AptarGroup (ATR) Q1 2026 Earnings Transcript

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DATE

Friday, May 1, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Stephan B. Tanda
• Chief Executive Officer Designate — Gael Tuya
• Chief Financial Officer — Vanessa Kanu

TAKEAWAYS

• Sales growth -- Reported sales increased 11%, with core sales flat, reflecting currency benefit and a mixed operating environment.
• Adjusted EBITDA -- Adjusted EBITDA rose 3% to $189 million, with a margin of 19.2% compared to 20.7% last year, impacted by less favorable product mix and operational issues in Beauty and Closures.
• Adjusted EPS -- Adjusted earnings per share were $1.19, down from $1.30, primarily due to higher depreciation, amortization, and interest expense.
• Pharma segment -- Core sales decreased 1%, with a 10% drop in Prescription market core sales, including a 5% negative impact from emergency medicine; Injectables core sales increased 20%, and Consumer Healthcare rose 4%.
• Emergency medicine -- Decline in dispensing system sales reduced Pharma core sales by 3%; anticipated total emergency medicine sales decline of $65 million for 2026 remains on track, with about two-thirds of the impact occurring in the first half.
• Beauty segment -- Core sales increased 3%, led by double-digit gains in prestige fragrance pumps and growth in color cosmetics; Personal Care core sales rose 6% driven by strong demand in body and hair care applications.
• Closures segment -- Core sales were flat; volumes increased, but lower resin prices were passed through to customers, impacting sales; Food core sales decreased 3%, Beverage core sales increased 10%.
• Segment margins -- Pharma adjusted EBITDA margin declined 150 basis points to 33.3%; Beauty margin fell 100 basis points to 11.1%; Closures margin declined 270 basis points to 13.1%, affected by maintenance issues, temporary plant closures due to weather, and a minority investment write-off.
• Free cash flow -- Free cash flow more than doubled to $53 million, with $119 million cash from operations offset by $65 million in capital expenditures.
• Capital return -- Returned $131 million to shareholders through $100 million in share repurchases and $31 million in dividends.
• Balance sheet -- Ended with $223 million in cash, $1.1 billion in net debt, and a leverage ratio of 1.43.
• Cost dynamics -- SG&A as a percentage of sales decreased to 17.1% from 17.5%; included $4 million in legal expenses for non-ordinary course litigation.
• Tax rate -- Adjusted effective tax rate was 22.6%, down from 25.8%, reflecting a favorable mix of earnings and increased tax benefits from share-based compensation.
• Legal update -- Litigation with ARS Pharmaceuticals is ongoing; court denied ARS’s motion to dismiss, and AptarGroup has filed a motion to dismiss or transfer an antitrust case related to the dispute.
• Upcoming leadership change -- Stephan B. Tanda will retire later this year and be succeeded by Gael Tuya as CEO effective September 1.
• Guidance -- Second quarter adjusted earnings per share expected in the range of $1.32 to $1.40; full-year capital expenditure guidance set at $260 million to $280 million, and depreciation and amortization now estimated between $310 million and $320 million.
• Regulatory and customer updates -- FDA and Health Canada approved expanded use of NEFFY; FDA approved Cipla’s generic Ventolin using AptarGroup’s inhaler valve; product launches noted in injectables, ophthalmic, and spray delivery platforms.
• Input cost management -- Increased raw material, transportation, and energy costs largely being passed through to customers via contract mechanisms, with some margin percentage compression expected.
• Inventory strategy -- Intentional build-up of safety stock on raw materials to address supply chain risk and ensure continuity amid external volatility.

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RISKS

• Operational challenges in Beauty and Closures—including supplier fire and extensive weather-related plant shutdowns—contributed to margin declines in both segments and impacted overall gross margin by 210 basis points year over year.
• The full-year decline in emergency medicine sales is projected at $65 million, with about two-thirds affecting the first half and acting as a significant revenue and margin headwind, particularly in the Prescription market.
• Cost inflation for raw materials, logistics, and energy has increased, with margin percentage compression expected as higher costs are passed on to customers.
• A minority venture investment was written off, impacting Closures’ margin by roughly 50-60 basis points.

