot today about your nasal and inhalation business. You mentioned that this was an area that was more nascent in how investors understand your business today. Could you provide a little bit of forward-looking perspective or color on sustainability of growth in nasal and inhalation and your -- what you're seeing today on drivers of growth and just how you expect that to continue?

Yes. I think it was a large part of my presentation, but just to summarize it, the historic strong part dealing with asthma, COPD, allergic rhinitis, all of these things will continue. If anything, allergies are growing in terms of duration around the year, but also in terms of geographic impact as especially Asia is coming online with more and more consumers being -- have access to these medications. And of course, after decades of pollution, you have a lot of asthma and COPD going around. So that keeps growing. And that by itself would be exciting.

Now on top of that, there's a whole new universe of indications available to us now that a few years ago, people would have just said you're dreaming. And now the pipeline is bulging with these indications from systemic -- for systemic drug delivery through the nose. At the same time, of course, injectables is filling more of the pipeline ophthalmic. So that's why we're so excited about the pipeline and kind of keep peeling back the onion or the curtain on that pipeline without giving the competition too many bread crumbs to follow, but we will continue to look at how much more we can give you on the pipeline.

I will add on your comment, Stephan, I mean, around our product vertical, I mean, we add capabilities and expertise to really support our customers to accelerate and derisk their drug development program. So the science behind the drug development, we've got that ability by now to do and to provide formulation support, formulation strategy, which kind of excipient you go for a drug repurposing program, we can support you. We can provide you the analytical support, so the deposition, the dissolutions and so on. That's really helping -- I mean, your development program from the early stage to Phase I and II.

Last year, we announced the acquisition of new capabilities to do Phase I and Phase II from a CGMP environment and to supply customers to be able to generate data for Phase I and II because we want to accelerate and derisk their pipeline. And on top of that, we've got a patient-centric organization. Everything we are doing within Aptar Pharma is really patient-centric.

And some of the new innovations coming like the Beat the Blink, for example, we went -- we discussed with patients and the difficulties they were facing to use an eye dropper and so on, and we came with a horizontal way to deliver the same with same efficacy. So really patient being at the center of everything we are doing. We are really happy, I mean, to be able there to -- through user experience, onboarding to improve adherence to remote monitoring the patient. I mean, to report, we've got more than 5 million patients using our digital solution by today.

And the partnership we signed with OURA yesterday, I mean, last week, to be precise, I mean, it's going to give us millions of additional data trying to better identify your drivers, your pattern for migraine with your sleep condition, with your temperature condition, your stress situations or your hormonal situation. So that's where we are. So strong product verticals with science behind and patient understanding.

It would be great to touch on capital allocation priorities. You mentioned that -- you mentioned provided some helpful metrics. But could you provide a little bit of additional information on how your priorities will support long-term value creation through capital allocation?

Sure. So if you look at our -- historically, our capital allocation policy or methodology has been, I would say, fairly well balanced between sort of growing -- investing in the growth of our business and then returning capital to shareholders. If you look at the last sort of 5 years average, it's been about a 70-30 split where we're investing in the business and 30% given back to shareholders. You heard Stephan mentioned earlier about we're in the 32nd year of annually increasing dividends, which certainly is a part of that 30% as well as buybacks, which remain the most discretionary part of our capital allocation program.

Now that's a split that we've sort of averaged over time. But certainly, there will be years where we lean in more on the buybacks and a little bit less on the buybacks. And so in 2025, we certainly did take a much more opportunistic approach in terms of share buybacks and bought back the greatest number of shares that we have, certainly, when looking back into our history. And we did talk about at the end of Q3, we had about $270 million left in our share buyback authorization that we expected to fully utilize in Q4 as well as Q1 of this year.

And certainly, we are on track to doing that. But just to go back, with all that being said, we are a growth company. We are a growth company and which is why roughly 70% of our capital goes back into investing in our business, and that's through organic growth as well as inorganic growth. You saw in one of the slides that Stephan presented, the TAMs that we play in and the growth rates of those -- the market growth rates of those TAMs. And certainly, for us to continue to participate in that growth, certainly requires investments. And so that's why investing back in our businesses will remain a key priority.

And we're obviously at a health care conference, but it would be unfair and remiss of me not to ask a question on the other segments. Could you speak a little bit about Beauty and Closures, some of the dynamics that you're expecting and provide a little bit of perspective on how these businesses have continued to perform so well?

Yes. So we've done significant renovation of the Beauty business over the last 8 years. There was a business that needed to regain its competitive footing. And basically, we've taken out a bunch of costs, shut down noncompetitive sites, created new state-of-the-art facilities, significantly strengthened our footprint in Asia.

And that business is now in good fighting shape. A little bit unlucky last year with Liberation Day creating a lot of uncertainty for our customers, push pulling back some of the launches that they would have otherwise made. But as I mentioned, we see good growth signals from the business already in Q4 and into Q1. And closures has done the same and more and has already benefited very much from being a much more competitive force and being in its long-term targets for a few quarters and certainly going to get there.

So we are really happy that this consumer part of our business is now in good fighting shape. And many things that first happen with consumers. I mentioned sustainability, really benefiting the whole company based on the decades we've spent in honing our sustainability jobs on the consumer side.

Thank you.

Thank you.

Good afternoon. I am Dan Rizzo with Jefferies Equity Research. Up next, we have Aptar Group. And today with us today, we have CEO, Stephan Tanda; CFO, Vanessa Kanu; Gael Touya, who is Aptar Pharma President; and Mary Skafidas, who is SVP of Investor Relations. We're going to have a quick presentation about 15, 20 minutes. And afterwards, there will be time for questions.

So with that, I'll turn it over to Stephan for the presentation.

Thank you, Dan, and good afternoon, everybody. I got the great energetic after lunch hour. So welcome to Aptar in 25 minutes. For those of you not familiar with the company, we've been around for about 80 years, public for 35 years. And today, pharma is really the driving force of our company with almost 70% of EBITDA. And the Pharma business is really all about proprietary drug delivery devices, predominantly drug delivery through the nose or inhalation, but also ophthalmic and dermal and we'll spend quite some time on it.

We also have a beauty business and the closure business. So broadly serve demographically advantaged end users, all the things you would think about, aging population, health and wellness and the drug application we serve are predominantly chronic disease treatment like asthma, COPD, allergic rhinitis, medicines that people take every day. We report out in 3 reporting segments, if you want the verticals here, but we manage the company really by technology platforms that you see here. Fundamentally, the core industrial processes that we execute are the same across the company, precision injection molding followed by high-speed automated assembly, I think hundreds of parts per minute, followed by automated AI-assisted quality control.

We practice that across the whole company. But as I said, we report out in the segments. Now -- we own the intellectual property of everything we produce. So we're not a service provider. We're not a service manufacturer, but we create and own the IP of the devices, obviously, with deep pharma regulatory expertise. We also produce life-saving drugs that -- in medicines that need to work to a 99.999% reliability standard. And that's really what makes us the partner of choice for many early-stage drug development activities.

When you look at the performance of the Pharma business, top line growth in the 7% to 11% the last couple of years, 8%, 3 years on core sales on average, adjusted EBITDA growth 26%, pharma profitability is in the 32% to 36% EBITDA range. We focused a lot on productivity in recent years, driving EPS growth to almost 50%, strong cash generation and dividend. We've paid dividends for the increasing -- annually increasing dividends for the last 32 years.

Now when it comes to capital deployment, we really obviously preferentially deploy capital towards our Pharma business because it's the highest returning, the most rapidly growing and addressing the largest addressable market, followed by beauty and closures. Over the last 7 years, you see here we returned $8 billion in dividends, $6 billion in share repurchases, about $1.1 billion acquisition and the balance in CapEx, again, preferentially towards the Pharma business.

Here, you see our dividend track record, 32 years of annually increasing dividend. Certainly something we take very, very seriously. And we just last quarter announced another dividend increase of 7% payout ratio of 30% to 40%. We were currently at the lower end of that payout ratio despite the increase.

Now we are in Europe, so we talk more about sustainability. We're very proud of our sustainability track record. We are the trailblazer in sustainability in our industry. Q1 both hard and soft recognitions here, EcoVadis Platinum, that means you're in the top 1% since 2021. CDP A List for a number of years, but also more soft things like named amongst the Top Companies For Women by Forbes, Most Sustainable Companies by Time Magazine, Barron's Top 100 Most Sustainable Companies, Newsweek and so on. And the same in France by Le Point or in China.

So we take not only what we do very seriously, but how we do it and our people are highly committed to the company. We've become an academy company for our industry that makes our people highly sought after, but also means that we are able to recruit above our weight class, if you want, because not only what we do, but how we go about doing the business.

Now let's deep dive into what you're most interested in, our Pharma business. I mentioned the proprietary drug delivery systems is the core engine of our profit growth. That business was built organically out of our Beauty business. So when you think about a high-end fragrance pump, if you reconfigure that, you get a nasal spray. If you think about an aerosol dispensing system, if you shrink that down, you get an inhaler. In fact, our first pharma products were made in Beauty factories 40 years ago until we started to make bespoke pharma capacity investments. And today, it is the profit engine.

Now we bought additional businesses. First, injectable solutions in 2012 was a privately held French company called Stelmi. We modernized it, upgraded the technology that today -- where today, it is equal to West's technology and expanded capacity in the United States, in Europe and also added capacity in Asia. And then in 2018, we bought Active Material business that really allows us to protect drugs, protect sensing systems, for example, we're in diabetes test strips, but also in flash glucose monitors like Abbott's Libre and some of the consumer-related products.

Again, it is the combination of having the intellectual property being in various indications that are chronic disease related, which means you need the drugs every day. And more and more, the nose has been discovered as a preferred drug delivery route. It used to be you just use the nose for treatment of the sniffles or the congestion or allergic rhinitis. And today, of course, it is used increasingly for total body treatment, getting drugs into the bloodstream. It started out with Narcan or using -- delivering naloxone to reverse opioid overdoses, then came SPRAVATO for antidepressant treatment.

And today, our pipeline is full with things that address the cardiovascular system. For example, recently, [ AVMI ] to treat edema -- tachycardia is right next to it. We have things in the pipeline to treat neurodegenerative diseases and also deliver larger molecules and peptides through the nose. That all is enabled by our regulatory expertise. We work with pharma companies from early stage to get a combination medicine approved. And then once the approval is achieved to stay with them for the life of the drug.

In the respiratory dermal eye care spaces, we have very high market shares. Of course, in injectables and orals, we have plenty of growth opportunities. And in injectables, I already mentioned, we are on things like the GLP-1 auto-injectors. In oral, particularly for sensitive drugs that need to be in a protected environment, the blister, think of it as a protected environment. And within that blister, we can influence the atmosphere, whether it's reduce oxygen content, reduce moisture, CO2 or emit products like chlorine dioxide to preserve a medication or a food product.

When you look at our track record, we grew the Pharma business by 8% over the last decade and frankly, significantly also the previous decade and also EBITDA. In more recent years, we've accelerated our EBITDA growth just because we push more and more into the proprietary drug delivery side of things. We've started to disclose the pipeline value and number of opportunities, and they all head in the right direction. Of course, there was a bit of a bump during COVID time. But fundamentally, we're very excited about our pipeline and the pipeline adds to the base revenue base.

And if you don't take anything else away from this presentation, it's the following. We work with the development partners, as I said, for a decade to create an approved combination medicine. What is an approved combination medicine, it's the API, it's the formulation and it's our dispensing device. That is what is approved. That is what is captured in the drug master file. Once the API goes off patent, it becomes a generic medication, it's still our dispensing device that is required for that combination medicine. And if the product goes over the counter, same thing.

So we actually make the same, sometimes increasing margin as we go through the stages of a drug. That means we have a perpetual revenue stream, perpetually growing revenue stream for these drugs. And then the pipeline adds on top of it. I don't know any other Pharma business that works like that where you have that profitability level, and that's what's behind the magic of our Pharma business.

As I mentioned, nose to brain has been discovered as not just local drug delivery vehicle, but really for all kinds of therapeutic areas. This is probably the most -- second most important slide to take away. It's all the areas where we have projects in the pipeline from neural disorder, neurodegeneration, mental health, metabolism up into including GLP-1 delivery through the nose, but also vaccines and cardiovascular.

So maybe bring a little fun in the conversation, one of our investors says, we've known that the nose is a great drug delivery vehicle for decades. Finally, pharma industry is catching up to that. It is the route from the nose to the brain that works the quickest. So no need to go through the GI tract, overdose dramatically just to get a few molecules into the brain. The nose is a much quicker way to go there.

A few words about our other businesses. The Beauty business is a world leader in the fragrance and skin care area, very much grew up in Europe, but now it's a global business. This is sales by region, but of course, what we sell in Europe ends up in the luxury fragrance products that you pick up in the duty-free store when you leave here, please, start at 200 pounds and up or premium skin care products. We've invested a lot in operational efficiency, increasing margins in the renovation of the Beauty business. And today, it is a much more competitive business. And as volume increase, profitability will increase further.

Our Closures business, for those who don't know, we were the people that allowed Kraft Heinz to put the ketchup upside down because of a unique valve that keeps things clean. And after that came sour cream and now it's Procter & Gamble's dish soap category that has been changed. So changing categories to formats that use our products is really the driving force behind closures. This conversion of driving categories, whether it's from allergy bill to nasal spray, from injected naloxone to nasal naloxone or from sour cream to sour cream that sends upside down. This conversion is really what's driving growth in our markets. In addition to that, of course, we have regional growth and all the other levers to drive profitability.

So with that, we have hit a Narcan pothole at the moment that has pulled our stock price down. But when we take Narcan aside, everything else in the Pharma business is working very well. Injectable business is hitting on all cylinders, also fueled by GLP-1. We are the innovation leader in the industry and have a very strong balance sheet that not only allows us to pay dividends, buy back more shares, especially at the moment, but also retain our strategic optionality.

And with that, I submit myself to your questions, Dan.

Okay. So if anybody has a question in the audience, please raise your hand. But for now, what I just want to kind of start with, one of the big exciting growth drivers for you guys is the injectables business. You mentioned GLP-1. But if we were to look out 5 years from now, how would the injectables business say compared to maybe nasal delivery, I mean, do you see it being comparable? Or do you see nasal delivery still outpacing it for the next 5 years? Or how should we think about it?

Yes. Let me start out and then Gael, please jump in. Look, the relative size is still quite different. The nasal and proprietary drug delivery business in general is by far bigger as a business and more profitable. And with all the things that you saw in the pipeline, we continue to see that as being the locomotive that pills our pharma business.

We're very proud of our injectable business. Right now, it's 17% of pharma, and -- with being technologically equivalent to West but driving a different business model, we see that business continue to grow very nicely. And of course, GLP-1 is turbocharging it, probably will become 20% of injectables down the road, maybe even more, but other parts of injectable pulling as well. But Gael, why don't you?

Yes. You know that segment, the injectable segment is the one growing way faster than the other segment. Most of the development are for an injectable form of delivery. So obviously, I mean, if we were to look at 50 years down the road, I mean, the growth rate will be nicer for -- this being said, I mean, there's a lot of drug repurposing program happening right now, and this is what we see in our pipeline. And there, we obviously extract slightly more value because we control the dose. I mean we deliver the full combination product offering, and you don't want to overdose, underdose. So that's where we are positioned.

And if we think about GLP-1 and Annex-1 compliance, I mean they are 2 separate issues, but when do you see the sales peaking? Is it like a 3-year trajectory upwards before it kind of flattens out for -- I mean, is each different? How should we think about it over the next 2 to 5 years or 10 years?

Yes. I wouldn't think about this in peak obesity is probably the ultimate chronic disease. It's like being drug addict and having drugs around you every day and part of which you have to take. So I don't see a peak to GLP-1 sales. Now there will be a different mix of auto-injectors, pen, oral formats, plus you can't go spend a week without a new indication being called out, whether it's dependence management, whether it's cardiovascular benefits and so on. So this is more about what is the trajectory of the growth rate.

And for the Annex-1 compliances, I mean, how should we think about that?

Yes. We've got a nice pipeline right now. I mean -- so customers are coming with Aptar and they need to be fully compliant with, and this is part of our investment. What we have done in the last year is not only to develop new technology capacity around the world, but also being in line with the Annex-1 to be fully compliant. So we see a nice pipeline. And I think that's going to be -- that's going to be an interesting, I would say, growth driver for Pharma injectable.

Yes. Again, there also, I wouldn't see it as a peak. Once you know or practicing a better way of doing things, meaning a safer way, more sterile way, there's no reason to go back. .

So we think about what you've done over the past few years is going to build out 4 different things and you kind of updated your R&D facilities, I believe, both in the U.S. and in Europe. I was wondering if there's a need for more CapEx spend in the coming years to meet the potential growth from your different products. Or if you think you have enough capacity to meet what's coming?

Yes. So our CapEx comes really in 2 forms. One is kind of to build large, sometimes I call them disrespectfully boxes, large new sites. So we just built a state-of-the-art large site in China where we hadn't really invested in new facilities since the mid-'90s. We've built a brand-new facility for injectables in Normandy and one for beauty in France in the [ Verneuil ] region. We don't see any of those large investments coming up in the coming years. And then comes the second part, which is really additional equipment, additional capacity in the buildings or adding another wing to a building like we've done in Congress over time to build out facilities.

But those are much smaller investments. So our largest capital investment this year was $5 million or so. So logical increment for us is $2 million to $3 million. So there's plenty of space to create capacity. And we have 50 sites around the world. There's no need to build another site. We shut down sites, we make acquisitions, then we add some sites. But other than that, for the next few years, we see capital expenditure more to be steady state. And as Vanessa said at the Capital Markets Day is for the consumer-facing business, it's kind of mid-single digits of revenue plus in for pharma, it's kind of more high single digit, low double digit depending on the year. So CapEx should be pretty conservative in the coming years.

