Good afternoon. I'm Gabe Hady, Wells Fargo's Paper and Packaging Analyst, joined by my colleagues today. I think maybe one of them might be in the room, Bailey Gordon, Richard Carlson as well. We'd like to welcome you today to Aptar Group. Representing the company is CFO Vanessa Canu, who has been with the company for about 18 months. And also attending from Aptar is Mary Skafidis 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 two 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, 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.
And yeah, I'd love to hear everything about Aftar today.
Okay, fantastic. Well, thank you, Gabe. Thanks, everyone, for joining us. And thank you for describing what we do. I think if I were to synthesize this, it 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 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 four regions, the lion's share for us being in Europe. And as you can see here, you know, for the year ended 2025, $3.8 billion in revenue, about 46% of that from pharma, beauty being 35%, and closures 19%. And, you know, you can kind of see there as well, you know, what the split of our adjusted EBITDA is, you know, by segment. I'll also add, you know, as you kind of look at our segments across all of these end markets, we've got, you know, 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, you know, very helpful to us, particularly for our pharma customers. As you kind of think through, you know, the long development cycles in pharma, you know, 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 um you know capital allocation uh and return of capital to shareholders in the last five years we've returned about 1.2 billion dollars to shareholders through dividends and and through buybacks and of course you know we're very proud of our you know sustainability credentials that 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 you know this is a differentiator for our customers particularly in the consumer businesses and also for our employees uh in terms of retention attraction and retention of our employees. This really just looks at, you know, technologies and industrial capabilities and how these, you know, 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 horizontals, you know, kind of show you how we share these technology and technology platforms across our end markets. So for example, you know, whether it's dispensing fine mist pumps or frankly airless systems or even you know aerosol valves and bag on valves you see how we share these technologies across different end markets that we serve and you look at you know the different industrial capabilities you know precision injection molding high speed assembly ai assist and quality control these are all areas where we share these capabilities across our entire footprint and you may also know that our pharma business that business rather was actually born from our beauty business speaking also to the synergies that we share across our different markets and platforms. I mentioned earlier that, you know, we're a technology company and we own the IP of everything that we manufacture. And this really gives you a little bit more, you know, color around that. So we've got about 7,300 patents across our portfolio. You see there pharma being, you know, just around two-thirds of that. And for us, you know, these patents are, you know, obviously, you know, know-how, trademarks and patents. And this is really important to us, really, really important to us. And this is why we defend our patents when we need to, because clearly, you know, 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 three of our segments. And frankly, it's also a lot of the times how we also reprice and price upwards 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 you know the first question is well what are the secular trends in that market right and when you look across our three 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 you know we are in a pharma packaging end market that's 165 billion and the market growth is seven percent you can see what the market growth there is for beauty as well as foreclosures 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 category conversion comes through driving innovate 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 secular tailwinds and also you know 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 you know be stronger contributors than others but when you look at the overall longer term you know picture no one product is going to make or break our overall long-term trajectory I talked a bit earlier about you know capital deployment and 1.2 billion return to shareholders when you look at our capital allocation um and you look at you know the last um you know several years and typically about two-thirds of our capital has been reinvested back in our business why we're 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 you know 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 a third of that being returned to shareholders 32 years of annually increasing dividends and of course you know we also do some share buybacks we've been very active in share buybacks particularly over the past you know 12 to 14 months and again that remains a more discretionary element of our capital allocation framework and then we already talked about you know sustainability and all the different awards that that we see there so just taking a little bit of a closer look at pharma um you know this is the growth engine of our business and will continue to be the growth engine of our business and you know we are differentiated here you know not only through our you know very very strong uh patent portfolio but also the know-how that we've built over the last 40 years when you look at you know um the the key strengths and the 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 uh with and we help our customers through the life cycle uh both from you know obviously from the very beginning where we start earning service revenues right through uh to a different um 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 um 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, you know, 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 end 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, you know, we've got some near-term headwinds with emergency medicine. You know, we've quantified that to investors, but these are near-term headwinds. When you look at over a longer period of time, we've got, you know, 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're very much anchored in our historical growth profile, which we've achieved, and also, you know, in our pipeline, which we're very excited about. So speaking of the pharma pipeline, the pipeline here, you know, 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, you know, there's a lot of attrition in the pharma cycle, so we want 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 five 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 shows you what the top eight areas are, therapeutic areas are in our pipeline. I won't go through all of them, but you can see here it's fairly well diversified, which is very exciting to us because, again, no single product is going to make or break that long term. growth profile. Top three items, respiratory, biologics, and systemic nasal drug delivery, SNDD, which is essentially delivering medicines through the nose to get to the brain, a very exciting area of growth for us in the future. We're seeing more and more, you know, drugs, you know, being administered nasally, which, you know, bodes very, very well for us, given what I said earlier in terms of, you know, our participation and really our level of experience in nasally administered therapies. This slide is really important because it really shows you how we actually grow over the lifecycle 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 from originator to generic to over-the-counter. So you can see there how we generate revenue in those early days with the originator. the 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 uh comes uh online they tend to use our products as well why because if they don't they have to go back through because we're 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 the 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 lifecycle. And again, you know, this also speaks to all the different, you know, 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 um 1.3 billion dollar business um you know beauty you know we went through a de-stocking cycle particularly with high-end fragrance in the last uh you know couple of years we're now seeing you know growth again in beauty we saw growth overall two percent core sales growth in 25 we ended 2025 uh with you know 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 you know 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 you know 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 customers they tend to actually ship that outward so a very globally uh