SUMMARY

AptarGroup (NYSE:ATR) reported flat underlying performance due to a marked decline in emergency medicine sales, which subdued core sales growth despite currency tailwinds. Management reinforced that the emergency medicine downturn would peak in the first half, clarifying that broad-based growth across Pharma, Beauty, and Closures is expected to resume as normalization occurs. Key product launches, international regulatory approvals, and high-growth areas in Injectables and Consumer Healthcare highlighted ongoing demand and pipeline momentum. Operational and input cost headwinds weighed on margins, but disciplined cost management resulted in improved free cash flow and maintained balance sheet strength. Executive succession plans and legal proceedings were transparently disclosed as part of ongoing risk and organizational updates.

• Leadership transition will see Gael Tuya assume CEO responsibilities on September 1, following the planned retirement of Stephan B. Tanda.
• The company confirmed significant pass-through of cost increases, supported by contract indexation, to neutralize bottom-line earnings impact even as margin percentages compress near-term.
• FDA and global regulatory moves, such as the updated NEFFY approval, reflect AptarGroup’s market position in critical drug delivery technologies but do not materially alter current-year revenue expectations.
• Management expressed confidence in returning to target EBITDA margin ranges as segment-level operational disruptions abate through the second half of the year.
• The company is intentionally increasing raw material inventories to mitigate prospective supply chain volatility and support customer continuity.

INDUSTRY GLOSSARY

• GLP-1: Glucagon-like peptide-1, a class of drugs used primarily for diabetes and weight management, relevant to AptarGroup’s injectables and active materials businesses.
• Activ-Blister / Activ-Vial: Proprietary active packaging technologies from Aptar CSP Technologies, designed to control moisture and enhance drug product stability.
• Index contract clauses: Provisions in supply contracts that link pricing adjustments (for example, for resin) to external benchmarks or indices, allowing cost pass-through to customers as input prices fluctuate.
• Ventolin: Brand name for albuterol, a widely used metered dose inhaler medication for asthma and other respiratory conditions, with AptarGroup supplying key valve components.
• NEFFY: Intranasal emergency treatment for type 1 allergic reactions; recent global regulatory approvals involve AptarGroup delivery technology.
• Activ Materials / Active Materials: AptarGroup’s suite of materials or packaging solutions with functional properties, such as moisture absorption or chemical stabilization, applied in pharmaceuticals and diagnostics.

Full Conference Call Transcript

Stephan B. Tanda: 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 Tuya as AptarGroup, Inc.'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?

Gael Tuya: Thank you, Stephan, and good morning, everyone. I am pleased to join the call today and grateful for the warm welcome I have received as CEO designate. I am 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.

Stephan B. Tanda: 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 will 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 Q1 2024 and Q1 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 decongestants, 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 account 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 AptarGroup, Inc.'s market-leading nasal and drug delivery technologies. Across intranasal delivery, our platforms are supporting a range of Phase 2 programs, including ENA respiratory virus-agnostic respiratory therapy.

These programs rely on the precision, reliability, and scalability of our delivery systems supported by AptarGroup, Inc.'s integrated formulation and regulatory capabilities, reinforcing our role as a trusted development partner. I also wanted to share a few approval updates regarding NEFFY, the emergency treatment of type 1 allergic reactions including anaphylaxis. Recently, the U.S. Food and Drug Administration approved an update to prescribing information for NEFFY, removing the age criteria. In addition, Health Canada granted approval for NEFFY, along with the Emirates Drug Establishment in UAE. In the prescription market, Cipla recently announced that they received 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 elastomeric 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 valve spray technology is featured on a nasal saline for infants.