And then you jumped into -- but you augmented your Pharma business by one, I think you did M&A in injectables in 2012, then you got into active ingredients in 2018 or so. I was wondering if there's another subsegment that might be interesting, too, that you're not in? I mean -- or how you're addressing that.

Yes. When we look at acquisitions in pharma, it's really -- and frankly, for the company as a total, are there additional technologies that we can add to the portfolio that deepen the moat or open adjacencies. For example, we acquired SipNose a couple -- last year to improve the intellectual property portfolio around -- and add some additional nasal capabilities. Or an additional geography, for example, the injectable facility we bought in China that came with a coveted government license. Or just a good business that comes with good management that is an adjacency. I mean, we talk a lot about nasal inhalation, but we're also active in dermal drug delivery, in ophthalmic drug delivery or some additional services like the CRO facility we acquired in New Jersey.

So it's really broadening the business, deepening the moat, something that can do better under Aptar leadership and ownership than it does outside, but always with a keen eye on management. The digital assets that we bought came with management that still works for us happily. The same for the Active Material business. We want to make sure that 1 plus 1 equals 3.

Got you. And then final question because we only have about a minute left here. So with what's happened with the stock price, but with what your priorities are, are share repurchases looking more attractive at this point versus maybe versus historically what you thought about it?

A little bit attractive, I would say, a little bit attractive. Yes, indeed. So we have leaned in a lot more on share repurchases this year. We had done about $190 million or so, 1.3 million shares by year-to-date to the end of Q3. And what we did say was that we would look to essentially exhaust the remaining authorization. We've got about $273 million left in our Board authorized pool for share buybacks. And certainly, we are executing against that given the current conditions.

Yes. I mean, usually, my cardial rule is never opine on the stock price, but I think the reaction to the Narcan pullback feels a little bit overdone.

I would agree.

So we buy back shares.

So we buy back shares.

All right, guys. Thank you very much, and thank you, everyone, for sitting here. We really appreciate it.

Thank you.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to Aptar's 2025 Third Quarter Results Conference Call. [Operator Instructions]

Introducing today's conference call is Ms. Mary Skafidas, Senior Vice President, Investor Relations and Communications. Please go ahead.

Thank you. Hello, everyone, and thanks for being with us today. Our speakers for the call are Stephan Tanda, our President and CEO, and Vanessa Kanu, our Executive Vice President and CFO. Our press release and accompanying slide deck have been posted on our website under the Investor Relations page.

During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measure and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. As always, we will also post a replay of this call on our website.

I would now like to turn the call over to Stephan. Stephan, over to you.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. I will begin my remarks by highlighting our third quarter results. Later in the call, Vanessa Kanu, our CFO, will provide additional details on key drivers for the quarter.

Starting on Slide 3. For the third quarter, we delivered adjusted earnings per share of $1.62. During the quarter, growth in our Pharma segment was driven by solid demand for proprietary drug delivery systems for central nervous system therapeutics, asthma, COPD and ophthalmic treatments. We saw moderating demand for emergency medicine dispensing systems. We also captured significant growth in injectables during the quarter from increased demand for elastomeric components for GLP-1 medications and solid growth in our Active Materials Science division.

When you step back and look at our Pharma segment performance for the first 9 months of the year, prescription has a 7% core sales increase, injectables at 6% and growing and active Material science is up 8%. Consumer Health care continues to be affected by the destocking and is down 11%. Additionally, royalties continued to contribute positively to our top and bottom line results.

And we're continuing to invest in the ongoing growth and innovation within pharma. To that end, we have signed an agreement to acquire Soma Plus, a Brazil-based provider of oral dosing pharma packaging solutions including droppers, dispensers and dosing cups. Aptar has been manufacturing in Brazil for 25 years, and this acquisition, which is subject to regulatory approvals and anticipated to close later this year is expected to further reinforce our footprint in the region. It also helps position us to capitalize on growth in Brazil's oral dosing over-the-counter and nutraceutical markets which are projected to grow at mid- to high single digits through 2030. This growth is driven by an expanding population, rising middle class and aging demographic.

In our Beauty segment, for the quarter, we saw revenue growth in a number of regions over the previous year quarter, such as Asia, Latin America and certain end markets in North America. At the same time, in Europe, our largest region, sales were flat as we continue to see softness in our higher-value products such as facial skin care and in certain prestige fragrance end markets. Our prestige fragrance pumps did have modest volume growth in the quarter.

Additionally, we saw lower sales for our full pack solutions that service the India market in the U.S. due to the challenges at one of our larger customers. In the first 9 months, Beauty reported sales rose 2%, while core sales held steady overall. Strong 11% growth in Personal Care helped balance softer demand in prestige fragrance and facial skin care.

Turning to the closure segment for the quarter, while product volumes were up, lower tooling sales and pass-throughs of lower resin pricing impacted core sales growth. For the first 9 months, closures reported and core sales rose 1%, driven by a 5% increase in product sales, partially offset by lower tooling sales in the pass-through of lower resin pricing. Food and beverage markets saw solid growth in Personal Care declined.

Turning to innovation. I'd like to highlight recent technology launches in key news as shown on Slide 4. Starting with the Pharma segment, our Unidose liquid system is used in the newly FDA-approved Enbumyst by Corstasis Therapeutics, the first intranasal loop diuretic for treating edema linked to heart failure, liver and kidney disease. This approval underscores the growing role of nasal drug delivery in systemic treatment and our commitment to patient-centric solutions.

And after proprietary nasal system is also used in the Phase I clinical trial for a powder nasal spray managing Parkinson's Off periods. Managing Parkinson's Off episodes means treating periods when medication wears off and symptoms like stiffness or tremors return, often by adjusting medication timing, or using fast-acting rescue treatments for on-demand relief.

During the quarter, we signed an exclusive partnership with French biotech company, Dianosic to develop a bioresorbable intranasal insert for long-term local drug delivery in chronic allergic rhinitis and rhinosinusitis. This collaboration also explores nose to brain delivery for neuropsychiatric and neurodegenerative diseases.

Next, our HeroTracker Sense technology has also received FDA 510(k) clearance as a Class II medical device. This Bluetooth-enabled sensor transforms traditional inhalers into smart data-driven tools for patients and providers.

Finally, we inaugurated our expanded pharma research and development center in France, which helps boost capabilities across our proprietary drug delivery business. It's one of Aptar's 11 global innovation centers. Over 10% of our pharma workforce is dedicated to research and development, supported by nearly 4,700 active and pending patents. The center integrates advanced technologies, digital simulation rapid prototyping, predictive modeling, data utilization and artificial intelligence. It is aimed at accelerating and derisking development of next-generation drug delivery solutions.

Turning to our Beauty segment. During our recent Investor Day, we showcased our award-winning technology for the Clarins reloadable Total Eye Lift serum, featuring our patented ALS packaging, with a highly recyclable reload and double tamper seal system. In fragrance, Christian Dior is using our Prestige Fragrance Pump for its new launch, Miss Dior, Essence perfume.

Finally, our precise dropper technology used for the controlled and targeted application of liquid formulas is a dispensing solution for the India brand basic app in Europe.

Lastly, in closures, [indiscernible] Buffalo Wild Wings sauces in the U.S., feature our Pour Spot Closure and more Lightweight sustainable solution that delivers convenience. In the beverage concentrate market, our flip-top non-VIP solution was chosen by PepsiCo for their soda stream syrups.

Moving to Slide 5. All of this would not be possible without tremendous teams around the world. We take great pride in the numerous recognitions we have earned, including being named among the top 100 of the world's best companies for women by Forbes. This honor highlights our ongoing efforts to build an inclusive culture that empowers individuals to grow, connect and reach their full potential through meaningful development opportunities and inclusive initiatives.

Before I turn the call over to Vanessa to share further details on the quarter, I want to highlight that we continue to focus on returning capital to shareholders through share repurchases and by increasing our dividend. To date, 2025 has been a banner year for share repurchases and we plan to lean in more.

In addition, we recently announced an increase to our quarterly dividend by nearly 7% to $0.48 a share. This underscores the strength and resilience of our business model as well as our confidence in APTA's long-term growth prospects. We are very proud of having paid an increasing annual dividend for the last 32 years.

Now I would like to turn the call over to Vanessa.

Thank you, Stephan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter on Slide 6 and 7. Our reported sales increased 6% and core sales, which adjust for currency effects and acquisitions, grew 1% compared to the prior year period.

Before moving further, I want to call out that this quarter, we had a couple of atypical items impacting our reported net income. First, as a result of the BTY transaction that closed this quarter, we recorded a gain on the remeasurement of the previously held minority interest of approximately $27 million, which increased our net income. And as this gain is nontax impacting, it reduced our reported effective tax rate for the quarter to 17.1%.

Our adjusted effective tax rate, which excludes the impact of this item, was 20.8%, in line with expectations. Second, as we mentioned on our prior quarter call and in our recent Investor Day, we are engaged in litigation to actively and vigorously defend our pharma IP portfolio and products. This resulted in a typical litigation costs of approximately $4 million that impacted our net income.

As the gain on remeasurement of our equity investment and the litigation costs incurred in the quarter are both atypical and not indicative of operational earnings of our business. We have excluded both of these items from our adjusted EBITDA and adjusted earnings per share for the quarter. All references that I now make to adjusted EBITDA and adjusted earnings per share exclude these items. A full reconciliation is provided in our earnings press release and in our 10-Q. With those high-level comments, let's take a closer look at segment performance.

Turning to Slide 8. Our Pharma segment's core sales increased 2%. Let me break that down by market, starting with our proprietary drug delivery systems. Prescription core sales increased 3%, and driven by strong year-over-year demand for dosing and dispensing technologies for central nervous system applications, asthma and COPD therapeutics.

We also saw growth for emergency medicine, albeit at a slower rate. And royalty payments continued to contribute positively to revenue in the quarter. Consumer Healthcare core sales decreased 11%, primarily due to lower sales of nasal decongestants and nasal saline. Sales for ophthalmic solutions continued to grow in the quarter, but could not offset the overall decline in cough and cold volumes. Injectables core sales increased 18% and with strong demand for elastomeric components used for biologics, GLP-1 and regulatory-driven NX-1 requirements. Services also contributed positively in the quarter.

And for our active material science solutions, core sales increased 3%, driven by continued strong demand for active material size technologies for diabetes treatments. Pharma's adjusted EBITDA margin for the quarter which excludes the impact of nonordinary course litigation costs referenced earlier, was 37.2%, a 120 basis point improvement from the prior year. The margin improvement was driven by increased sales of higher-value proprietary drug delivery systems, services and royalties.

Moving to our beauty segments on Slide 9. Core sales were flat in the quarter. While increased tooling revenues provided a left, these gains were offset by a decline in product sales.

Looking at the beauty segment by market. Fragrance, facial skin care and color cosmetics core sales decreased 5%, primarily due to lower sales of skincare dispensing products for Indie brands in North America. Personal Care core sales increased 13% and driven by continued strong demand for body care and hair care applications. And core sales for Home Care, the smallest end market in our beauty portfolio decreased 18% in the quarter due to the timing of some nonrecurring service fees in the previous year. This segment's adjusted EBITDA margin for the quarter was 12.1%, a decline of 120 basis points. The decline in Beauty margins primarily reflects less favorable sales mix and lower-margin tooling sales.

Moving to Slide 10. Our closure segment core sales decreased by 1% compared with the prior year. While product sales were up 2%, this growth was more than offset by lower tooling sales and pass-throughs of lower resin pricing. When looking at the market feels for closures, food core sales decreased 4%, primarily due to lower tooling sales, while volumes increased across a number of categories.

Beverage core sales increased 9%, primarily driven by increased sales for functional drinks and bottled water. Personal Care core sales decreased 8% and while in our other category, which includes beauty, home care and health care, core sales were flat. This segment's adjusted EBITDA margin was 16.1%, representing a 110 basis point decline over the prior year primarily due to unscheduled equipment movements that impacted production.

At the total company level, consolidated gross margins declined by 80 basis points year-over-year while SG&A as a percentage of sales declined from 15.6% to 15.5%, a 10 basis point reduction. SG&A expense in absolute dollars increased largely due to the aforementioned nonordinary course litigation costs incurred in the quarter.

Overall, consolidated adjusted EBITDA margins increased by 30 basis points to 23.2% compared to 22.9% in the prior year period. and adjusted earnings per share was $1.62, up 4% year-over-year on comparable foreign exchange rates.

Slides 11 and 12 cover our year-to-date performance and show that reported sales increased 3% and core sales increased 1%. Our reported earnings per share increased 17% to $4.75, and adjusted earnings per share increased 7% to $4.48 compared to the prior year including comparable exchange rates. The current year had a reported effective tax rate of 20.4% and an adjusted effective tax rate of 21.9% compared to the prior year reported an adjusted effective tax rate of 22.7% and 22.8% respectively.

Neutralizing both the effective tax and exchange rates for the year ago period, adjusted earnings per share would have been up 6%. Additionally, adjusted EBITDA increased 8% to $624 million, and the adjusted EBITDA margin increased by 100 basis points to 22.2%. In the first 9 months, free cash flow was $206 million, comprising cash from operations of $386 million, less capital expenditures net of government grants of $180 million. The year-over-year decline in free cash flow was largely due to higher working capital and higher pension contributions in 2025. These were partially offset by lower capital expenditures.

Finally, we ended September with a strong balance sheet, once again, reflecting cash and short-term investments of $265 million, net debt of $936 million and a leverage ratio of 1.22. Over the past 9 months, the company has returned $279 million to shareholders through share repurchases and dividends. So far this year, we have repurchased 1.3 million shares for $190 million, the highest repurchase amount in a decade.

Of the $500 million authorized by our Board of Directors for repurchases, approximately $270 million remains available as of the end of September. Given the recent trends and the strength of our balance sheet, we expect to fully utilize this remaining authorization over the next couple of quarters.

Before we move on to outlook, I'd like to provide a brief update on our emergency medicine portfolio, where we continue to see strong underlying demand, but we anticipate near-term headwinds in this end market that we expect will impact Q4 and at least the first half of FY '26.

To help with your modeling, as we previously shared, in 2024, emergency use delivery systems represented approximately 5% of total company sales. For the first half of 2025, this end market accounted for 7% of Aptar's total sales. Revenue for the first half of 2025 grew roughly 50% year-over-year while Q3 showed more modest growth.

For Q4 2025, we expect a more pronounced deceleration mainly due to elevated inventory levels at a large customer. and expect revenue contribution for the full year 2025 to be about 5% of total sales.

While demand from other customers remains healthy. We expect this inventory normalization to extend into 2026. Based on what we currently know about end market demand, funding dynamics and customer inventory positions, we anticipate 2026 revenues from this end market to be approximately 35% lower than 2025. Given the high-value nature of this portfolio, this will have a compressing effect on overall margins prior to any mitigation actions.

Now on to outlook for Q4 summarized on Slide 13. We expect continued strength across the majority of our pharma businesses in Q4, particularly injectables, driven by rising demand for higher value elastomeric components fueled by growth in biologics, GLP-1 therapies and NX-1 compliance requirements. Partially offsetting the growth in injectables is softer demand for emergency medicine that I just spoke about.

For the consumer businesses, we anticipate beauty will have positive core sales growth in Q4 and product sales volumes for closures will also continue to grow. In terms of earnings per share, we anticipate fourth quarter adjusted earnings per share to be in the range of $1.20 to $1.28 per share. Our effective tax rate range for the fourth quarter is 19.5% to 21.5%.

Our guidance for the quarter is assuming a EUR 1.17 to USD exchange rate. Additionally, as you will model depreciation and amortization, -- due to the closing of the BTI transaction and other timing and FX impact, we expect fourth quarter depreciation and amortization expense to be between $75 million and $80 million.

With that, I will turn it over to Stephan to provide a few closing comments before we move to Q&A.

Thank you, Vanessa, for the review of our Emergency Use Delivery Systems business. Now let me step back and share the bigger picture. In the short term, we faced some headwinds due to tough comparables from the exceptionally steep onetime ramp-up of the unique naloxone distribution channels as well as uncertain and evolving landscape around government funding.

Steady state, our customers expect this market to grow in the low to mid-single digits. Over the past 3 years, our prescription division serving this market has grown at brisk double-digit rates. After a period of destocking, we anticipate more stable sales of our dispensing systems.

Looking ahead, we expect our pharma pipeline to continue to be strong and robust. As I shared during the Investor Day, it has been contributing 7% to 10% of revenue annually. What is important is that our revenue stream in pharma is largely based on the treatment of chronic diseases with the help of our proprietary solutions, resulting in a long-term stable to growing business with new launches layered on top of that base.

We believe this is possible because together with the molecule, our dispensing system, former combination medicine, which is part of the regulatory filing and remains embedded in the drug master file.

When I touch on injectables, I want to highlight that we are seeing good and strong growth in the very areas where we have invested, GLP-1, NX1 and Biologics. Our investments in added capacity and capabilities in high-value products are paying off. Closures is performing well. The reorganization we started 2 years ago has delivered solid growth and innovation traction. Beauty has lowered its cost base and breakeven point, which we believe is giving it a competitive footprint. We have reinforced operational efficiency and cost discipline is an important part of our culture. And these efforts sharpen our execution.

We also keep a close eye on shareholder returns, strategic capital allocation and bolt-on acquisitions. Bolt-ons are a core strength take our Brazilian pharma packaging acquisition as just the most recent example.

As we look to the future, we remain confident in our ability to deliver sustainable, profitable growth. We believe our business model is resilient, our pipeline is robust, and our teams are focused. With the right mix of innovation, operational discipline and strategic investments, we think we are well positioned to continue creating value for our customers, our employees and our shareholders.

With that, I would like to open up the call for your questions.

[Operator Instructions] Your first question comes from the line of Ghansham Panjabi with -- your line is open. Please go ahead.

Good morning. Can you hear me okay?

Yes, hi Ghansham.

Okay. Vanessa just so I can understand your comments specific to 26 for pharma. So is it -- is it right to assume that you're assuming 7% to 10% growth just from the new product pipeline, et cetera? And then emergency medicine is roughly 11% of pharma, and that's going to be down 35%, and that's how we should calibrate as it relates to the growth expectation for next year? And then related to that, where are we on the cough and cold specific to Europe in terms of the destock? Is it going to drag into 4Q? And yes, where are we on that?

Yes. Let me start and then one, Vanessa please chime in. The 7% to 10% comment was just to reiterate what we covered at Investor Day that we have a stable growing business. And on top of that is innovation, and that supports our long-term target. It was not meant to give you a guidance for '26.

So when we look at -- out to '26, of course, we don't give guidance for 26. We made an exception for emergency medicines for the obvious reasons, and Vanessa went through that in quite some detail. Assuming out we expect injection to grow very nicely, high single digit, low double-digit rates for the coming period, we expect Consumer Healthcare to return to growth.

To your second question, we believe that had largely run its course with quarter 4 potentially returning to growth admittedly versus a lower base. and also active material returning to growth. So the key impact will be emergency medicines and we can reiterate some of that, if you'd like.

Yes. No, absolutely. But I think, Ghansham, you got the number. It is -- again, we expect for the full year to be roughly 5% of the total company. And so for the pharma business, specifically, it will be in that 10%, 11% range of revenue. So that goes down about 35%.

And then European cold and cough or cough and cold.

Yes. That's what I was referring to, sorry, that has largely run its course. We expect quarter 4 to potentially be growing again and certainly growing into next year.

Okay. And then for my second question, so for the initial 3Q guidance, you did include the litigation cost of $0.67 and then you've changed that going forward? And just give us a reason as to why that is?

Yes. We did Ghansham. So we did give the estimates. We said it would be roughly $5 million to $6 million a quarter, roughly $0.06 to $0.07 of EPS impact. You will see in our disclosure that the actuals for Q3 came in at about $4.4 million. We did disclose that. But this is litigation. This is litigation. The timing of the litigation is always uncertain, and we discover things through as the progresses.

And as we looked at the business, I mean these are elevated litigation costs, very atypical. You know Aptar, you have a very long history with the company. We don't typically do this. So these are very atypical costs. And when you look at the underlying performance, the underlying operating performance of the business from a management perspective, this is not indicated of the underlying performance of the business. And so we certainly provided all the transparency that we need to, but we wanted to make sure that we called out what the underlying operating performance was of the business. .

You're quite right. It was when we gave the guidance.

Your next question comes from the line of Paul Knight with KeyBanc.

Can you talk to the GLP-1 marketplace and NX1, what level of contribution to growth do you think those 2 markets represent? Is it 100, 200, 300 basis points of additional organic growth? Or can you quantify it as the first question?

Yes. Paul, we don't break it out in that detail. But clearly, GLP-1 is a solid driver probably in the quarter and, let's say, in the couple of quarters to come, top one driver of growth. NX1 closely behind. And then obviously, Biologics continues to fill the pipeline.

Now we are on all the auto injectors. And remember, there is always 2 SKUs on an auto-injector, plunger and needle shield and 2 companies can say they're on the same auto injector and it may very well be true. And on the plunger side, I think there's even some double sourcing.

So we had lower growth rates in the beginning of the year quite simply because we were still validating some of our capital investments and some of the equipment. Now as of, let's say, middle of the year, early quarter 3. Everything has been fully validated and we can catch up with demand. So the growth rate you're seeing is reflective of the market demand, but also a certain catch-up that's why we feel we're going to have a very strong finish of the year.

The other question, of course, that people often ask a, what about our oral is there going to crimp demand. We don't see that at the moment, 1 is still quite a bit away to from everything we hear, it's more intended to serve markets that don't have cold chain capability. But pricing will be such that it will not obsolete existing investments by our clients. That's our best read.

And maybe the only other thing I'll add just because you did mention GLP-1 specifically, Paul, we continue to see really healthy year-over-year growth rate. For September year-to-date, we were up over 40% compared to the prior year. So to Stephan's point, really seeing some very healthy growth there.

And then lastly, NX1 with your large French operations, are you seeing what -- is that #2 or #3 benefit you said in the quarter?

Correct. Correct. Now I don't want to make too light of it, but they basically say no, you need to provide sterile products. Well, it's not change of the world. It's just some customers, as a result, decide to go more towards higher-value solutions.

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

Hi, everyone. Good morning. Thanks for the details. My 2 questions. First of all, certainly, you've had progress in your non-pharma business operationally over the years you've been doing really quite well and closures better than we would have expected a couple of years ago. props to you on that. Beauty, we certainly recognize the challenges that you've been managing against yet the margin still seems to be slow to come around, what is the next 2 or 3 steps that are going to drive higher margin in beauty?

When should we expect that inflection? And then Separate question. Just as we think about the pharma business and the product side and recognizing you love all of your kids and you have a tremendous suite of products, and that's the reason why you've been able to grow 7% or better over the years. Should we expect that unit dose has been where you're seeing most of the product activity recently. Just seems like that's the case from your slides even today and some of the commentary the last couple of quarters. How should we think about that?

Sure. Thanks for recognizing the progress, George. I take any complement I can get. And especially for closures, I would say that #1, 2 and 3 for beauty is volume. But clearly, we're never done with the productivity story. We have significantly strengthened the competitiveness of the footprint. We see that now flowing into project activity, including leveraging our very agile China footprint for rapid prototyping, small volume launches and so on. So that makes us quite confident that the volume is going to come.

Number two, it's a regional story. As we've discussed, Europe is already well in its target range. Of course, it's a global target, not a regional target, but nevertheless, China is also doing well, where we currently held back is North America. We talked about [indiscernible] essence, our Fusion PKG business that serves India brands with a significant customer having issues.

And then overall, of course, innovation continues to be a key driver in that business. And again, with a more competitive infrastructure. that gives us confidence that, that business will grow.

Now on your second question regarding our kids, yes, units is important. So especially also for a lot of those things in the pipeline, for additional indications. I mean, I mentioned the 1 to treat edema. And I think tachycardia is not much far behind. But we also have other formats. Of course, SPRAVATO is a good example. It's the Bidose that supports J&J's ramp up. And we have large-volume powder inhalers and many other formats. But clearly, emergency medicines, which is primarily Unidose relatedly grow in the last couple of years.

Stephan, if I could just get a clarification point on volume in beauty. Did you see signs of destocking in your customer base in the quarter or looking at the fourth quarter, you don't have to go into great detail. Just curious, yes or no?

Not really. I think there's more of -- keeping the powder drive for next year. Customers really managed their year-end inventories. We actually see the encouraging signs for quarter 1 order entry as opposed to destocking.

Your next question comes from the line of Matt Larew from William Blair.

I wanted to ask about I wanted to ask about growth expectations for the Pharma segment. So over the last kind of 12 months, core sales growth has been about 3%. Obviously, you've been dealing with the cough and cold destock, but it sounds like you've had a benefit from higher Narcan sales given that, that was 7% [indiscernible] medicine as a class was 7% in the first half of the year.

So as you think about kind of the more medium-term period, understanding you're not giving guidance, what's the level of confidence that 7% to 11% absent the right moving part is still the right range given that, again, it's been several quarters now since you've been at the low end of that range?

Well, first, let's acknowledge 7 to 11 is our long-term target range. It's not a quarterly conceptually not in the yearly number, so a long-term target range. We've been in that range for many, many years. There were some years where we have not been in that range, but I think everything we went through in September, what we have in the pipeline, the growth that we see coming out of the pipeline with launches, the injectable growth, active material growth, the lapping of consumer health care, European cough and cold as Ghansham calls it. All of these things are contributed to growth.

Of course, the emergency medicine situation we described this basis we could -- can get us the visibility perhaps into the middle of next year. So nothing has changed about the attractiveness of our pharma pipeline, about our pharma business, the pharma markets. And yes, we just reaffirmed the 7% to 11% growth rate in the Investor Day as the long-term target. So no reason to change that. .

Okay. Very good. And then, obviously, from a capital allocation standpoint, the balance has been towards pharma in recent years. And Stephan, you alluded to the validation of some equipment bringing on new capacity. As you're starting to ramp your injectables capacity and now thinking about the next level of capital investment, what are the areas that you think are most interesting? And at what point do you think from an injectable standpoint, you will need to start to think about broadening capacity again?

I think we have quite some time with injectables. You may remember, I just respectfully called the large boxes. We've built 3 large boxes. There's a lot of equipment we can put in that box in injectables, and to creep capacity as needed, and those are much lower increments. So we don't foresee a next large increment for quite some time, certainly not on the books.

Your next question comes from the line of Daniel Rizzo with Jefferies.

Just with the Narcan with the emergency medicine, is there a significant margin difference between that product and others? Or is it kind of just along with the rest. I was just wondering how we should think about that effect on hopefully this year?

Dan, I did mention that in my remarks, there is a significant margin differential. I mean, as you can imagine, emergency medicine being a high-value, life-saving product with high regulatory requirements, quality requirements, et cetera. These are very high-value products to us. So certainly amongst the highest of our margin products within our overall pharma portfolio.

I can't give you specifics. As you can imagine, we've got competitive reasons not to share that publicly, but you kind of think about our overall pharma portfolio, this is amongst the highest of the margins.

8 I'm sorry. I must have missed that. I understand you talked about volume and mix. How does pricing work on an annual basis? Is it generally like a 100 to 200 basis point tailwind -- just -- I mean, across the board, I'm just wondering how that kind of plays into the things versus -- also versus -- I mean, some of your costs, which are generally not kind of called out, but I was just wondering how we should think about price versus cost?

Yes. Clearly, pharma is about value and use pricing. So price is not very much related to cost. -- the material content is in relation to the other value added, whether it's quality systems, whether it's data packages, additional services completely different mix than in our consumer-facing business.

So the one addition I would want to add to Mary -- to Vanessa, sorry is that -- it's really our Unidose system that is quite attractive. It's not just limited to Narcan, -- it's across the board in our Unidose system, as our Bidosystem, clearly, anything that is life-saving and central nervous system targeting is more profitable than an allergic unites business, of course.

Your next question comes from the line of Matt Roberts with Raymond James.

Can you all hear me?

Yes.

On the emergency medicine again, I'm just trying to square some of that commentary with a customer and emergency medicine. It seemed like Narcan was down, but sequentially improving, and I noted some international potential and broader market growth. So are there other categories within the emergency medicine that are still growing? And if so, how much specifically is Naloxone expected to be down and maybe into '26. What gives confidence in the second half recovery and any market share changes or shifts in that category at all?

Yes. Matt, we don't break down different indications or SKUs within the emerging amazing category, but things like neffy, things like hypoglycemia, vaccine are also in the category. The I don't know what customer you referred to, but maybe there's 1 publicly traded customer is pretty important. You could look at the balance sheet and the inventory. I think that will be a big part of the reconciliation you're looking for.

Yes. Yes, that's exactly right, Matt. They are -- they did express some optimism going forward, which I think actually validates that things will improve. But as we said in our commentary, there is inventory in the system. So they'll have to work through -- customers will have to work through that inventory situation.

All right. That makes sense. And maybe on Personal Care, that's seen mix. It was up in beauty, closures was down. Home Care, I think it was down. So given some mixed signals there and another publicly traded peer recently called out sudden inventory corrections in those categories. maybe just broadly, what are you seeing in those categories? Or what are customers saying in regard to inventory levels heading into 4Q, recognizing that they are smaller contributors overall in Beauty and closures?

Sure. I mean we obviously separate what is accounted for in beauty versus what is accounted for enclosures. Those are different formats and sometimes customers switch between these 2 formats, and we try to catch as much of that as possible. I don't hear a lot of noise around inventory or destocking in personal care. It's more of a rotation in format and sometimes the pulp side wins and sometimes the closure side wins. It's different by customer. I'm not sure if we can call out a trend there. .

Your next question comes from the line of Gabe Hajde with Wells Fargo.

I just want to make sure I'm doing my math right. Are we sort of implying maybe a $40 million to $45 million revenue headwind associated with what you called out specific to the emergency response medicines in H1 '26?

Well, we gave you a lot of data points. And I think if you sort of work through the math, again, if you think about 10%, 11% of pharma, 5% of the company, 11% of pharma, declining 35% year-over-year. It's a slightly bigger number than you're coming up with, but I think you can get to the same ZIP code -- 11% declines at 35%.

Got it. I guess I appreciate it's tough. I don't open mic like this. But -- as it relates to the, you called it out Stephan, is that a product line that you're currently supplying to? Or does the litigation prevent any sort of outside sales of that product? Like is it sort of progressing as normal commercially until there's a resolution.

The best of our knowledge, we are supplying all of that product. It's the only 1 that has the 99.999% proven reliability. And of course, we serve our customers with that, and in this case, ARS, absolutely.

We have a follow-up question from George Staphos with Bank of America. Please go ahead. .

First of all, on DNA, Vanessa, you called out the 75% to 80%. Just from a modeling standpoint, should we be carrying that forward for the next number of quarters? Or is that just a onetime kind of step up because of...

Yes. So the thanks for the question, George. And we would as we put out our future quarters, we'll provide more clarity around some of this. But you did see a bit of a step up because we're now going to be amortizing or we are now amortizing the intangibles from BTY. So that was the reason for the step up. So it's essentially a new run rate. So if you take sort of the midpoint of the guide and annualize that, I think you should get pretty close.

Okay. Very good. The other question I had for you just back to emergency medicines, and we appreciate all the detail that you've given us. No guarantees, no guarantees in life. But if it plays out as you expect -- are we back to sort of the more normal growth rate into 27 after the step-down in '26. And I think you said low single-digit growth on a going forward basis. I just want to confirm that.

Yes. We don't guide for '26, we are sure don't guide for '27. But based on what we've said, I think that is a fair interpretation George.

Yes, Stephan, I wasn't asking you to guide. I was saying -- I just want -- are you -- is the assumption that you're done with the destocking in '26, no guarantees and then it's more normal going forward. And you said -- and would you say the growth rate normal.

Yes, I said low to mid-single digits. In my opening remarks, the one additional uncertainty that I hate to throw on you is, of course, that's assuming normal government funding levels. Now we've just -- the reconfirmation in September that this is a supported product by the government. And of course, the opioid overdose settlement money is readily available. So of course, those funding sources are turned off, then it will be more difficult environment. But I wouldn't expect that for a light saving intervention that has been proven so successfully. And then do interpretation would be my interpretation of what we're seeing.

There are no further questions at this time. I will now turn the call back to Mr. Tanda for closing remarks. .

Thank you, operator, and let me just summarize and zoon out of it. Our teams delivered another solid quarter with adjusted EBITDA growth of 7%, continuing our well-established record of expanding the bottom line at a faster pace than the top line.

While we do face the uncertainty, we discussed at length on the sales trajectory of emergency medicine, we hopefully were able to give you progressive insights that we gained ourselves since Investor Day that confirm the temporary nature of this headwind.

The fundamentals of our pharma business remain highly favorable with an attractive and growing project pipeline, a steady stream of new launches, leveraging the nasal delivery route for exciting new indications. We talked about edema. And at the same time, of course, our injectable business is now taking full advantage of a booming market with our state-of-the-art capabilities.

Our novel innovations and decades of experience drive a significant body of intellectual property, including patents know-how and trade securities, which we protect vigorously.

Now as we look towards 2026, beyond the emergency medicine topic, we see solid growth in the other parts of our Franna business and are receiving some encouraging signals from our consumer goods customers, including in fragrance and beauty at large. So given the strength of our performance and our strong balance sheet, we have and we will further accelerate capital returns to shareholders, underscoring our confidence in the business while retaining the strategic optionality of our capital structure.

With that, I look forward to speaking with many of you in the coming weeks. And should we not speak before then, let me wish you already now a restful Thanksgiving in the U.S. and the holiday season around the world.

With that, operator, we can now close the call.

This concludes today's call. Thank you for attending. You may now disconnect. Have a wonderful day.

Good morning. My name is Mary Skafidas. I head up Investor Relations and Communications for Aptar, and I'm absolutely delighted to welcome you to Aptar's Investor Day 2025. So I am just going to first stop on our Investor Day tour, of course, our disclosures page. This is for our General Counsel. It's up there. Okay.

I just want to take a few seconds to give you some background on Aptar for those of you that might not know us as well. So Aptar reports in 3 segments. At our core, we are a technology company, our innovations, shape markets through our proprietary Drug Delivery and Protection Technologies through our Pharma segment, our Precision Dispensing technologies through our Beauty segment and our Dispensing Closure segment. While we report in 3 segments, we actually serve diverse and attractive end markets. On this page, you'll be able to see our revenue and adjusted EBITDA by segment and also by end market.

Our proprietary Drug Delivery Systems for the respiratory ophthalmic and dermal delivery route is our largest end market. We are global. That is not an understatement. Our customers and operations span the globe. Europe represents our largest revenue base as well as employee presence and our customers really are the who's who of the pharma and CPG industries. This is just a few of our innovations from our Pharma segment, and Pharma enables many delivery routes, you'll be able to see some of those at the pharma innovation table following the Q&A. And for those interested, we have a few lingos which have our active material science technology within it. This is, if you want to monitor your glucose levels because you want to get healthier. We have a few of these for you.

Now the same innovation and reliability we use for our consumer end markets, you'll be able to see some of our new technologies over here in our consumer innovation after the Q&A. And I want to remind you that the products in front of you are water bottle for closures, eye care, eye care is not a statement for anyone. It's just new on the market. We wanted to share it with you. We think all of your eyes and under eyes look wonderful. Theraflu, which I am using because allergies are alive and well this time in the U.S. and, of course, Armeo to add a little flavor to your water.