Finally, our recent partnership with Enable Injections integrates Aptar digital health connected, lifecycle-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 pumps specifically engineered to dispense higher viscosity or bi-phase liquids while delivering the fine mist consumers expect from a perfume. There is also a growing trend for skincare-infused fragrances—those that hydrate, soothe, 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 Guerlain’s Aqua Allegoria alcohol-free hybrid and microencapsulated line. In skin care and makeup, following the success of Clarins Double Serum, Clarins has launched Double Serum Foundation featuring our patented dual dispensing technology with progressive dosage. Lastly, Clorox 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 launch. Turning to Closures, our dispensing closure that is often used for Asian sauces is now featured on Newman’s Own barbecue sauces.

Lastly, I want to highlight our technology that is turning beauty and personal care products upside down similar to what we did with ketchup and other condiments. We have launched our inverted, lidless closures for single-handed dispensing that can be used with shampoos and conditioners, body washes, baby soaps, lotions, 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 valve 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’s motion to dismiss. We are now well into the discovery phase, and we have also filed a motion to dismiss the Southern District antitrust case or, alternatively, to have it transferred 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?

Vanessa Kanu: 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 us 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 expected a challenging year-over-year comparison 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 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 Aptar CSP Technologies’ Activ-Blister, Activ-Vial, Annex 1, and biologics projects. 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 strips. 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 continued to positively impact margins. Moving to our Beauty segment, core sales increased 3% with improving volumes in the quarter. Looking at the two largest end markets for Beauty, fragrance; facial skincare 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 skincare. Personal Care core sales increased 6% with broad-based growth across all regions. Applications for both body care and hair care continue to show strong demand. Beauty's adjusted EBITDA margin for the quarter was 11.1%, a decline of 100 basis points, primarily due to less favorable product mix in North America, and we are still feeling the impact 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 Closures 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 two largest end markets for Closures, Food core sales decreased 3%, primarily due to the impacts I just mentioned, partially offset by continued demand for our sauces and condiment 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 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 would like to touch briefly on the impact of the Middle East conflict. For Q1, the impact 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, an effective tax rate range of 22.5% to 24.5%, and a 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.

Stephan B. Tanda: Thanks, Vanessa. Regarding our outlook, looking ahead to Q2, 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 Healthcare 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 are 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 healthy order book activity. We will now open the call for questions.

Operator: Thank you. If you would like to ask a question during this time, simply press 1 on your telephone keypad. If you would like to withdraw your question, press 1 again. In the interest of time and fairness to all participants, please limit yourself to two questions and then come back into the queue if you have more questions. Please stand by while we compile the Q&A list. Your first question comes from Paul Knight at KeyBanc. Your line is open. Please go ahead.

Paul Knight: Thanks, Stephan. We will save the remarks until July, as you suggested. The comments you made at the beginning around NEFFY being approved for any age group in the 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?

Operator: A reminder to unmute yourself locally.

Stephan B. Tanda: Alright. Let us try again. Does this work?

Paul Knight: Can you hear me now?

Stephan B. Tanda: Operator, can you hear me? Loud and clear.

Operator: Alright. Sorry about that problem. We have a new system.

Stephan B. Tanda: A reminder: no single product really moves the needle substantially—I guess the exception is Narcan—in any quarter. 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. Having said that, we feel very good about Prescription growth for the balance of the year. Q1 had a very tough comparable, but we already in Q2 expect strong growth in Prescription, excluding emergency medicine.

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

Stephan B. Tanda: We made substantial investments. Right now, we have plenty of capacity, and we do have the ability to creep additional capacity by just putting in additional equipment in the existing large building.

Paul Knight: Good. Thank you.

Operator: Your next question comes from the line of Ghansham Panjabi. Please go ahead. Your line is open.

Ghansham Panjabi: Yeah. Hi. Good morning. Can you hear me okay?

Stephan B. Tanda: Yep. How are you doing, gentlemen? Okay. Great. Thank you.

Ghansham Panjabi: Good morning. 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. 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 2025, but the comp for February is also pretty tough from what I remember. I think it was up 10% in Q1 2025 and plus 8% in February. What is the expectation for Rx ex-naloxone in Q2? I know you do not give specific guidance, but do you expect it to grow year over year based on the tough comp as well?