So last but not least, our executive team. They're all here in the front row. You'll be hearing from many of them throughout the presentation. You'll have a chance, if you're here in person to be able to mingle with them during our innovation display and also during the lunch, and our schedule for the day.

So of course, you'll be hearing from our CEO and our CFO, the heads of each of our segments, and we're also going to do a special deep dive proprietary Drug Delivery Systems. So now without further delay, I'm going to introduce our CEO, Stephan Tanda, who will walk you through our relentless pursuit of profitable growth. Do you want a glucose monitor?

All right. Good morning, everybody, microphone on, just checking. All right. Special thanks for making your way to New York, whether it was across the country or across the street and also a warm welcome to those who are joining or listening via the webcast. So whenever we talk about the company, these are some of the themes that you are interested in, that we're discussing, of course, we serve highly attractive end markets that are advantaged from a demographic point of view, over the decades. We are innovation leader, driving constantly towards a richer mix, higher value profile of the business. And in recent years, really doubled down on operational efficiency, productivity, cost management, capital efficiency and we're proud of what we achieved over the last few years.

For more than a decade, we've been the sustainability leader because it is good business. It's also the right thing to do, it is good business. It enables our customers to drive share win markets and win over consumers. And then, of course, you are here because you know our strong balance sheet gives us strategic flexibility and peace of mind, it also does that for our customers who deal with us for many decades in developing and growing products. Now when you summarize it all, that kind of brings us to our value creation framework that's -- those are the 4 points listed here at the top.

Leading position in key categories, technology innovation leader, driving differentiation, of course, very deliberate capital allocation towards the more profitable, faster-growing businesses, strong operations and productivity management and the balance sheet. And in case you've missed it, we reassured your last night that we are raising the dividend again this year with an almost 7% increase. 2 years ago, these are the targets we discussed. We had raised the ROIC target and the EBITDA margin target. And here we are 2 years later, and we're very proud what the teams have achieved, with increased margins and return on invested capital as well as a growing dividend.

Now let's peel back the onion a little bit more. This is kind of looking back over the last 2 years, revenue up 8%, 3% core sales growth on average, significant EBITDA growth, almost 50% adjusted EPS growth over the 2 years. And you see the rest of the year returns up 40%, free cash flow up 87%. Again, the team did a fantastic job. Top team is here upfront, and they all will be happy to answer your questions later on. Of course, the Pharma growth is a significant component of that, but not only, and we've returned significant funds to shareholders.

Now let's talk about the first half and Q2. So first half, of course, growth a little bit slower, but EBITDA grows 8%, EPS grows 8% and within the long-term target of EBITDA margins. And just following up on some of the points we made on the Q2 call. First, Narcan or Naloxone distribution. Recall that this is a very unique set of circumstances. We had the originator, adapt or emergent biosolutions and then a rapid succession of generics coming in, a handful of generic players and getting OTC approval that allowed the states to procure directly. There was a massive filling of the pipeline of end users and also the generics getting ready to compete for them. So of them thought, of course, they will get the lion's share, not all of them did. So there is inventory in the chain. So we see customers pulling back.

Now in Q2, we had just picked up that the administration is not in favor of all these [indiscernible] strategies. But since then, it has been clarified by the administration that, that does not include Naloxone. The administration fully supports Naloxone and we'll continue to fund Naloxone of course, most of the money anyway is at state level and from the opioid overdose segments. What they don't like is needle exchange programs, shelters and all that. But Naloxone is supported. That doesn't take away the whole supply chain pile up and the in-transparency of how much is there, where the inventory levels are. But certainly, it will take some time for Naloxone sales to normalize. Then I want to remind you that the Injectable teams has hit their stride with product sales. It took us some time to get the factories up and running, get the equipment fully validated, but we feel very good now with high single-digit, low double-digit growth rates from a product sale point of view, in Injectables, of course, also supported by the GLP-1 growth.

Cold & Cough is kind of our COVID pendants to pay, so to speak, we think that will normalize by Q4. But of course, our Consumer Healthcare business is much broader than that continues to develop very nicely. And then the legal fees. So intellectual property, confidential information is at the core of what we do. Remember, everything we sell is our own creation is our own intellectual property and regard that vigorously. And every once in a while, there is a need to defend it. We've done it in the past, but it doesn't happen every year. But when we do it, we go all in. And that's what we've disclosed to you.

And as a shareholder, and I'm also a shareholder, you got to look at this really as an investment in future revenue and profit streams to defend our intellectual property. So our batting average in legal is pretty good. So this is a very clear investment to make sure that our intellectual property is safeguarded.

Now talk a little bit how we see the next 5 years or so unfold around this profitable growth journey. Of course, we start with Pharma. You will hear Gael and Alex talk more about our pipeline. The pipeline continues to grow. And you should think about, on average, the pipeline adds about 7% to 10% of revenue every year. Now that doesn't sit very much. But you got to realize and you do that this is not innovation that adds or replaces previous products. We are not in a business where you have these product life cycles where the next one's got to replace the one that fell off. Basically, our revenue stream in Pharma for the most part, is a growing perpetuity and the innovation is on top of that. And that is because of how we work with our clients, to have our combination medicines in the drug master file, and it's almost impossible to dislodge them.

Second, I already talked about Injectable growth. The team is hitting its stride. We got plenty of capacity headroom. So we see good growth in Injectables. Then a little teaser, Alex will talk to you more about what we -- the kind of indications and allocations that we see in our pipeline developing. And that's really exciting. Everything from cardiovascular or emergency treatments for heart issues to central nervous system drugs there's so much in that pipeline that makes us really excited about the future. And of course, our Service business, including digital, reinforces the moat around all of these businesses because it gets us in the door very early, it gets us in the door at the sea level and it ensures that the pipeline keeps filling.

Closures is doing very well. That reorganization that we underwent 2 years ago has paid off and is paying off by strong growth and good innovation traction. And then, of course, Beauty has lowered its cost position, has lowered its breakeven point, at a very competitive footprint now, and we'll be leveraging growth with that position. Then for an operations efficiency and cost management. These muscles are now trained. It's part of our culture. And when that is the case, you continue to have ideas. -- whether that is more global talent center use, whether that is more automation, and we have further room for automation or just plain old cost management.

At the end of the day, what this does, it forces the organization to focus. If you're the innovation leader, you tempted to do everything for everybody, but that's, of course, not good business. So this cost focus is productivity focused, make sure we focus on the best opportunities. And then last not least, of course, clean eye on shareholder returns on strategic capital allocation in bolt-ons. Bolt-ons is really our sweet spot. Our M&A track record is very good, especially the bigger ones, and that allow us to build and complement our organic growth with M&A growth.

Now this is the slide you're all waiting for. What about those targets? So a little legend here in light green is the targets we changed last time or raised last time, raising the growth target for Pharma by 100 basis points and the adjusted EBITDA margin for the company. And we also raised the ROIC last time, given the track record, given the productivity we are raising our ROIC target again by 100 basis points to 12% to 14%. The execution plan of all this is, of course, guided by our strategic priorities, that have been around for quite some time. You will see them at all the plants on the wall and basically reporting that we execute on the value creation model.

Now let's double-click on each of the value creation drivers with some additional information on the key elements of that. Number one, on the growth. Let's remember that delivery of drugs through the nose is a very recent trend when you talk about Pharma pipelines. Given the time the Pharma project takes 6, 12 years. We do now see the pipeline exploding with that. You'll hear more about that. And we see in general, nasal drug sales continue to grow at, at least 7% over the next 5 years. Then a trend that you all know well, acceleration in biologics. We find ourselves having now very good cards in that game, having high-value products, shifting the mix on par with the industry leader and, of course, underpinned by all the obesity drugs and diabetes drugs.

Allergies are not going away. In fact, that is a continuously growing franchise and many more combination products. Allergy seasons keep expanding in time. And as more people join the middle class, they also have more access to these medications. One trend that we did not talk in detail before is the emergence of decentralized health care which basically means they send you home or hospital and you need to deal with it yourself, self-care, at home, self-care, in community health centers and online virtual platforms. We are very well positioned with our devices to take advantage of that trend. And that really also drives, again, the pipeline as our customers want to participate in healthcare that way. Let me stop for hydration.

On the consumer side, it's all about category conversion. And we are running out of categories to convert there are plenty more to convert. And then, of course, you have the geographic growth aspect that we'll come back to. Here are just some examples. The soap skin care -- and you will hear a lot more about all of these. But even if the category you're dealing with is a category that [indiscernible] GDP maybe doesn't grow, maybe even the clients like infant nutrition, if you convert large categories, you drive a lot of growth, and that's really the growth model for our consumer-facing businesses. And that is enhanced with our sustainability leadership.

At the end of the day, our -- we enable our clients to drive preference, to gain share and consumers prefer solutions that are not only great solutions, but also are manufactured in the right way and are sustainable. In addition, of course, it's a great retention tool for employees. But our sustainable leadership enhances all of these innovations. Now let's talk about geographic growth.

As Mary showed you, we are active around the globe. It is in our genes. Everybody here, a significant international experience. And we've even more come to appreciate our in-region, for-region supply chain philosophy. That is not new. We've been in Asia for 30 years, but it's always been in Asia for Asia. The same in Europe and the U.S. that also means we have great leaders in those places who really know their markets and that allows us to drive geographic growth. We've got [indiscernible] now in the Middle East, with gulf Closures in Bahrain and [indiscernible] in Turkey, pushing more into Southeast Asia. And of course, we've made tremendous progress in large markets of China and India, with not only significant growth but also substantial portability. Let's talk about technology and innovation.

As

a reminder, we report results if you want, in the vertical columns. But the business is evolved really by technology platform, whether it's [indiscernible] pumps, whether it's airless technology, whether it's bag-on-valve aerosol, and that is because we share common technologies across the company and all of you know, our [indiscernible] business was built organically out of the Beauty business. It's leveraging these technology platforms. And on the next 2-minute video indulge me, you'll see all the common technology platforms that we practice, of course it's injection molding, very precise injection molding, small parts, all tracked with our manufacturing execution system and then followed by high-speed rotary assembly. Here are just some examples is a nice spin stack tool in Pharma for injection molding, some needle shields, and then, of course, it goes through the segments.

Then our high-speed continuous motion rotary assembly, sometimes they tell the story. Elon Musk says "we discovered high-speed motion high speed continuous motion at rotary assembly. We've done it for decades. It's 500, 600, 700 parts per minute, across the company. And then AI assist division system-based quality control, again, across the company. And increasingly, with more automation also in the logistics that bring product to these highly automated machines and take it from them. All made very interconnected and transparent with [indiscernible] manufacturing execution system. That allows us to bring improvements from plant to plant to plant in quick succession.

All right. Let's talk about innovation. 7,300 patents. We own the intellectual property of everything we make. It is a core tenant and we defend that intellectual property. And intellectual property is not just patents, it is confidential information. It is know-how. And that really drives the returns that drives the attractiveness of Pharma in Aptar, in general for our customers. We also have increasingly build up service, know-how, human factor expertise, you will hear more about that. It's really there are many different noses out there. There are many different hands out there. There are many different sizes. We have agronomic experts on how to optimize design and again, capability, we leverage across the company. Not all of our innovation comes from in-house. We collaborate very much with external universities and around the world and have innovation centers that we and customers to and co-create with them.

I invite all of you to visit one of our innovation centers, whether it's in Shanghai, whether it's Paris or up the road here in Connecticut. At the end of the day, we help our customers shape markets, create categories and win market share and then get small reward for that help.

Last, not least, sustainability. It is something that's in our genes. We've done for many years, more than a decade. And it is, of course, crucial for our clients to have recyclability, recycled content, refillable formats, reusable formats. It helps them win in the marketplace. What is, from my point of view, also essentially is that it underpins Aptar as a purpose-driven company. It helps tremendously to recruit above our weight class to attract people who really want to work for a company not only that makes great everyday products but makes them in the right way. So we are an academy company in our industry, it also means sometimes our competitors try really, really hard to get our people, but many people have come back to Aptar because of that, because the grass is not so green on the other side.

I will not go through all the accolades and awards, but that is, of course, nice, but it is a competitive weapon in the war for talent, and it's an important part of the company. Capital allocation. Of course, we have a keen eye on preferably investing in our higher returning and faster-growing businesses, especially Pharma, but not only. And keen eye on shareholder returns. Roughly about 70% of the capital is reinvested into the company, 30% is returned to shareholders in the form of dividends. And somebody picked 2017 as a base, I don't know why. But this is kind of the evolution of capital deployment, sales and EBITDA. And of course, there is a correlation there. We feel really good about all our businesses, but of course, optimize returns by directed and strategic capital allocation.

Now the dividend, very proud of that track record. And it's not that we are hyper focused on the dividend. Our payout ratio is 30% to 40%, and we're kind of on -- towards the lower end of that. But given the performance of the company, the Board felt really good of supporting us with another dividend increase that we announced last night. So very, very proud of this. And of course, it's the right thing to do.

Now let's me break our Board of Directors for a few minutes. It's a very well curated very effective Board deep experience in our industries. Seven of our ten directors have pharma experience, many of them have consumer product experience, regional expertise, whether it's Asia, whether it's Europe, for current or former public company CEOs, many of them in private equity. So very robust discussions, the right discussions whether it's about people succession, whether it's about portfolio, whether it's about investment, and we keep a keen eye on Board refreshment. Average tenure now is 8 years, but it's a highly -- and it's a highly, highly effective Board.

Also very proud, of course, of our executive team, not all will talk, but just pick Gael and Marc's experience in all 3 segments, multiple functions, multiple regions. Alex and Hedi experience in 2 segments, multiple regions. And that's, of course, coming from [indiscernible] industry, bringing a whole different set of rigor to the financial function and a whole lot of experience. So you're in for treat, and with that, I will hand over to Gael.

Thank you, Stephan. Checking the mic. Is that okay? Good morning, everyone. For the next 45 minutes with Alex, the Head of Pharma Prescription for the segment, we would like to give you a deeper understanding of Aptar Pharma and how our business model is generating great value for the ecosystem, not only for our shareholders, but also our customers and the many millions of patients using on a daily basis, one of our solutions.

My intention this morning is to give you a clear understanding why we believe we are a reliable value generator. We shifted our strategy some years back from a pure supplier of devices through our Drug Delivery Solutions to become what I call an [ indispensable ] of the industry. We partner with industry creating value with them during one drug development program through during their drug life cycle management program, but also during their patient engagement programs. And all these companies, one were with us because we have demonstrated, one, that we clearly understand the science behind the development of their drug products, all the way through approval. But they also want to work with us due to the fact that we clearly understand how a patient is interacting with their product. And this patient knowledge is key to drive patient adherence, the patient will stay the course of the prescription, okay? And this patient adherence is probably one of the single most important criteria to drive patient outcome and patient outcomes, better patient outcome, this is the quest for all the Pharma industry.

So let me now turn to part one. And part one is all about our building blocks for growth, our element of differentiation, and we're going to spend sometimes around our pipeline. And Stephan mentioned that in Pharma pipeline build and pipeline conversion, be critical. So take this slide as a kind of teaser sharing some of our element of differentiation. We are a leader in drug delivery devices solutions operating in a highly regulated space. We've got a solid and growing IP portfolio. Remember, we are not a contract manufacturing company. Everything we commercialized has been developed, manufactured by Aptar. We've had a pretty diverse set of portfolio with no dependency at all on a single drug, a single customers or a single technical platform.

Our services upstream and downstream, positioning Aptar Pharma as the partner of choice of the industry. Last, we've got a very solid balance sheet, and this balance sheet is giving us optionality to self-invest in our business, innovation, capability expansion, but also to look at inorganic growth. Take a moment and look at this broad range of Aptar Pharma portfolio. We've got quite a lot. I mean, from, I would say, Spray to Airless system to Injectable component to a Digital Healthcare Solution, Training Devices, and guess what, all those products are leveraging one of our many patents. We leverage for Pharma, Aptar Pharma over 4500 plus, proved our pending patents. And we have done such with a fantastic track record. I mean, over the last 10 years, we grew annually between 8% and profitability at 9%.

Let me now spend the next 2 slides to explain you, where we play and how we look at the market. This slide represents the total drug sales market. It's a $1.7 trillion growing in the 3% to 4% on a year-to-year basis. Somebody asked me this morning how much does represent CHG? Have been checking 15% of the overall Pharma space is CHG. And you've got the different routes of delivery. And Aptar is the leading company in the respiratory field in the ophthalmic space, in the dermal application field. It represent 11%, 12% of the overall market. With 43%, this is the Injectable route of delivery. This segment is growing way faster than the overall segment, the overall market, in the 8%, 9%, some of the categories are even growing faster. We are in a way newcomer in that space after the acquisition in 2012 of Aptar Stelmi, we are a component player. We don't come over those, but we've got a critical component player. You're going to find us with our stopper on multi-dose vials within PFS, prefilled syringe with our plunger, our needle shield protection. Our market intel is telling us we are the #3 player.

With 45% of the overall market, this is the oral route of delivery, solid or liquid forms. There, we are really a new player after the acquisition of CSP back in '18. And Aptar CSP is only focusing on sensitive drug, how to better protect sensitive drug, biologics, GLP-1, peptide, [indiscernible] acid, mRNA type drug development. Aptar CSP has been the largest acquisition of Aptar and is generating an annual growth rate of 10% for 8% reported EBITDA. This is the same view, but this is the view of our addressable market, the Pharma packaging market. And if you look on the left-hand corner, you see $165 billion. So it's a pretty sizable market. And we believe this market will keep on growing at a 7% year-over-year basis. I'm going to spend a little bit of time on those building blocks for our growth.

On the upper left corner, this is our pipeline. Pipeline build, pipeline conversion. We've got a strong pipeline and growing pipeline. And pipeline conversion present in the 7% to 10% of our revenue, meaning that of our growth is coming for repeat growing orders. On the far up left corner, the converting story. It's not only in CPG, it's also in Pharma, and in Pharma, we are converting drugs to new route of delivery. The Naloxone example was first introduced in the market back in the mid-70, '74 with an injectable drug delivery device. We are now dispensing Naloxone, the molecule through the nose. [indiscernible] for glucagon for severe hypoglycemia patient, same story. Neffy Epinephrine was the [indiscernible] pen approved by the FDA last year, last summer through the nose and many others. We convert drugs through our new delivery platform. And the best example is one of the products you've got on your table with a customer called Helion. Helion is one of the largest consumer health care player in the market and Helion introduced our newly innovation from CHG, from our consumer health care that we call LCS Lateral Control System. That's a push button. So we help Helion in their life cycle management to convert from a traditional vertical stroke pump to push button way more comfortable for patients on their daily usage.

We converted for non-present formulation from [indiscernible] to our multidose [indiscernible] solution that we call the OSD. That's really the essence of Aptar format, convert markets. On the bottom left corner, this is really the large investment we've done for the injectable divisions for high-value products. The premium code for biologics, for example, but not only because we have invested a lot in capacity expansion to get our presence and footprint in the U.S. and China, but also through improvement of our processes. High-value processes to really match regulatory requirements.

Our services is really supporting the customer to accelerate and derisk their pipeline. And our patient engagement expertise is really giving us the ability to deeply interact with our customers. And remember, better passion outcome is really, really what all pharma companies are looking for. So how patients behave with the drug? How are you going to onboard a patient? How are you going to remotely monitor that patient is front and center for our customer strategies.

The next slide will be about our pipeline. So we shared already the 7%, 10% top line coming from pipeline conversion, so 90% coming from repeat growing order. We've got a very disciplined way of looking and managing our pipeline. So a very disciplined one. And in the last years, we did 1,200 launches with one of our proprietary Drug Delivery Solution. It's a lot, a lot of activities behind, and in very different TAs, therapeutical areas using one of our solutions. But I'm going to let Alex later on to give you more detail about the quality of our pipeline and more specific around different tiers.

This slide is the one that we are keeping sharing. Our pipeline is healthy, has been growing in the last years by 54% in terms of derisk value of the pipeline, and we've got plus 46% of new opportunities in the pipeline. And why such? Because we are navigating the ecosystem. We are supporting our customers in the early stage of their development, all the way through approval, but even during their remote monitoring for their patients.

That's a new slide. And this one I'm going to spend some time on. That's a real example of a nasally delivered drug leveraging one of our drug delivery devices. I won't share the molecule, the name of the customers behind, but that's a real example. If you closely look at the first time we introduced that drug, with one of our solution that was back in '94. 31 years after, we continue year after year after year to generate revenues. If you look precisely that a 30x increase in revenue since '94. Why? Because we have been the drug delivery partner with the originator when they first introduced that product to be delivered through the nose. Then during the life cycle of that drug, it moved with generic company. Guess what? We've been the drug delivery devices partner of this transition. And years after, branded companies and generic companies, they went OTC. And guess what, we are the drug delivery partner for this transition. That's the beauty of the Aptar Pharma model.

Our pipeline is not only delivering new launches on a year-over-year basis, but it's also a long-term contributor.

Next part, Part two will be all about our strategy and our chosen strategy. First, we spent tremendous amount of time to really understand market trends, having a real impact for our business. Then we dug deeply into the -- our customer strategies and the way we called [indiscernible] support them during either their drug development program, their life cycle management program and where they interact with their patients. As in response, we build a very, very unique value proposition. We build or we acquire assets so that they match exactly where Pharma companies need their partner. So we develop, we build new capabilities and new experiences in such a way that they really answer to the need of our customers during their different programs.

In response, I believe we've got a unique value proposition built around front formulation to patient journey that is, I would say, one of the best value proposition in the market. And this one we'll keep on delivering the term target. But let me first, in the very first element you need to remember. If you want to understand our Pharma business, in the space of drug delivery devices, you need to remember first things. Number one, market trends and market trends for us are really supporting our value model.

First, small size, midsize companies are the one going through approval. In most of the cases, 63% or 65% of all approvals on earth, are coming from a small-sized company, midsized company. They don't have the breadth of experience of the big pharma co, and they are looking obviously for the right partner to support them. On top of the small midsized company on a worldwide basis, regulatory complexities are just keeping increasing year after year after year. And to navigate such complexity, we believe we are well positioned to support our customers. So you combine one and two -- you understand that we are playing a different role with our customers, not only through our product solutions, but also the way we support them during their development.

Second element, you need to understand it's how you build a moat to give you the ability to be considered as a long-term partner to the industry. This slide represents the drug development process, the different many steps from early-stage formulation development up to a market launch and post-market launch. And the gray bar, the vertical bar, where it's written core business, this is where we started from. This is where we are recognized with our solutions. And we enter in that process at the manufacturing stage. They need a system to dispense the drug. That's where we started working with them. Looking at the way they are developing their programs, we've decided to come as early as possible, work with them during their formulation development.

And that's why we went to acquire a company called Nanopharm Nanopharm being a CRO, contract research organization, specialized for any formulation to be delivered through the nose or through the lungs. Once they develop the formulation, they need to generate data. They're going to do early-stage validation. They're going to go to Phase I, to Phase III and so on. You need to give them the right analytical support for them to face the regulatory bodies to get the approval. We have done the acquisition of a company called Getway. We've done recently the acquisition of a company called [indiscernible] giving us that ability to provide them the right support from an analytical standpoint, up to the ability to supply samples for their Phase I and Phase II clinical testing. Then we strengthen our regulatory capabilities because they're going to be facing the many regulatory bodies on a worldwide basis.

Obviously, we've got our product, and the sooner you are in the development process, the sooner you can spec your product, obviously, and we provide them support later on once the product is on the market. Number three, you need to understand how patients behave with your product. So we've decided to put the patient at the center of everything we are doing. Why such? Because you need to support our customers they look at the user experience, how am I reacting, interacting with a new drug delivery devices? Is it easy to use? Is it complex? What about the instruction for use, but you need also to support the pharma company that they onboard a patient for patient adherence.

But once you're at home, alone, facing your new drug delivery devices or your prescription, you need to provide remote monitoring supports. That's what we are doing. So that our value proposition by now is really from formulation to patients, to be the partner of choice of your drug delivery device and solutions. We move to the next part, and I'm going to call Alex to join me. We're going to have a deep dive into each of our divisions. We've got four divisions in Aptar Pharma. And Alex will cover first what we call the proprietary Drug Delivery Devices. This is a prescription and the CHC world. I will come back then to speak about injectable, Aptar Active Material and the digital and patient engagement capabilities. Okay. Alex?

Thank you, Gael. Good morning, everybody. My first time presenting here at the Investor Day, I think I've met a lot of you through different visits, and interactions, but happy to be here with you today.

As Gail said, I'm going to talk to you today about proprietary drug delivery systems, which is not actually an operating division of Aptar. Internally, we're actually organized under the prescription division, consumer healthcare division. An additional nuance there is that over the last decade or so, a lot of the products that were prescription-based have been transitioning to the OEC market, especially here in the U.S., all of the allergy drugs, almost all of the allergy drugs that have become quite popular. Narcan that we'll talk about soon has also transitioned over to the OTC market. The important thing here is that when the FDA authorizes a product to switch OTC, they continue to regulate it in the same way that they regulate through prescription products, no difference whatsoever.

So for us, it means we have access to broader customer base, increased volumes, but we continue to enjoy also the regulatory hurdles that are known for prescription basis. So in terms of the percentage of Aptar sales, the 2 divisions combined account for about 72%. I was going to talk about proprietary because that is important for us. A lot of our competitors. A lot of our capabilities would allow us to make devices for other people and that's a request we get on a regular basis, but we choose to manufacture only our own IP, our own devices. This gives you an overview of the breadth of the technology platforms that make up proprietary drug delivery systems. At the heart, at the origin of Aptar multidose nasal pumps and MDI metering valves were the core aspects of our Pharma beginnings.

Interestingly, both of those product lines originated from our Beauty. Those pumps used to be delivered, used to deliver fragrance somebody had the bright idea to flip the spray from a horizontal one to a vertical one, and the nasal spray was born. Same thing with the metering valves in the pressurized container also used to be used for fragrances. It was flipped upside down. It became an asthma inhaler. So our beginnings, going back 30, 40 years, really started with those technology platforms from our Beauty segment. Over time, obviously we've gone beyond that. This also shows you the delivery routes that each of those platforms covers. So you see a lot of nasal there. We're going to talk a lot about nasal today, a little bit about pulmonary as well, topical transdermal delivery systems that we don't often talk about, but that are also borrowed from our Beauty colleagues. And then finally, the [indiscernible] squeeze dispenser for eye care, eye delivery. So basically, we're covering here all of the different delivery routes that are not included in injectables and orals. Those are handled through other divisions.

30-plus years of experience and know-how. We're really -- we were the pioneer of this market and continue to be the leader by far today. I'm jumping straight into emergency medicines and more specifically Narcan. Stephane and Gael talked a little bit about those, but there's been a lot of chatter about that business and whether it's still growing for us. This is a very unique drug Narcan, naloxone in particular. Unless you've been living under a rock, you know that there's been a significant opioid crisis here in this country. Naloxone is an old drug. It's been around for decades, being given intravenously. First responders discovered that at some point, if you just mix it differently and put it into a Windex bottle spray it up your nose, it's actually quite effective, faster and easier to deliver to patients. So over time, it was used more and more through the nasal route even though there wasn't an actual approved product for it.

One of our customers Adapt now called Emergent actually developed an approved pharmaceutical product using our device technology. For a while, the first couple of years, this product was a nice product for us, but nothing special, of sun post-COVID, opioid death exploded to the point where it peaked in 2023. 100,000 people per year were dying of opioid overdoses. And so this became a very politically charged high-priority issue. Narcan is literally a miracle drug. If you look up on YouTube, you have people that are dead flat on the ground. They get one spray up your nose within a minute or 2, they're walking around. So it's quite a very fast-acting and effective drug. The FDA and politicians decided that there should be Narcan Naloxone available everywhere. They approved generics, it was switched to OTC, and so all of a sudden, all of these channels were filled, they wanted Narcan to be available literally everywhere.

And so also, we enjoyed significant growth. What we're saying now is that there's going to be some normalizations to that business. I'll talk about some of the other nasal drug delivery products that we have out there. But what makes this one particularly special is not just the financial or economics of it. But the first year that Narcan was available so widely over the counter. We saw the first drop in deaths from about 100,000 people per year to 70,000 people per year. So that's something that we're enormously proud of. When I started, there were nasal delivery was for congestion and allergies. And now we're literally saving lives. There's been millions of doses of Narcan given just over the past few years. and easily several hundred thousands of people are alive today because of this drug. So something we're very proud of.

But Narcan is just one of the drugs that's in our portfolio. I've listed here a couple of drugs that use similar delivery systems and that go through the nose, but to treat conditions elsewhere in the body. Most of these drugs here have been launched in the past couple of years to treat migraines to treat epileptic seizures to treat depression to treat hypoglycemia to treat food allergies with epinephrine and so on and so on. These are much less known products, but nonetheless have been launched in just a couple of -- in the past couple of years and are just in their infancy and continue to grow nicely. Taking a bit of a step back to explain how we got there.

I see really three building blocks in terms of how we started, where we are and where we're going. A little bit of physiology the original drugs that were in nasal sprays were acting locally, you spread them in the nose to treat a condition in the nose. One of the products you see in that first green box is migraine. So obviously you spray in nose but the problem is elsewhere. The first inklings that maybe nasal delivery could be treated to use to treat systemic conditions. And that took time to take off. These migraine drugs have been around for 20 years. But bit by bit, there was a lot of research being done to the point where now we're seeing the explosion of what we call systemic nasal drug delivery, straight up your nose, and it treats a condition elsewhere. It gets into your -- it's absorbed into your blood stream. And so emergency medicine, CNS treatments, pain management, all kinds of things are now on the market and bringing growth in that area.

As Stephan and Gail accurately pointed out, our original building blocks continue to grow and grow nicely. You add another one on there, and that compounds the growth. What we're seeing in the future now. So we're going from to the nose to through the nose to now directly to the brain. And one area that we're very excited about is what we're calling nose to brain. The delivery of more complex, larger molecules and directly to the brain as opposed to going via the bloodstream. What do we mean by nose to brain basically, your brain is protected by what we call the blood brain barrier. It allows oxygen to pass through your bloodstream, but it tries to block everything else from getting in there. We have a lot of companies that are investing a lot of money trying to find ways to get drugs through this blood brain barrier. It's very difficult. What nose to brain seems to offer is a more direct pathway to get completely around this blood-brain barrier. And so if you can do that, there are diseases and conditions like Parkinson's, like Alzheimer's, that are today very difficult to treat because you can't get drugs to the right places.

We've partnered with Wake Forest School of Medicine. And again, at this point, it's not trying to prove that a compound treats a certain condition. It's trying to confirm that the pathway exists -- and by spraying something up the nose, you're trying to show that drugs are actually reaching parts of the brain where they need to go. And so the Wake Forest School of Medicine paper showed that they were able to develop imaging techniques because proving where they go is not easy and that they were able to reach critical areas of the brain using insulin in this case, but no reason to think that, that wouldn't work for other drugs. So as we start looking now at extending our pipeline with our customers into more complex areas like nose to brain, we also have to adapt our technology platforms. The traditional ones that we've used aren't necessarily always well adapted to be able to reach those difficult-to-reach places with larger, more complex molecules. And so we've been quietly acquiring or developing internally platforms that look from the outside, pretty similar to the ones we have today, but are actually developed to be more targeted to specific areas, deliver to specific areas are able to accommodate larger, more complex molecules, the big difference here is that the expectation in the future with these programs is not that you can take a drug and put it into an old off-the-shelf device.

The device and the drug need to be developed in parallel, and the two being adjusted at the same time. And so as Gael said, we've made acquisitions also with Nanopharm who have formulation technology. So we're helping our customers develop our drug. They come to us with a compound. We help them formulate it in a way that can be delivered to the right places. At the same time, we're also tweaking our devices to be able to do that. The acquisition that we made up here in New Jersey for a company called [indiscernible] will help us now go from the -- once you have the device and you have the drug you need to fill it and package it and put it out into clinical trials. And that's their experts and what they're able to help us with. So I talked a lot about the more highly regulated world of prescription drugs, taking a step back also now to talk about our Consumer Healthcare division. So there, this is a world that's pretty different from the patient-centric world of prescription drugs, and more into the FMCG type world and consumer-based innovation. Life cycles tend to be quite a bit. development cycles tend to be quite a bit shorter and faster, life cycles, they still enjoy quite a few years, if not case of life.

Otrivin, for example, is a pretty old brand. It doesn't exist in the U.S., but does in Canada and Europe. It's been revived by its owner, Helion, with a brand-new delivery system. I think you guys have boxes there on the table to use them. So a side button that's able to gently and quickly deliver a nice tight dose of the decongestant. So we're excited about this innovation. Ophthalmic squeeze delivery for us falls under our Consumer Healthcare division. Most of the products that were launched in Europe are over the counter. So here, the key is that if you want to use a eye drop in a multidose format that does not have a preservative. Most of our eye drops today have preservatives, and that's the thing, the bite that you feel when you put the drop in your eye. The only way that you can use a multi-dose container without a preservative is by using one of those ophthalmic squeeze dispensers.

Today, the alternative is to use those liquid unit dose vials and obviously creates a lot of waste as opposed to our reusable container. Following on that additional, recent innovations, we've got [indiscernible], which is a very convenient system to deliver a nice soft list, for example, to an infant. That product was launched just last year. So very recent, but the uptake on the market has been very, very positive. And then here, the futurity line of products, something else that we've borrowed from our beauty colleague who were on this sooner than we were. The idea is to have fully recyclable packaging for pharmaceutical products. And so we've had a nasal version of that as well as a dermal dispenser. Talk a little bit about the stickiness of our business and the regulatory hurdles. That's the important thing to retain here is that most almost all of our products are not stand-alone medical devices. They're part of what we call combination products. They get -- they don't get approved as a stand-alone device. What's even more interesting is that they are filed as combination products with our customers' submissions. And so they become inextricably linked to the drug product, switching out of that device to something else becomes complicated. Its always in contact with the drug product on [indiscernible].

The way that it's dispensed and delivered is also critical. So any changes that you make post launch, post approval becomes risky, costly and customers usually choose to stay with it throughout the life of the product. Even more interesting, when generic companies come along, they don't want to take any risk. So if we're able to, we supply the same device that the innovator or brand has and it derisks and accelerates their development time lines. And then with the advent of these life-saving drugs, we're now at an even higher level, what we call the [indiscernible] higher highest levels of reliability. The expectation is that they work every single time. And we like to say there's no such thing as zero defects, but this is as close as you can come to zero defects. And so the -- the agency is imposing these types of reliability on any life-saving drug. It's an exercise that starts with design, specifications statistics and calculations. So it's one thing to be able to show that you can meet this on paper, but Aptar is the only company that can say that we've got millions and tens of millions of units out there that have been used in these life-saving situations. And so we've got real world evidence to back up that fact. No other company can even come close to saying that.

And then rest of our pipeline. Now keep in mind, development times tend to be long. Yes, once we have a product on the market, it's there for decade development times do tend to take 5, 7, 10-plus years. So I always caution people when I talk about our pipeline, but the number of things -- these are all things and it's not exhausted, that is being work done by us and by our customers in terms of future pipeline growth at different stages of development. There are a couple of things -- and for example, in terms of cardiovascular, we've got 2 customers that are expecting approval this year, 1 for edemas to treat edema from congestive heart failure, another 1 to treat irregular heartbeat. So nasals sprays that are treating cardiovasculars. Those would be approved later this year. We're very excited about that.