Stephan B. Tanda: Thanks for the congrats, and the short answer is yes. Yes, the comps are also demanding in Q2, but we expect very solid growth for Rx in Q2, excluding emergency medicine, of course.

Ghansham Panjabi: Okay. Thank you for that. And then Consumer—you said plus 4% in Q1 2026. From what I remember last year, you had a pretty easy comparison, given the destock that was occurring in cough and cold, etc. Was that in line with your plan in terms of Consumer? And then, a broader question as it relates to some of the comments about supply chain uncertainty—was there any benefit in any parts of your businesses across the portfolio as it relates to any sort of pre-buy, given customer uncertainty as it relates to supply chain?

Stephan B. Tanda: Let me take the second one and then, Gael, maybe you can comment on Consumer Healthcare growth. We really do not see a lot of pre-buying and, to be perfectly honest, with the bounce back of demand, there are several product lines where we could not even fulfill the demand of pre-buying. So it is rather limited. But I understand the question. Consumer Healthcare, Gael?

Gael Tuya: Consumer Healthcare is back on a trend for several quarters in a row after a good Q4, so it is in line with expectation. We continue to get a very strong ophthalmic business with a good pipeline conversion. Dermocosmetics is doing well. From a cough and cold standpoint, we have seen the end of the inventory adjustments, and in certain countries there was a low cold and flu season, especially in the U.S.

Ghansham Panjabi: Yeah. Okay. Terrific. Thanks again. Congrats to you both.

Operator: Your next question comes from the line of George Staphos at BofA Securities. Your line is open. Go ahead.

George Leon Staphos: Thanks so much. Hi, everyone. Good morning. Congrats to Gael and to Stephan. We will save the roast for July. Congrats on the quarter too. Point of clarification to Ghansham's question—did you say Pharma will grow even with the impact from emergency medicines, or just Rx will grow ex the eMed impact? How should we think about that now?

Vanessa Kanu: It is the latter.

Stephan B. Tanda: It is the latter. We just wanted to highlight—and I know you all take a lot of comfort—that Pharma ex-emergency medicine grew 10% in Q4, and it is a little bit less this quarter, but we expect again good growth in Q2. Do not read too much into a single quarter here.

George Leon Staphos: Growth in Pharma ex-eMed, correct. My questions—one on Pharma and one on Closures. Stephan, Gael, is there any thought in terms of what you are seeing with GLP-1s—recognizing it is not a huge driver of your business—that nonetheless maybe there is some pipeline filling occurring somewhere? How do you peer into that if that is a risk? And then on Closures, when do you expect that we will 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, or any of your customers talking about that, or is that, at this juncture, not something you are baking in?

Stephan B. Tanda: I have not heard the America 250, although it is a worthy cause to celebrate. Let us all have some barbecues on that. Coming back on GLP-1, demand is very strong. I still hear anecdotally that consumers have to wait not for weeks, but maybe a few days to get their prescription filled. You also saw Lilly's very strong result with Zepbound being up around 80% or so. Clearly, as people see other people losing weight, they want to get in on it, and there is strong demand for the product. Gael, do you hear anything about pipeline build?

Gael Tuya: There is a very healthy pipeline, as we speak, because it is attracting a lot of players. Inventory build—no. There is no inventory build. This is not at all what we are hearing from our customers.

Stephan B. Tanda: On Closures, let me start and maybe Vanessa can also jump in. Clearly, I am disappointed with some of the maintenance issues that we had, and the dozen tornado warnings that we got on our phones in the Midwest did not help, as we had to shut down plants and people had to take shelter—adding up to 11 days. My expectation would be for the second half for Closures to return to normal margins, but I look to you, Vanessa.

Vanessa Kanu: Absolutely, Stephan. You are right. We did have some challenges, which I called out in my prepared remarks, and we do expect to see sequential margin improvements in Closures, and that is baked into our guidance.