Some of the things that you see there are MABS and mRNA Again, molecule that under the right conditions can't be delivered nasally. Enter directly to the brain or other parts of the body and quite a bit of research happening there as well. And then you see at the very top obesity. We've got one of our customers that published initial results just last week of a GLP-1, semaglutide in this case, the active ingredient for Ozempic. They've successfully shown that it is able to be spread in the nose and absorbed into the body. So we're quite excited with the future promise of how GLP-1s delivered nasally. And then finally, I want to leave you with this. You know that you've hit the big time when you're featured on South Park. And so those little devices are the ones that are used for SPRAVATO, i'll space you the story line, you can check it out yourselves -- but you've hit the big time when you -- or the mainstream when you're being featured on South Park. And that's it for me. Back to Gael.

Yes. Okay. After the proprietary drug delivery franchise, let's go through the Injectable divisions first. I mean this is a growing and strategic part of our business. This being said, that's 17% of the overall business. But a growing part of our business. We are a component [indiscernible], as I was explaining, I mean, we're supplying the stopper, the plunger, the needle shield protection, and we are the #3 player. We play in different application fields from biologics, to vaccines to small molecules, antithrombotics.

You know that we have invested a lot in that division right after COVID. The objective was really to enhance our capabilities and capacity. So we've got footprint in the U.S., in China. We've got now a technology called Premium codes, giving us the ability to supply our customers in their sensitive drug development, all the biologics behind. But not only this technical platform, we have invested a lot around our processes, and we are talking about Premium Fill and what is Premium Fill vision. This is the way to characterize within your quality specification, the level of authorized potential contamination. So we've got a very clear stabilization strategy. We've got a very clear production environment, for matching the regulatory requirements and to comply with. We are talking about the Annex 1 in Europe, and that's where we are fully in line with them.

What is important with this slide and what Aptar has done in the recent years is to keep on investing where the Pharma industry are growing and investing. So we're going to keep on growing with biologics and sensitive drug, GLP-1 being 1 of them. We are also growing by supporting our customers through their life cycle management. They start with a multidose vial. They want the same formulation once they go with a prefilled syringe and the prefilled syringe will be in an auto-injector. They want to make sure they've got the same formulation. They just want a different component, no longer a stopper. They're going to be looking for the same formulation for a plunger, and that's where we are supporting them. Small molecule is still an important part of the R&D pipeline for the market, and there, we are really optimizing our production. We have invested a lot in our facilities, and we've got a lot of automation to reduce as much as possible any human touch for better quality their efficiency and obviously having a better profitability profile, regulatory complexity. I just discussed that one. So we offer the premium fill, but also what we call the ready-to-use -- you've got product delivered to the pharma companies. They don't have to go for any internal sterilization process. We've done it for them.

They take our product and they're going to go straight away for their filling operation. So some key elements. The growth of biologics, including GLP-1 in the last 2 years grew by more than 50%. And we talk about margin expansion for the injectable division. This margin expansion is coming from a better mix and a better part of what we call the high-value product, a high-value process. And those [indiscernible] grew by 42% in the last 2 years. Moving to the Active Materials Science division.

It represents 11% of our business. Remember, this is the acquisition back in '18 of the company called CSP. We call it now Aptar Pharma Active Materials Science Solutions. And what they are doing is really to protect the efficiency of a drug, any sensitive drug as a certain shelf life. Our technology invaded in the different delivery solutions will protect at length the stability of those drugs. And we play in different application fields started first in the diabetes care, but also in the oral solid care in the dermal drug delivery, the diagnostic, the glucose control monitoring system with Abbott embed this technology in their device, some of the products from [indiscernible] for powder formulation, very sensitive to moisture. We embed that technology within our drug delivery devices solution.

Since the acquisition, this business grew on a CAGR growth rate by 10%, profitability by 8%. So has been a huge contributor to the performance of the segment. but also adding element of differentiations whenever we are engaging conversation with our customers. Innovation from Active Materials Science, three examples I will start with the one on the left side of the corner. We call it Active Shield. What is Active Shield doing? Active Shield without an energy source will sterilize a medical device, could be very interesting in military environment, could be very interesting in countries where the reliability of a source of energy is not a given on any remote environment. We are expecting a 510(k) approval for the second half of next year.

The second technology in the center, we call it Active Blisters, applied for sensitive drug, peptide, GLP-1. And at the same time, we've got a dual action. We're going to control muster and we're going to control oxygen within the dead space of a blister. That's the way we are embedding this technology into the blister type format.

And the last one on the right is what we call [indiscernible], what is [indiscernible] doing preventing the formation of nitrosamine. That's a pressing issue, all over the places where the formulation tends to degrade and to form nitro [indiscernible]. So this technology, preventing the formation of nitrosamine will eliminate the need for the formulators within the big pharma or the pharma co environment to reformulate. There's very strict regulatory guideline. If you reach a certain level of nitrosamine you have to reformulate and to reformulate guess what, it's a lengthy costly process where you need to be back in front of the regulatory bodies by proving the efficacy and the safety profile of your drug.

Last slide and last presentation is everything around digital. You know that we acquire a different type of companies, [indiscernible], why such because getting the patient knowledge is really critical for any pharma companies. To better understand the way they interact the way you onboard them, the way you remote, monitor their treatment will boost patient outcome will improve the quality of life and the quality of treatment for patients and you generate data that you can then after monetized back with your pharma company because they are interesting to really understand at scale in a real world environment how patients are behaving. So what are we doing within the divisions? We

developed software, but software as a medical device in the different agencies. You need to prove best upon clinically relevant data that you have an efficacy impact on the outcome of the patient. We develop connected devices. You put a sensor into one of our proprietary drug delivery devices, and you track basically whether or not the patient has been using this product. You send the information to the software application that's going to compute the elements and based upon some real-time events could trigger a real-time prescription. And then we embed this digital expertise in our patient engagement solutions at scale. This is across different therapeutical areas, in oncology, neurology, diabetes, rare disease, respiratory name them, wherever you want to better understand your patient, you're going to be looking at having some kind of connectivity around. We do it globally.

Our software applications approved by the market are already over 100-plus countries. And we've got 4 million-plus patients using one of our solutions. Those solutions are 100% Aptar Solution. So we own the IP behind the algorithm behind the sensors, behind the approach that we share with our customers. And remote patient engagement and monitoring either in a clinical environment or in a real life environment is more and more crucial for our company. That's why we went there, and that's why our overall value proposition is from formulation with a deep science behind embedded with our drug delivery solutions, combined with the patient expertise.

So to conclude, we are confident on our long-term target, the 7% to 11% top line growth long-term target with a profitability profile between 32% and 36% depending on the mix. We've got solid building blocks, solid competitive advantage that you've heard from Alex and I. And if there's one thing I'd like you to remember this morning, we're going to keep on winning in the marketplace because we are a partner of choice of the pharma industry in their drug development program, in their life cycle management programs and also in their patient engagement programs. Thank you very much. And I'm going to turn the mic to you, Marc.

Thanks. Good morning, everyone. Let's talk about it, after that long time spent on pharma, let's switch to another segment. Two parts in my presentation. This first part is about the market where we play trends and competitive advantages we bring to the market. The second part is what we did mostly in the past 2 years to improve that business and to make it more profitable and drive profitable growth today and tomorrow.

So this is Beauty segment is a sizable part of the sales of Aptar, a little bit more than $1.2 billion in sales. What we call Beauty sometimes fragrance, facial skin care and color cosmetic representing around 60% of it, but we play beyond this. And we have an extensive definition of Beauty. So we play also in the personal care space for 35% of the total. And we have a tiny portion that we call home care and tiny bit profitable. In terms of geographical repartition of the sales, and this is historical, we have a large portion of our sales made in Europe. This is because our customers are feeling many of their products in Europe being fragrance being skin care and they export these products ultimately outside of Europe, for around half of it. So half of what we built in Europe ultimately ends up as a finished product outside of Europe.

Second largest region where we produce locally is North America, about 20% of the total. Very closely followed by the growing Latin America. And then we have Asia at 7%, mainly China and India for the time being, but a territory where we expect to grow faster in the coming years. Talking about customers, we have been serving small, local, medium-sized, multinational global customers many of them for more than 25, 30 years building very strong and productive relationships and they value what we bring to the market for sure. In terms of financials, you know in the past few quarters, we faced some adverse situation in the market that was denting our growth of the top line.

Nevertheless, with what we did to improve the profitability of the segment we were able to maintain the profitability and improve the profitability during this temporary difficult period. We have one of the largest and most innovative portfolio of products and solutions that we bring to the market. This is considered as a fantastic competitive advantage by our customers. Of course, we operate this at scale in each of the regions, but globally at scale. And to deliver this to the market, you understand that you need to have very strong capabilities in each of the regions, R&D capabilities, but also operational capabilities. And hopefully, you can recognize some of the products that you use or your family is using every day. In terms of capabilities and also services, we bring a lot to the table because we go way beyond just providing products. And

let me -- I like a few of them: consumer insights and customer radiation. Stephan [indiscernible] a new different innovation centers in the world for beauty. We have 4 ideation centers in the world, 1 in Europe, 1 in North America, 1 in LatAm and 1 in China, where we bring customers together with us, and we co-create and we codevelop the idea. And as we have the capabilities with 3D printing, with fast prototyping to create the mockups or even some functional products, you will see at the end of the presentation how we can in North American Connecticut within a day from the ideation, create a tooling to inject and to create a functional product within 1 day or 2. This is unique and has been blowing away our customers that have been using it. So we can help the customer to speed their time to market and bring innovation to life much faster than.

We are also, of course, paying attention to the user experience and her leveraging, for instance, some synergies with Pharma, very recently acquired a company named Metaphase that's focusing on ergonomics. It was for Pharma, but we are using it now in beauty with a lot of success. When you look at these capabilities, strengths, the set of products and solutions, and you put this in regards to the market we play in, we are definitely very strategically positioned to support and benefit from the growth of these market. Historically, Beauty has been a growing market, very steadily with some up and downs, but very steadily. But this is also a market that is calling for innovation. It's a big engine for the beauty market. customization and also sustainable solution. We play in different categories, facial skin care, which is a very big category for us historically. The #1 market for facial skin care, you may know is China. Again, a very large franchise is the [indiscernible] category first is fragrance, Fragrance Prestige, Fragrance [ Mas ]. North America is the #1 market for fragrance even though we are mainly made and filled in Europe.

And in personal care, we have three big categories: haircare, body care and skin care. So you see we play in all these large categories of the market with different level of market shares and we bring, of course, innovative solutions in all these categories. It's nice to talk about the current situation or even the past situation, but it's even better to look at the future and what are the trends and how these trends should be captured to create the growth or generate the growth. Before COVID, the beauty market was evolving, let's say, nicely, but very slowly in terms of trends. Post-COVID, we saw a lot of movements, of course, much more uncertainty, but very interesting trends, that are very solid now and are generating the growth that we need to capture, and we keep capturing.

The first one is sustainability. As of today, in Aptar Beauty there is 100% of our innovative solutions have all the sustainability features. There is not an innovation that is going to the market without sustainability features. And we are also progressively converting the existing products to these innovative solutions with sustainable features. It was something to have in the past, nice to have. Now it's mandatory to have to do business. Derma cosmetics is a submarket of the facial skin care, but it's a market that is growing faster than the rest -- it's a kind of a new blue ocean. And here, we play and we team up with Pharma, especially the Pharma Consumer Healthcare division to create a set of new solutions to even ship the market altogether and benefit from the growth. So of course, we have some products, existing products, but as we discover and shape the market, we bring our knowledge from Pharma to help our beauty customers to get more into the Derma cosmetics pharma-like.

Last point on that slide is the personalization. [indiscernible] is customization. The brands are looking at something that is differentiating. They want to differentiate. The consumer wants to differentiate as well. We have now everywhere in the world, the capabilities to deliver this to our customers at scale. It's not just a [indiscernible]. We can do it in an industrial way, in China, in Europe or in U.S. or even in LatAm, that is a very strong market for customization.

Talking about the Beauty market. I told you, it has been historically growing steadily in the 3%, 5%, if you look at the past 15 or even 20 years, and the consensus for the years in front of us is to keep growing with some hiccups that we saw in the post-COVID but keep growing in the range of 4% to 5%, let's say, mid 4.5%. But of course, that growth is different and has different drivers, region by region, not going into details, but the fact that we are organized regionally that we have regional teams we produce regionally is helping us to capture these regional trends and, of course, to generate the growth.

And the other -- if you look in the other dimension, we have i told you, we have one of the largest portfolio of products. They are all made regionally locally. and we can capture on the market for, let's say, the access mass, low price points of our customers to the Ultra Prestige and niche and, of course, going through the premium and [indiscernible]. So we can capture a full range of the market. with what we added in China, and I will come back to this, we can definitely capture even a broader set of that market.

In the past quarters, you heard Stephan and Vanessa talking about the fragrance, the destocking in fragrance in particular. So let me drive you through what happened. Because this is historically a market that -- a part of the market that has been very steady, 4%, 3%, 4% growth on an average every year. What happened post-COVID is back in 2022, one of the customers decided to launch new SKUs, they wanted to restore because they were anticipating a fantastic rebound of the market, retail market. And we benefited from it. We had in units. And what you see here on the slides are shots in units, not in value because the market put a lot of price in the retail, but not so many units but you see are units. We saw the growth. We benefited from that growth just to end up last year and beginning of this year in a destocking situation because actually, the retail market was not taking all that growth that was forecasted our customers.

We are coming to an end of it. we forecasted this to end Q2, Q3. It takes a little bit longer, but it's -- depending on the customer, depending on the SKUs, we see this now normalizing, and we expect that to be behind us by the end of the year. And hopefully, the U.S. trade deal is going to remove some uncertainty because this was not helping knowing that a large portion of these fragrances are filled and made in Europe and exported to U.S.

That's an important slide because I was 2 years ago, standing in front of you saying we are going to improve the cost base. We are going to launch many initiatives to make beauty, more agile, more cost effective and cure more growth in a profitable way. We did a lot. Actually, we did even more than what we thought at that time. It started before 2 years ago. We -- if you want to have a few examples, we closed 10 sites and locations in the past 4 years. But in the past 2 years, we reduced the size of the workforce globally for Aptar Beauty by 11%. This was never done before. And we did it still serving the market with efficiency. We also reorganized restructure our two largest regions, North America and EMEA without an impact to our customers. We also started an accelerated the shift of some of the very transactional activities away from high-cost country to more lower-cost country and Global Business Services, and this is an ongoing process because we shift progressive more processes to these locations, being Czech Republic for Europe or Mexico for Americas.

And we kept putting cost out efficiency in the factories, digitalization of the factories, automation of the factories. And this is not stopping. We keep doing it. We have 25 factories in the world. We permanently make them more efficient. And this is not only helping the cost but also creating a competitive advantage because as we do this, we become agile, more responsive to markets that are fluctuating faster and more than before. We also improved the R&D efficiency. We have to be faster to the market, more cost effective to the market. And in the past 2 years, we reduced by 30% our time to market. So a good start, not enough. And part of that acceleration is coming from the China ecosystem we built as well, and I will come back to this. So we are improving the R&D. We want to reduce, and we started reducing the number of SKUs. It's a very complex business where we have number of SKUs. And for us, we need also to keep reducing and containing these SKUs and the complexity of the business.

All that translated into 60 basis points improvement in the past 2 years. And as you can see on the curve on the bottom right side, even with sales not growing recently, we preserve the bottom line. So we created a business that is first and foremost, more resilient than ready to generate more bottom line as the growth is pushed forward -- so what mix -- what are the key blocks when we look at how to drive the profitable growth and [indiscernible] strengths we created in the past 2 to 3 years 3 [indiscernible] blocks here. As we look at protecting and growing the core of our business, which is our bread and butter, we will continue to push our innovation pipeline to the market. We have a very strong well recalibrated innovation pipeline. You will have the time at the end of the presentation, see the innovation we are bringing to the market. They are -- so well received by the market that several of our customers are asking for exclusivity for it, which has not happened before. It's a changing market. It's the engine of beauty, you need to bring innovation, and that innovation must be a sustainable innovation.

The second big block for us is the go-to-market being faster, better, more focused on the go-to-market. This is what we started already more than a year ago. We see the benefits of this now. And of course, as we leverage our strengths, it is helping to drive more go-to-market stages. And the last one that has been set for ever is the financial discipline, the operational efficiency there is never an end to this. The minute you start doing it and Stephan was seeing it. Once you do it, once you see the outcome of it, you keep doing it because it's a never-ending story, it's continuous improvement and financial discipline. But this would be only the core. It's nice. But what we realize is with that new setup, very solid setup. We could -- with limited cost, limited effort, go into adjacencies. Adjacencies that are new geographies such as India that is booming now in beauty, and we are present in India, but we want to be even more present in India. Middle East and Africa, we started doing it and it's like fishing and getting the fishes one after the other. So there are regional expansions that will bring the profitable growth and definitely, of course, Southeast Asia. But we are also expanding the customer base.

We can serve more customers than we were serving today because we are operating at scale with agility and we see markets that we were and customers we were not serving before. We want to accelerate customers that are also growing faster than the average, such as fillers for instance, the market is changing. We need to adapt to that market. On custom, we can make custom everywhere. I told you about the differentiation, personalization. This is one of the biggest needs of the market, but you have to deliver it at cost and operate at scale. And of course, this is one of the adjacencies we are pushing for. The last one I mentioned, especially on Derma Cosmetics, the synergies between Pharma and Beauty has never been so strong, and we intend to make them even stronger.

China ecosystem, of course, we have been operating for the past 25 years in China. We built -- we have very strong teams. We operate every day in China. But in the past 2 years, we created a very different, more stronger ecosystem. And I have to say a large portion of the credit to that change is going to my [indiscernible] colleague, [indiscernible] she had especially [indiscernible] in dealing with joint venture creation in China in the past years. Thank you, [indiscernible]. So

what we created here is a set of partners, suppliers around our base of Aptar that we leverage to China for China, China for Asia as a growth strategy. Asia is growing faster than the rest of the world, and there are many untouched territories that we can touch with that ecosystem. And two big drivers of that ecosystem are the joint ventures we created, one with BTY. We started with a minority. we moved to a majority in [indiscernible]. They bring at scale a set of capabilities between mold making to set of products that are cost effective that we can push and use in Asia and in some cases, even beyond Asia, of course, in other regions. So that's a front-line ecosystem, maybe not unique, but for us, it's a very, very strong competitive advantage.

You see on the right-hand side some of the products, innovative products, custom products or even the last one. Fragrance Pump from [indiscernible] that we sell in India, something we could not do before. India is booming. We have the proper setup in China to support. That's something that is not existing 2 years ago.

To conclude, big blocks for growth for beauty, how we recalibrated this. We are focusing on dispensing systems, and only on this. This is enough. It's a very large market. We will keep driving cost out being very financially driven in our decisions, driving operational efficiencies in all our factories, and we still have a good run rate for this. We will leverage and we started this. It's only the beginning -- the China ecosystem I was describing to you. This is a huge lever that we didn't have 2 years ago. And of course, as we do this, we will continue to push our innovation pipeline innovation, innovation, innovation with sustainable fields. That's the future of the Beauty segment.

But all that is a strong foundation that we will now leverage and pivoting from all the restructuring we did, all the adjust we did to push the top line, the go to market, accelerate the top line growth because we can make it more profitable than before. And this, of course, already started. We saw it, but it deserves now an acceleration, and we know how to do it. So this is why we believe in our long-term top target, top line, bottom bone. And we also believe in them because several regions of the Beauty segment have been in this case for several quarters already. We need all the regions to be within the targets of the segment at the target, but it's not something that is a dream. It has been executed in several regions and the setup we put in place now is allowing us to believe in this and to deliver it in the future. And I think with this, I pass it to Hedi.

Thank you, Marc. Good morning. So we created this Closure segment in 2023. It was a consolidation of our various Closure businesses that we had in food and beverage and in Personal Care under Beauty leadership. I'm very happy because we are seeing some nice progress and that I would share with you. And of course, I'll try to take you with me through this growth trajectory that we're seeing on the closure side.

I'll start with this. So first of all, very happy to reach the $700 million mark. So yes, we are the smaller segment, but we're proud of that because we think we can grow and we can grow faster with the agility they need. We are now in the long-term targets from an EBITDA standpoint for a few quarters. So we're very happy, and we're very happy to be there. You can see that for our first part of the year, we were at 16.4%. So really at the lower part of the range, but within the range and consistently. And this is what we will try to do on a regular basis. On the left-hand side, I think there is a key message here. Stephan shared one element, which is, we are local for local or regional for regional. So our objective is to manufacture in the region for the region.

So from a tariff standpoint, for example, for us, was a nonevent, because our objective is to produce in U.S for the U.S. We have 2 big factories here, very happy to have them. And we have also one factory that is being -- the elastomeric control. You will see the [indiscernible] that is also related in Midland in Michigan. So for us here, you will see that it's local for local, and they always driven from the rest of the segment is that we're doing 50% of our business in the U.S. If you look to Aptar, it's the other way around. But for us, -- the U.S. and North America are very important. And these numbers are -- don't include Mexico. So it's really our U.S. business.

You can see that Europe is the second zone for us. And EMEA, I would say, is a very important part of our business for one reason, not necessary for Europe, but more for the MEA part of it, which is Middle East and Africa, you know that we acquired the company [indiscernible] to deal with Middle East. And we're also very proud that we have been the first sport closure company on a special [indiscernible] finish that was validated by Coca-Cola for large their large South African operations. So really for us, Middle East and Africa will drive growth. And I'm saying this now because we'll talk about the growth and how we anticipate to exceed the growth of the market.

If you look who we work with, -- of course, some names you know, the P&Gs of the world, the L'Oreal, Coca-Cola. So work with all these companies, but what we also do is that we work with many what we call local champions. So big CPGs that you know, but also companies that you don't know like [indiscernible], like [indiscernible] that are big players in their region. So this is our -- what we call our technology platform. So you can see a lot of products, they all look the same for you. For us, they don't -- and this is why we're agnostic of the package on which the closure go, we're agnostic of the market in which they're sold. And you can see that, for example, on inverter tops, you will have products that are for [indiscernible] or sauces, and also for products for [indiscernible] and P&G. So we can use what we call product platforms across multiple end markets. And this is why the way we organize is very important meaning that, of course, technology is important for us. Closure, meaning injection and [indiscernible] assembly. But our ability to understand the markets in which we serve is essential for us, because, yes, it is a Closure, but the needs can be different for a consumer that is using a shampoo and a consumer that is using a sauce. So it's really very important to understand how it works.

And it starts by this. For us, consumer insights are key, like patient insights are key for Gael and his team. We need to understand how our product is used. And we also need to understand the customer because I remember one of the conversations I had with a customer and they said, "Hey, don't talk to me about consumer. I want you to talk to me about me, I'm your customer. How can you help me? I know my concern. And so it's interesting because we have this conversation. We need to understand the consumer, but we also need to understand the comment.

And I'll give you an example. Today, companies like P&G, Unilever, are paying fees consistently to Amazon because their product is leaking. Paying fees for the package to be repackaged. And that's a cost for them. So how can I help them avoid that cost, and this is how we create value because yes, this has no impact on the consumer at the end, but it has an impact on our customer. And our ability to, at this time, understand the consumer and understand the customer, makes us different today on the market. And we'll talk about also innovation and how do we extract value out of the $1 that these guys are saving per pack, how much is coming to me as Aptar and how much we're taking, what's our share of that when we solve the problem of this nature.

If we look, the second part is really research and development. I mean that, I will include also the material science, regulatory support, durability. Once we understand what the consumer is requesting or what the customer is requesting, we then, of course, do research and development. It sounds very difficult, but that's our job. This is where we create value. And -- at the end of the day, we will be, of course, having and having patents around what we do in IP because we also have a lot of IP, more than 2,000 patents are today using the Closure area. And for us, what's important is how then we customize it to customers. How do we make sure that every customer has the impression that the closure is unique to him, or to her. That's the key. This is how we do it. And we will like to do this, of course, on our understanding of our customers but most importantly, on world-class manufacturing capabilities. Once we have a product, we need to be able to scale it in all the parts of the world and to scale it consistently.

We can not have differences in the way we operate by region. And the last one is technical support. People underestimate the impact of that. But just to give you a sense, the bottle that you have in front of you can be filled at 1,200 bottles per minute. So if your product is not at the level of quality that is expected, if you're not able to support your customer from a technical standpoint, they will not be able to run it at 1,200 parts. And this is also a differentiator for us because we are able to provide the quality that is needed. So to summarize, we understand what consumers' habits are. We understand what customers are requesting. We try to design the proper solution for them. We try to scale manufacturing with high level of quality, and we need to support our customers to make sure that they can operate their feeling lines at the best of their ability.

This is the market that we serve, 7 billion. I feel very small today compared to my colleagues. But what's important here is that we really have a good understanding of each of the markets that you see here because we have marketing people and what we call market leaders that are really specifically working on the market that's they need to approach. There is a newcomer here that you're seeing, it's called Wellness and Healthcare. We're working with Gael and his team to see how we can use more and more closure into the health care industry. We have -- this is how we cross pollinate and how we make sure that we can use our knowledge without starting from scratch around health care and what needs to be done.

And so you see this is, for us, a big effort to some of the thing that is important here is we believe that we are in a growing market. You see that here, I'm talking about markets by region. You have two regions that will be growing a little bit slower than the others, not surprising. These are mature markets, North America, in EMEA, i would make a difference between Europe and Middle East and Africa. I think that the growth rate is completely different between the two regions. And then you have, of course, LatAm in Asia, where we have -- we expect to see growth more around the 3.1%, 3.2% in the coming years. So we can say, yes, Hedi, but that's not enough compared to your long-term targets, you're saying that you can grow between 4% and 7%. But my message is more on the left part of this slide.

Our other food and beverage, when we were only food and beverage, we outgrew the market. And for me, this is the key of all the story of closure is how do we make exactly the same thing that we did on food and beverage, on the other part of the market, which is personal care, home care, and hopefully tomorrow healthcare. So we delivered on that part of the market and we have proven that we can do it. And so now is how do we use the same recipe and apply it to other markets that we serve because over the years, we probably lost market share in personal care and home care. So how do we regain that with the same recipe. And so what's the recipe? A very easy one. I remember having the conversation in front of you 2 years ago. And I always say two things.

For me, we walk on two legs. The first leg is innovation, growth. We are an innovation company and a growth company. So -- this is the first part. This is the first part of it. And I hear you the details because for me, it's in the slide, but the story is the following. I can only do that also if I'm competitive. I can only do that if my second leg, which is about cost management is working. And we have demonstrated over the last 2 years, our ability to generate savings to better use our assets. You can see the numbers on the bottom right side of the slide. We know how to do it. We know how to understand the market. And this is why, as a consequence, you can see that we increased our EBITDA by 430 basis points, so 4.3 percentage points of increase in EBITDA in 2 years.

And this is how we do it. So it can seem simple. It's a lot of efforts from the teams. And the good news is that when you see results, it fuels even more energy around what we're doing, and this is why I'm very proud of the team. And I think we can exactly do the same thing in all the markets that we serve. I promise this is the only [indiscernible] in picture that you know that we've shown you for many times. But I think you'll see examples -- but I needed to start with this one because if you go now to a supermarket, all your sources aisle is inverted. And we believe we'll do that. There is one element here that for me it's important that you would see in all slides is how much did they increase the price when they invert it. And how much did I get in that. I'm helping them to invert, I'm helping them to sell per ounce more expensive. Can I get some of that, can I extract some value of that?

And there is exactly the same thing here that we've done with various things. So this is sour cream, you see and Susan will show you some of our products. Here is interesting because the price went up, but the category was completely changed. And so here, it's not only the story about increasing price, but it's -- they increase their share with our product. And so here, it's a double whammy, the double effect of us winning because of the price increase, but also because of a -- of share gain.

Next example, far away from here, this is in China, so with a product that is Oyster sauce. And this is where I can tell you that product platform is important because we did not reinvent this for China. We use a platform that was existing here in the U.S. and in Europe, and we just adapted it to another source or another product that was in China. Same here, I won't spend more time on this one. You saw it, I think, on the -- how do you call it the big game because I'm not supposed to say to say the other word. But for me, what's important, you will see some advertisement that we've done -- but here, we premiumize the whole aisle. This was a flat market, dish care was a flat market. And with this product, the company that we started with what was growing 4.5%, 5% on a flat market, this is the last one. Hidden Valley, you know this product. And it's exactly the same, 12.1% increase per ounce. And we help them grow their sales by 5%. So again, we're looking into this of prices and share and share gain because this is how we believe we can extract value with these numbers. And these are [indiscernible] number. These are Walmart price. So it's not us making up any numbers, but this is how we look at the market in the way we operate in Closures.

We're very disciplined in the way we look at innovation. So you see on the top part, you have all the market needs that we're trying to fulfill in a way. They're very diverse. You have premiumization. You have enhanced dosing -- but when we look at it from a functionality standpoint, from an Aptar solution standpoint, we look at sustainability or sustainable mono material. We look at flow control, inclusive design temper evidence sealing, light-weighting and durability. How do I make my product ISTA-6, meaning that can be shipped without damage. And so one of the successes of this segment coming together is on the bottom part of the slide is we increased by almost 50% the number of developments that today we have in our pipeline.

Gael talked about pipeline conversion. It's the same for us. Pipeline conversion is key. And this is why we're also happy to see that our pipeline grew by 50% between 2023 and today, meaning in 2 years. And it comes from our understanding of, of course, the market and what our customers are expecting from us. I'll finish with this. Nothing new. I will repeat myself. I'm sorry for that. But for us, what's important is the focus on innovation and how do we convert categories. category conversion is key for us. We take an eye and we want it all to be inverted, and we want it all to be with closures. The second element that I would like to convey is regional growth. This is a key driver for us. We started in Middle East. I think Africa could be the next for us. But Eastern Europe could be the next. So really, we have opportunities for us to continue to grow and only using the technologies that we know. And so I think this is why it's important is that we're not reinventing anything. We're going there -- we know there is a market, and we know how to get that market. Utilize IP and also the know-how in pharma, this is more related to what we want to go and we would like to spend more time in the health care part of the business for us, for Closure. So this is really something that we intend to do, and we do that with the support, of course, of our Pharma colleague.

And the fourth pillar that is very important is operational efficiencies. We can, of course, innovate, but that's not enough. We need to innovate being very cost conscious and being very strong on cost management. I'll finish with our long-term targets. I said to you that we are consistently now in the 16% to 18% range in terms of adjusted EBITDA. Of course, our target is to continue to stay there. consistently there, and we're confident that we will. And the other 1 is, of course, our core sales growth that is 4% to 7%. Again, we show that it's possible with food and beverage around 6%. So how do we, in a way, do exactly the same on our personal care, home care and also hopefully to more health care part of our business. This is our closure presentation. And now I'll pass it on to Vanessa.

Okay. This is much better. So good to meet you all. I did have the benefit of meeting many of you virtually and some of you in person over the last several months with the organization, so thank you for those -- to those that have met and I have received your feedback and your thoughts about the organization. And for those that I haven't met, I do look forward to making your acquaintance and certainly look forward to hearing your feedback as well. as I continue in my tenure.

All right. That's great. Okay. Over the last several months, I've also had the opportunity to really get to know my Aptar colleagues much, much better at a much deeper level and just to really see firsthand the level of entrepreneurialism, I would say, across the organization. And there, I even say, competitive healthy team spirit. Everybody wants to do better. And of course, just a really good level of innovation. And you've seen that across the presentations today. The culture and the values come to life across the organization. And certainly, those are reasons that I joined the company, along with a great growth profile that you've heard about this morning. So it's just been really terrific to see all of that come together over the last several months, and I'm really certainly very happy to be here with you this morning. So now that I'm here. What are my priorities?

My priorities are unsurprisingly aligned with growing long-term returns for the organization, for our shareholders. And each one of these items is a significant value driver for the organization. And so my presentation today is actually aligned to each one of these priorities. And it starts with top line growth because Aptar is a growth company. And what that means for me is to do what I can with my finance organization to help augment that growth, but to augment that growth in a way that continues to enhance profitability, driving earnings per share growth faster than revenue growth. My [indiscernible] colleagues and myself, what that means for us is -- of course, EBITDA margin and EBITDA margin expansion is super important. However, it doesn't stop at EBITDA. Our focus on driving profitability doesn't stop at EBITDA. We are focused on all the other below-the-line items that impact our profitability because earnings per share growth is what drives the value for the organization. And you'll hear me talk a little bit more about that later on.

Particularly, we'll be zeroing in on cost management and some of the things that we've been doing along that front. Near and dear to my heart, healthy and optimize free cash flow generation. When I joined, and I had some of these early meetings with many of you, some of you are quite vocal in talking about free cash flow, particularly in the earlier years, if you kind of go back to the early 2020s, 2021-ish, maybe early 2022 time horizon. We were in a very heavy CapEx investment mode at the time, all for great reasons. But of course, when you're doing a lot of CapEx, then that does since have an impact on free cash flow. And so many of you are quite vocal about driving growth in the free cash flow. I think we've done a really good job of that. And you can see that in the numbers. You saw in Stephan's slide earlier, free cash flow was up 87% over the last couple of years. So we're certainly on a right trajectory. But that doesn't mean we can stop there. Particularly with earnings growth and continuing to optimize working capital, we can continue to grow free cash flow. So certainly, 1 of my key priorities. Of course, disciplined capital allocation and growing the ROIC. We just increased the ROE target by another 100 basis points. Clearly, we have confidence in our ability to get there.

And that is obviously, as we continue to prioritize higher return investments. We'll continue to see the earnings growth and of course, that's showing up in our ROIC metric. And of course, last but not least, balance sheet strength. We do have a very strong balance sheet -- and we need that to kind of go with us along all the different cycles. You heard Gael and Alex talked earlier about the product development cycles in pharma, for example, those can be as long as 7 to 15 years. And so for our customers working with a supplier who's got the balance sheet strength to be able to partner with them through that cycle, is not only important, frankly, it's a competitive advantage for us. And so continuing to optimize the balance sheet, leaving it very strong and managing our liquidity is a key priority. And again, all of these come back to driving returns for our shareholders.

So double-clicking a little bit now into the growth priority. You saw this earlier in each of the segment presentations where we talked about the large total addressable market. And so what I'm doing now is just aggregating it together now for you. You heard Gael talk earlier about the pharma market being $165 billion. So there's a $1.7 trillion drug sales market that's growing. And then you've got the $165 billion total addressable market for Pharma Packaging, which is what we play in, and that's growing at a compound annual growth -- or expected to grow -- projected to grow at a compound annual growth rate of 7%. And that's not after projections. That's market projections. So certainly, well supported there.

You heard Marc talk about the addressable market in Beauty, beauty packaging, $38 billion market that's growing about 4%, just a little bit over 4% at a compound annual growth rate. closures. Closure $7 billion Hedi, is not that small. That's a pretty -- that's a market that we can go after. We're well positioned in that market as well, and that is also growing, right? So -- when you kind of look at the total addressable market for all of the different to segments, you bring that all together, if you do the weighted average math, which I'm sure some of you have done, I certainly did that weighted average math, what you'll see there is our total company long-term target revenue growth rate of 4% to 7% is very well supported, very well supported by the underlying market dynamics. And

as we've already heard from each of the segments, we have very strong franchises in each and every one of these markets. And that's just market growth rates. You also heard from the different segments, each of the things that they're doing to drive growth at or above market. So just going from Hedi's presentation because you were the last to go, innovation, very much an innovation-driven growth story, premiumization, expansion into new geographic markets, converting categories which also includes Pharma as new drug delivery routes come to market for the existing molecules and so on, that is the form of category conversion, right? So these are all strategies we've employed to grow and beyond and beyond the market growth rate, and we'll continue to do that. So this is what makes me super excited. Yes, we have to execute, but we can, we have and we will. -- and we've got the right strategies to get there. And the other thing that makes me super excited is it's not a growth story that is reliant on one particular product.