George Leon Staphos: Thank you, Vanessa. Thank you, Stephan. Thank you, Gael. I will turn it over.

Operator: Your next question comes from Matthew Burke Roberts at Raymond James. Your line is open. Please go ahead.

Matthew Burke Roberts: Stephan, Vanessa, and Mary, good morning. On emergency, coming back to the 3-point headwind in Q1—on a dollar amount as well, maybe my Friday morning calculator is broken, so just to sanity check because it seems a bit lower. How did emergency growth specifically compare in Q2 2025 to Q1 2025? And any other considerations within the Pharma category that decelerated in Q1 worth mentioning? I noticed asthma/COPD was not in the prepared remarks—anything else going on there?

Stephan B. Tanda: On your specific question, I would point you to follow up with Mary. It is a very specific question that we probably do not have at our fingertips. In general, let us reconfirm that the $65 million is still the right number. About two-thirds of the impact we expect in the first half of this year and the balance in the second half. By the time Q4 comes around, this should be almost washed out, and certainly with Q1 2027 we will have a clean comparison.

In the first half, the bulk of the $65 million will have been done, and we feel reasonably confident that this is the new level—deduct the $65 million; this is the new level from which we expect to grow from low- to mid-single digits according to our customers. Other movements, I do not think we want to get into those specifics.

Matthew Burke Roberts: Right. I appreciate that, Stephan. And while we are on Pharma—on the margin, it was down. It was 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. Given what you saw in Q4 and Q1, is the long-term range still achievable in 2026? How do you think about the progression through the year? And in Q1 specifically, despite the mix, it was still within the range. Any other drivers—whether cost, performance, change in royalty revenues, or Injectable margins improved that much? Any color on the margin?

Stephan B. Tanda: Pharma is a great business, and of course emergency medicine is very profitable. Hence somewhat lower margin this quarter but still within the range. To answer your first question, we do expect Pharma to be within its long-term EBITDA margin target for the year, and as the year progresses, to return with top line growth. We also said last time that we expect the company to be within its long-term EBITDA margin target for the year—which is not guidance per se, but is a consequence of Pharma being there. Vanessa?

Vanessa Kanu: The only update I would add is as we look at the full year and the pass-through of higher costs that we are seeing—I mentioned this in my prepared remarks—as we pass on these costs, it does have a compression impact on margin percentage. Our focus is to neutralize the dollar impact on our bottom line. So you might see, at the segment level, some compression based on the pass-through of these costs.

Matthew Burke Roberts: That makes sense. Thank you again.

Operator: Your next question comes from Matthew Larew at William Blair. Your line is open. Please go ahead.

Matthew Larew: Good morning, everyone. Following up on the margin point—the six prior quarters before the emergency med destock occurred, corporate gross margins averaged around 38%, and then, obviously, the last couple quarters below that because of the destock. You have also had, as you referenced, the operational issues in Beauty and Closures. If all of those things in the back half are improving, is it fair to think that you can get back to that range for corporate gross margins by Q3 or Q4?

Vanessa Kanu: Matt, we are guiding for Q2, not Q3 or Q4. But directionally, that aligns to what Stephan just shared and what we shared on the last call as well. The overall EBITDA margin impact is a gross margin story because, as you would have seen in Q1, we are pretty tight from an SG&A perspective. The gross margin impact is coming from mix and from the operational issues we have had to deal with in Beauty and Closures. All of those will start to sequentially improve starting in Q2. So directionally, you are right.

Matthew Larew: Okay. And then following up on the operational issues—the maintenance, which is something you can control, and then the fire at one of your suppliers, which you cannot control as much—how did those progress through the quarter, and when do you expect to close the loop on those things?

Stephan B. Tanda: I can only repeat what we said earlier. I expect in the second half for these issues, both in Beauty and in Closures, to have passed, with sequential improvements.

Matthew Larew: Thank you.

Operator: Your next question comes from the line of Daniel Rizzo at Jefferies. Your line is open. Please go ahead.

Daniel Rizzo: Hey, thank you for taking my questions. On Narcan, I was wondering if after we get through this initial destock, over the long term we are going to see this again where emergency services or buyers of this product reload—you see a huge surge and then it flattens, then it declines. Is it going to be lumpy like that, or was it just over-ordering the first go-round? How should we think about it?

Stephan B. Tanda: Hi, Dan. I certainly would expect the first wave to be unique. This is 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—everybody getting ready to do battle to win contracts. Now it is a much more competitive market. People win one state, lose another. I do not see the same kind of dynamics repeating. Will you have lumpiness? I am sure. There is no business without that, and this one has less visibility than most because we cannot track inventory levels at the end user.

But since we have 50 states being in this game and more than a dozen competitors, there should be some evening out. I do not expect this kind of magnitude in the foreseeable future.

Daniel Rizzo: Okay. That is helpful. You mentioned there was no pre-buying among your customers. Have you stocked your own inventories or planned to, to smooth things out and ensure security of supply, given volatility with logistics, input costs, and everything?

Vanessa Kanu: Yes, Dan, absolutely. Our purchasing and supply chain teams are managing this very tightly—securing safety of supply, balancing geographically, and monitoring even the health of some of our suppliers to see what the impacts of rising energy may have on those suppliers' overall health. We will increase some of our safety stocks, so I do expect a bit of a trend in rising inventory—but for the right reasons and done intentionally to ensure we are well managed through this crisis and its longer-term impacts.

Daniel Rizzo: After COVID logistical issues, did something similar unfold?

Stephan B. Tanda: Not really that I can 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 were not really coming back into manufacturing. In Europe, companies kept running because companies had the support from the government, not the individuals. So it returned pretty smoothly. It is very different.

Daniel Rizzo: Alright. Thank you very much.

Operator: A reminder, if you would like to ask a question during this time, simply press 1 on your telephone keypad. If you would like to withdraw your question, press 1 again. The next question comes from the line of Gabrial Shane Hajde from Wells Fargo. Please go ahead.

Gabrial Shane Hajde: Stephan, Gael, Mary, Vanessa—good morning. I wanted to ask about Active this quarter. You talked about probiotics and another headwind for test strips. On a go-forward basis, we are talking a lot about GLP-1s for Injectables, but I think there are some solutions that you have for oral solid dose of GLP-1. Anything you can highlight in that arena for us?

Stephan B. Tanda: I would not put too much into Active film, which is the film that goes into the blisters of sensitive drugs, including GLP-1 drugs. It is too early. I know we have one in the pipeline, but it is too early to make any calculations on that. The Active Materials business has a very exciting pipeline—for example, on nitrosamine reduction. That is a much bigger topic that the FDA is cracking down on, and we may be the only solution where you can reduce nitrosamine and not change anything else. Another dynamic this quarter is the further transition from finger prick with diabetes test strips—we make the vial for the test strips—to more flash glucose monitoring and continuous glucose monitoring.

As you know, we are involved with Abbott’s Libre and Lingo. It is more a matter of the decline of the first one and the growth of the second one and how it balances out in any given quarter. Overall, we continue to be bullish about Active Materials, but I would not hang it on oral GLP-1.

Gabrial Shane Hajde: Understood. Vanessa, you called out a specific headwind. Historically, you have been able to catch up quickly on price/cost headwinds. Is there something specifically baked into Q2 on resin lags or transport that you are behind on, that you would expect to get back in the second half?

Vanessa Kanu: Not anything material to call out. We are going to see the impacts of rising resin prices—we have already been feeling that. Our Closures business is where we see the biggest impacts from a segment perspective, but it does impact all segments. Closures are generally protected by indexation. In Beauty and Pharma, a little bit less so, but even there, we pass it on to customers—we have done that in other periods of rising costs, and this is something we have a good muscle for. In terms of impacts to Q2, we have already started with those cost pass-throughs, and we do not expect any net material impact to our overall Q2 results—that is baked into our guidance.