It's a very diverse model. So of course, all the products are together, but this is not a 1 widget 2-widget story. This is a highly diversified model. No single product is going to make or break the long-term growth trajectory of the organization. So a lot to be excited about there. But of course, it's not just about growth, it's about profitable growth. And as we talk about profitable growth, you heard me say earlier that one of my key priorities, along with my colleagues here at the front is to grow earnings per share faster than revenue. And when you look at the last couple of years, certainly, that's been our trajectory. So from 2022 to 2024, you see the big numbers there. We've continued that trajectory in the first half as well, and we plan to continue to do that. That will be across multiple fronts. -- as we look to grow EPS faster than revenue, clearly, adjusted EBITDA margin is part of that. Of course, we want to expand our margins, and we will continue to expand our margins. And that's coming from your top line growth, your mix improvements, cost optimization, we'll continue to add to the margin expansion story.

But again, as I said, we're going also below the line, below just EBITDA, depreciation and amortization expenses. -- depreciation [ expenses ] are a direct are directly tied to our organic and inorganic capital decisions that we make. And so making sure that we're optimized from that front as well. Interest expense obviously, directly tied to our debt management strategies as well as other capital priorities, for example, share buybacks, which will impact that. And last but not least, our tax strategies. And so While, of course, we don't control tax legislation globally. What we do control, however, is we can continue to optimize our tax position, continue to optimize what we can do how we can structure certain transactions, obviously, within parameters that make sense to make sure that we're taking the best advantage of our tax position, which also helps to drive earnings per share growth.

You've seen that a bit, in the last several quarters. Some of you have asked me, what's up with tax. You guys are a little low on the tax side, we're optimizing where as we've done some transactions recently, we've actually taken advantage of some tax vehicles to help us get a better tax position there. So all of these components will drive EPS growth again with the priority there to be -- to grow EPS faster than revenue. We talk a lot about cost savings. And what I wanted to do was really just kind of bring it to life for all of you because as much as the organization has done such a great job I don't think we've actually ever put numbers in front of you, right? So numbers, mix things come to life and numbers make things credible. You've seen it in the margin profile, but there's a lot of things that go into margins. And so over the last couple of years, including up to June 30 of this year, -- we have taken out $110 million of cost out of the organization. And that is a pretty significant number. And you can see here that is between not only SG&A but also cost of sales.

So roughly $50 million of that being SG&A, the other $60 million being cost of sales -- you see here the segment contributions, beauty, just tying back to what Mark -- the comments that Marc made, trying to lower the breakeven point, obviously, having a big share of that lift, but not only beauty. Look at how much has been contributed by closures, by Pharma. Even the corporate functions have all had to contribute to these cost reduction efforts, right? And so how did we do that? Obviously, continuing to streamline our operations, moving more costs to our lower-cost offshore locations, rationalizing our footprint and all of those different initiatives that have contributed to our cost optimization. What I will also say is we also have a very strong governance framework around this. We've got scorecards internally.

Again, everybody's got a target that they have to -- productivity target that we have to manage. We've got weekly meetings, monthly meetings as we kind of look at how we're doing against those targets. And we've put incentives around it. So if you look at our incentive plan, our incentive plan is actually not only on revenue growth, it's on EBITDA growth as well as cost optimization initiatives as well. So all of these ways to ensure that we continue this and really have this in-built into our DNA as an organization. Focusing on improving productivity. This is, again, just to bring to life what we talk about. You see the headline numbers around how much we've grown revenue, how much we've grown profitability. As we look at productivity, 1 of the biggest line items on any company's P&L is people-related cost, head count costs. And what you see here, just to sort of really highlight our focus on productivity is as we have grown revenue over the last couple of years, we've actually kept the head count flat. Again, proof points that automation, et cetera, we're doing more with less, and we're moving more things towards the automation cycle and less manual labor where we can.

Now you look at 2022 to 2024, same thing, revenue grew 8%. We kept head count flat. Look at first half '25, revenue grew 2%. We kept head count flat. And that's a very, very important indicator of how we're driving productivity across the organization. And not only that, when you look at sort of the mix of where that head count is you're seeing here an intentional shift to better cost countries. And so if you go back to 2024, about 20% of our head count was in what we call sort of better cost countries. Fast forward to just 6 months later, we're about 25% in better cost countries. And so that optimization will continue, and these are all ways that we're continuing to enhance our cost structure, which will help drive that EPS growth that I just talked about. And of course, you see all this in the margins. Gross margin has improved significantly in the last couple of years, and we've continued that trajectory in the first half of 2025. Of course, there are a lot of things in gross margin. You've got your volume, your mix and other things. But the cost reductions, you saw the cost of sales reductions in the previous slide, that has directly contributed to this gross margin expansion.

Similarly, the SG&A reductions that you just saw in the previous slides have also contributed to the EBITDA margin expansion in addition to the cost of sales. So clearly, you're seeing this reflected in our numbers. So we are already in our long-term target. So as of end of Q2 of this year, where the adjusted EBITDA margin of 21.7%. Our long-term target is 21% to 23%. And -- so we're already comfortably in the long-term target. We see a very credible path to get to the higher end of that top line target, right? And so how do we get there? Clearly, volume -- revenue growth is going to be a key part of that. You just heard that we're a growth story. Hopefully, you now understand why we're a growth story. So that volume growth will also help to continue to drive EBITDA margin expansion towards the higher end. Obviously, with additional volume comes better asset utilization, better absorption of fixed costs. So that will continue to be a key driver. -- revenue mix, higher-margin products and services, let's not forget services.

Gael talked earlier about some of the services that Pharma is driving, particularly as we look to service the segment of the market that requires that help. -- from our teams. And so services, high-margin services will be a key part of that mix trajectory as well in addition to, of course, the product mix and the segment mix. But operational efficiencies. The $110 million shows that we can do it because we've done it. We're still doing it. Some of the questions many of you asked me when I first joined was, okay, you guys do cost reductions to talk about it, but like are you done? And my response is we're never done. We're never done, we can't ever be done because when you're -- when you get to 8% better, then the next question is great, how do we get to 10% better. Then the next question, how do we get to 12% better, right? So we're never really done.

And we talked about -- I think it was Mark who talked about digitization in the factory operations. And hopefully, those of you that joined us in France in Q4 of last year, I hadn't -- I was a guess with a company, and I was on that tour with many of you. But hopefully, you've got to see truly how automated and digitized our factories are, like it's just -- it's phenomenal, phenomenal, right? And that's part of why we have such strong gross margins. But as much as we are so advanced in terms of digitizing our manufacturing operations, I would say, and my colleagues would agree that we still have a long way to go in the back office, a long way to go. And so are we done? No. There's still a lot of room to continue to optimize our back office processes, continue to do more automation of those back-office processes continue to digitize make better use of AI tools in our back office. And so that will also drive ongoing cost efficiencies. I would also say our shared services centers.

I think he was also Marc who mentioned [indiscernible] and [indiscernible] Mexico. We've moved a lot to our shared service centers. We're still in the early innings. There's a lot of processes that have not yet moved to the shared services centers. Yes, we've got some foundations that we need to build and work with our business partners in each of the segments to sort of put our arms around additional processes that can move, but that is also in the works, right? And so when we say we're not done, this is not just without substance, there's tangible projects and initiatives that we can and continue to optimize to move more of our cost structure, either more automated or more to a lower-cost offshore locations. So -- those ongoing operational efficiencies will continue to drive EBITDA margin expansion. And again, we see a very credible path to get to the high end of our target range. So we spent a lot of time talking about earnings, right? So let's just shift gears to capital, free cash flow and our very strong and disciplined balance sheet. So I mentioned this a little bit earlier.

When you go back to some of the earlier years, 2020, 2021, maybe early 2022, we were in a very sort of heavy CapEx investment mode for very good reasons. And now you're seeing those earnings show up in our -- but as you look at that, a lot of those big build-outs have been completed. So you're seeing now the capital intensity coming down a little bit more -- in more recent years, including H1 of 2025. Those large build-outs are largely done. Of course, couple of investments are an ongoing thing. We'll continue to focus on near-term capacity expansions -- sorry, adding additional production lines, et cetera. But as we kind of think long term, how are we thinking about capital intensity not a target, but a guideline, I would say somewhere in the 7% to 9% range is a pretty healthy guideline. Not all segments are equal. You've seen us and you've heard us say that most of our capital does go to pharma -- so how we think about that 7% to 9% sort of guideline is pharma being, again, a much more capital-intensive business, clean rooms, high regulatory requirements, [indiscernible] of reliability and quality, right? So -- all of that drives a higher capital intensity profile. But of course, the returns in pharma, that margin profile is there to drive higher returns.

I think of Pharma sort of in the high single digits to low double digits in terms of percentage of revenue. And then for beauty and closures, I would think of that as more in that sort of mid-single-digit range. The one thing I will say is we're not capital constrained. However, every business and every function because we also fund our corporate functions, such as our global technology infrastructure that supports all segments. Every segment and every function has to earn its right of capital. We have a very rigorous internal capital review process. We look at hurdle rates. We look at return on investments. In fact, if you kind of look across our entire capital investments, we're probably about 20% plus in returns and, of course, in -- of course, that's the blended view. If you actually look at only the growth projects and take out the maintenance projects, which don't really drive a that's north of 30%. So very good returns and very much a focus on capital discipline, what are we investing in and what's the expected return? What's the expected payback of these investments. And as we look forward, I would continue to expect as it's been historically, that about 2/3 of our capital would be growth related, whereas about 1/3 will be required for the ongoing maintenance and replenishment of our key assets. I talked about free cash flow being a key priority.

How I would think about free cash flow. So if you kind of look at the longer-term horizon over the last several years, we've covered at about 80% of adjusted EBITDA is what converts to cash from operations. So your CFO, cash flow from operations, roughly 80% of EBITDA converts to cash from operations. And that's sort of been, again, not a single quarter but over a longer-term horizon. Now of course, from that, you've got the CapEx investments. I just talked about the 7% to 9% as a good guideline for the future. So when you look at our history, certainly we've been tracking around 40% of EBITDA converting to free cash flow overall after the CapEx investments. Clearly, we see additional opportunities to continue to grow that free cash flow. We've been very focused on working capital improvements. Mark, for example, heads up operational excellence, for the organization. And I mentioned that because operational excellence also looks at things like supply chain and inventory management.

And so as we'll cut working capital initiatives to drive the free cash flow, working with the OE team is a key aspect of what the finance organization does. -- to make sure that we continue to optimize working capital. And so with those improvements, certainly, we do see a very credible path to go above the 40%-ish that we've been and approach 50% of EBITDA over the longer term. On the capital stewardship front, Stefan talked about this already. I wouldn't deliberate too much. But what I would say is, this is really -- our capital allocation is really across 4 dimensions, right? So investing for organic growth, organic investment in sessions are the CapEx that I just talked about. So we're investing for innovation and investing in capacity expansions, investing in new product introductions, investing in technology to drive our effectiveness and those future cost reductions that I just talked about. And then, of course, augmenting the organic investments with inorganic investments in M&A. Also a key priority for our capital allocation.

When you put those two together, investing in our business has accounted for roughly 70% capital deployed and with very strong returns on those investments. We look over to the right you see the trend in return on invested capital. So when you look at the last couple of years, of course, with interest rates rising our weighted average cost of capital has also gone up with raising interest rates, but our ROIC has increased at a faster rate than our WACC has increased. And so as we continue to drive increased investments on higher return projects, we do expect to see that ROIC continue to increase, which, again, it's part of why we raised the ROIC target earlier today or well, earlier today. And of course, returning cash back to shareholders. Roughly 30% of our capital in the last several years has been returned to shareholders dividends, of course, being a very key part of that. And we did raise the dividend. We're very commit to our dividend profile.

30% to 40% of earnings coming back in the form of dividends. We raised the dividend earlier as well. And as Stephan mentioned this morning. So that continues to demonstrate our commitment to the dividend growth and then, of course, share buybacks, which continue to be discretionary, but also a key part of our capital allocation profile. I won't spend too much time on this, but I do get questions or we get questions sometimes about M&A, what are your criteria? What are you looking for, right? So the most important thing I would say is strategic fit. There has to be a very, very strong strategic fit because ultimately end results of every M&A is to eventually drive value from that M&A. And so strategic fit is super important. Does it strengthen the core business? Is it giving us access to certain geographies or new adjacencies or is it a new technology that perhaps it makes more sense to buy versus build in terms of time to market, et cetera. And then we've also got some pretty rigorous financial [indiscernible] that go along with that. So how quickly is it going to be accretive to EPS? You've got to be accretive to EPS within 1 year. How quickly do we make sure that this potential target is accretive ROIC perspective, i.e., generate greater than WACC.

You got to get there within 3-year synergies, of course, being super important and a very, very tight integration playbook. The one thing I'll say that's not here and probably should be there. But I would say, it spans everything, Cultural fit is super important. We all know that a lot of M&As across the globe not as successful. Aptar has had a very successful track record, and I would say 1 of the key [indiscernible] is cultural fit. You can have the best financial models in the world, if there's not a cultural fit, that M&A will not be successful, right? And so as we look at strategic priorities, financial priorities, -- we're also looking at, say, more as a horizontal across all of it, making sure that we've got a good cultural fit for all of our acquisitions. You guys already know, we have a strong balance sheet. All I'll say here is low debt leverage. We've got a corridor of 1x at 3x. We're currently at 1.2x. We hope to continue with a strong balance sheet, investment-grade credit rating -- you would have seen earlier this year, we got two upgrades from Moody's as well as from S&P.

Ample liquidity, $1.9 billion of borrowing capacity. We do have some debt coming due, not large amounts. We've got about $125 million coming to you in Q4 and another $125 million coming due in Q1. We will seek to refinance that. But of course, just given our financial profile, no issue is expected and those will go pretty well. So this all -- this brings us back to the long-term targets. And you've already heard a lot of this from Stephan, so in the interest of time, I'll move on and come back to our value creation framework. So -- we're a growth company in attractive end markets, right? We're focused on ESG. We're a leader in sustainability. You've seen all the awards and all the accolades that Aptar has received not only recently but frankly, for the last number of years, several years. So this is not a new thing in terms of leadership in ESG and sustainability. We are an innovation leader. You've seen that throughout the presentation today. You'll see that when you look at the demo earlier. All of those things combined support our 4% to 7% core sales growth.

Our focus on cost management and operational leverage, combined with continuing to make intentional capital allocation decisions and driving more capital to higher return projects. look to drive our EBITDA towards the higher end of that $0.21 to $0.23 EBITDA margin range and also helped to generate 12%, 14% ROIC. And but not least, the very strong balance sheet and healthy free cash flows will continue to support returning cash to shareholders , particularly on a [indiscernible] stay within our commitment of the 40% dividend payout ratio. So with that, I'll pass it back to Stephan.

Thank you, Vanessa. Thank you to all my previous speakers and of course, the [indiscernible]. Let me just summarize how we drive to profitable growth and value.

Of course, one of it is all around driving the top line. We covered quite in detail the pipeline, how the pipeline comes to revenue, 7% to 10% annually. -- importantly, on top of a stable growing base. That is the unique nature of our business model, serving the originator, the generic over-the-counter these revenues don't go away. There might be some supply chain value chain hiccups now and again, the fundamental model is if you have chronic diseases, you have a treatment that works, that doesn't go away. Then, of course, IP, IP IP, we create these products.

We watch the IP, the know-how, like a hawk, including legal means necessary. Very happy with hitting our strides in injectables. And if you're not taking anything more away from Alex is the plethora of new indications and applications, they will take time. But if you start talking about treating cardiovascular situations, if you talk treating Alzheimer's, Parkinson's is these are really, really big markets. Yes, they will take time. Now large molecules like semaglutide being able to be delivered through the nose. These are major, major big deals. -- again, long time lines, but very exciting to us. We have differentiated services that ensure that the pipeline keeps being filled to ensure that switching barriers get increased, not decreased.

And of course, they have business in their own right. Very nice track record with Closures recently, and Beauty is ready to deliver with increased profitability as the volume comes in. We talked about the balance sheet and the strategic shift in capital allocation and then last but not least, productivity management drive focus and margins. With that, our formal remarks are concluded. I will our fellow speakers to come up on stage, and we will go to the Q&A portion.

For those listening on the webcast, there is an area on the website where you can enter your questions. So we will also take questions from the Internet. And in the room, we have mics please be sure that you wait for the mic before you ask your questions or the folks listening online can hear the question as well. And I'll be the moderator of the questions. All right. Go ahead.

George Staphos with Bank of America. Thank you for the presentation. I mean some wonderful slides there. Two questions I'll turn over out of respect. One, Vanessa, great slides particularly like Slide 109, where you did derivation of free cash flow.

Basically, you're going to generate about 10% free cash to sales what those numbers work out to, which is where you're at right now. So would it fair to assume that your free cash flow growth over the next few years is going to be 4% to 6%. And if so, should we have that as a target?

Related question. It doesn't sound like you have anything big right now. But are there any sort of big, bigger capital investment projects are going to come up, say, in year 3, year 4 that we need to be mindful of. When is kind of the horizon where CapEx is going to start to rise?

And then the last question, and I'll turn it over, again, great presentations from everybody. In Pharma, given the fact that injectables is going to be growing at a quicker rate. Should we not expect that mix over time in Pharma is going to trend to the lower end of the range? Why or why not?

[This call length has exceeded streaming capabilities. Please refer to the preliminary transcript that will be posted shortly.]