Gabrial Shane Hajde: Perfect. Last one—you mentioned building a little bit of safety stock. Is that on the raw material side or finished goods side? Thinking about overhead absorption, to the extent things de-escalate and nine months from now you may be underproducing in some product lines—anything specific as you build a little bit of a safety net?

Vanessa Kanu: That is on the raw material side, to make sure we do not run out of any critical inputs.

Gabrial Shane Hajde: Thank you.

Vanessa Kanu: Thanks, Gabe.

Operator: Your next question comes from George Staphos at BofA Securities. Your line is open. Please go ahead.

George Leon Staphos: Hi. Thanks, everyone. A couple of quick ones. Vanessa, if you mentioned it, I missed it—can you talk about what the minority investment write-off was, what the amount was, and what was behind it? And then on Closures—you are managing through operating issues and will resolve them in the second half. Remind us how the Lincolnton plant has been doing. How has that performed after you put it up for Food and Beverage? In general, how do you view your operating network in Closures now, and how is Lincolnton doing in particular?

Stephan B. Tanda: Let me start with Lincolnton, and Vanessa maybe you can address the other question. Lincolnton is doing fine—like any other plant, it sometimes has an issue here and there, but overall it has grown up to be a good-performing plant. It also had some of the weather issues we talked about—it was not just in the Midwest, also in the South. I think we had some snow there. Other than that, we are quite happy with Lincolnton. Some of the maintenance issues we talked about are more in the Wisconsin plant. Vanessa, maybe you talk about the venturing.

Vanessa Kanu: Yes. George, I did not talk too much about it in my remarks. I commented that there was a write-off of a minority investment. We had the challenges—the weather issues—and this was yet another factor, though not the most material item. As Stephan mentioned, maintenance impacted Closures negatively in the quarter. The write-off was a venture investment we made a few years ago. As we do with all investments, we assess recoverability, and we chose to write it down. It was not a big amount—another thing that impacted Closures’ margins in the quarter—but not material to overall results.

George Leon Staphos: A few million bucks, a hundred thousand—any way to size it? Bigger than that?

Vanessa Kanu: About 50 to 60 basis points in margin impact year over year. Important to call out, but I would not spend too much time on it.

Stephan B. Tanda: Overall, not to digress too much, we have a venturing program that has served us well—to complement our in-house innovation by taking positions in leading-edge companies that do innovation. We trade few-million-dollar investments, often with a board seat, and get dibs on the technology. Overall, the portfolio has been returning quite well. But as venturing goes, you do not win them all, and those that you do not win, you have to write off.

George Leon Staphos: Thank you, guys. Appreciate it.

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

Stephan B. Tanda: Great. Thanks. Let me zoom out and summarize the call. Number one, thanks for holding off on the roasting—appreciated. On the quarter, the team performed solidly, overcoming some unexpected challenges and delivering a good EPS number. As we move through the last two quarters, the visibility of the destocking trajectory of emergency medicine has improved, and we have confirmed our estimate of the $65 million and that about two-thirds of that will impact the first half of this year with the balance in the second half. We talked about Q1 being a tough comp for Prescription in particular, but we expect Prescription, excluding emergency medicine, to return to solid growth in Q2—adding to the growth of Injectables and Consumer Healthcare.

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 the GLP-1, biologics, and Annex 1–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. More and more of our customers choose to disclose their collaboration with AptarGroup, Inc., which is also a credibility builder for them in their early development phases and allows us 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 2026, emergency medicine aside, we are well positioned for broad-based growth across all three of our segments. We expect continued strong growth in Pharma, including emergency medicine, with solid momentum across Injectables, systemic nasal drug delivery, and Consumer Healthcare. 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 roadmap, 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 but not least, our strong balance sheet gives us strong optionality while investing in the business and returning capital to shareholders. We look forward to talking to you in the coming weeks.

Operator: Thank you. You may now disconnect.

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