diversified business for us and you can see all the you know very large names uh 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 uh to uh to turnkey solutions that we provide for our customers and then last but not least you know 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. You know, 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 that long-term target range. And again, here, a very diversified portfolio just looking at the breadth of all the different products uh that uh that we bring to the market uh in this part of our business and so you know key takeaways i think it's very clear the fundamentals of our former business we've been very very strong what excites us is frankly the pipeline so it's good that we you know our growth historically has been consistent but we as we look outward uh very excited about the breadth of the pipeline and the growth in the pipeline as well injectables is doing very well uh 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 uh innovation a key driver of our growth not only in the past but also uh you know going forward uh and of course you know the strong balance sheet that i spoke to which is something that uh you know we're very proud of because it gives us the flexibility to invest back into our business but also return uh you know capital to our uh highly valued shareholders so with that gabe let me stop there that was a quick flyby thank you mary that was more than a couple of slides
well appreciating so it's it's a general session and it's it's an equities um conference here at wells fargo today um we recently got more constructive on the name i march the 20th and then part of it was the the strong balance sheet and the resilience of of your pharma segment there's a lot of detail in here that you know it's tough to walk through everything 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 narcanaloxone is 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 percent this year going from maybe seven percent of revenue to five percent 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 the way you expected and then from a profitability standpoint I think it tends to be one of the more attractive areas within your portfolio um operating leverage de-leverage is there anything unique about that product relative everything else that you'd like to call out for us
yeah so um maybe just stepping back you know um narcan nalaxone um pharma generally has a pretty long cycle um it takes a while to bring this these uh products uh you know to market um because so So let's talk about why we saw such rapid growth in a short amount of time. Clearly, we were in a crisis, opiate crisis, and the FDA accelerated the timelines. 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 you know other you know credible uh sources of external data to say well you know I'll just plug these numbers into my model and just see what it spits out right and we just that's that's a very opaque channel uh and frankly you know what's the channel you know for this product hospitals you know fire uh um uh you know um departments libraries and so on and so there's not really one single source of information but we started to see that you know we thought inventory was building up um and of course our customers however because we're 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 because i think i think you might be building up inventory um so they also had you know some of their data uh you know possibly uh incorrect so we suspected we were building up inventory and so we started to put our own information together um and uh and and shared these concerns um and uh we were able to quantified you know 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 dollar full year headwind is what we expected and we also said roughly two-thirds of that would be you know the first half impact and about a third of that would be the second half impact and we are so far tracking you know pretty close to those estimates so you know partly good forecasting on our end partly luck because you know we can't all take the credit for everything that goes well but it's tracking you know pretty closely uh so far so that that all bodes well to your point you know this is a very high margin part of our portfolio emergency medicine saving lives controlling the dosage five nines of reliability uh and quality and of course you know in pharma these are the the kinds of medicines that command a pretty high uh you know price point so very very high margins for us and so as we experience these headwinds uh to the top line driven from narcan of course that is having an outsized impact to the bottom line with all that being said you know we're super proud of the fact that you know even in q1 when we looked at the year-over-year impact you know pharma still was in its long-term target margin range um and so i think that also speaks to the you know to the the strength of the rest of our portfolio uh but also other mitigating factors that we're you know taking internally uh just so that we're not seeing all of this flow 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, 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 three 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 stablish a growing product line for for aptar or is it too soon to tell yeah i mean certainly um we want to get
through the de-stalking dynamics you know we think that the de-stalking should be behind us at the end of this year um and back to my earlier points about where we're tracking to that now the question is what happens after right um you know there was a period of uncertainty around the funding climate you know that seems to have stabilized and and and funding is important for this product because it's largely funded by by the government that's how states and and and and locals get you know the the budget to buy these these life-saving products of funding is really important and you know we've kind of we had a period of you know 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 uh based on what we're seeing right now which is good um and so once we pass these uh you know destalking dynamics unfortunately the crisis is not behind us right and so the need for these life-saving medications will continue and um you know uh the originator uh in this space has certainly said publicly that they do expect this to be a you know high single to mid single digit you know grower over time and and for us we think that's that's the right range once we're past this period so fairly consistent
with kind of the portfolio overall yeah okay um one question that i'm trying to ask all the companies that are at our conference i think it's relevant um how would you compare this recent acceleration and input costs to what we observed during the pandemic or 2021-2022 time frame. I mean, obviously, you know, everyone's pretty laser focused on oil, petrochemical derivatives, which are somewhat impactful for your business from a raw material standpoint. But obviously, you know, day-to-day transportation, diesel, those types of things, you know, internal meetings or however you characterize it. How are you thinking about that and and then relationship with your customers your ability to to recover that
i would say we're just we're better organized having experienced it before what's different this time is we're better organized um you know at least from our organization we're able to hit the ground running relatively quickly because you know we had already developed this muscle internally through covid uh through other periods of inflation but frankly also through tariffs last year um you know just kind of name your inflation there's been a lot of inflation in the last few years right and and tariffs were were you know similar uh uh you know to that extent and so you know this time um you know we didn't see a lot in in in q1 we started to see it towards the tail end of march so it didn't feature a lot in our commentary uh in our q1 earnings but we did talk about it uh in terms of you know q2 and beyond and we are seeing a significant amount of inflation for us uh the biggest impact is resin so resin prices uh particularly in a closure segment why closures well closures just has a higher percentage um uh of resin uh in the actual you know product itself compared to say pharma uh and uh and beauty so closure sees the biggest impact um and in closures we have indexation uh clauses in our contracts and so we pass that on to customers um the company has also done a really good job learning from those earlier experiences gabe where we're now passing that on you know um on a much shorter time leg 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 um and so it's it's raw materials cost but frankly it's also transportation you know i mean energy prices are higher across the board which have you know which has ripple effects uh across a number of things and we've been passing those through um and you know again so far so good nobody likes getting a price increase i don't like getting a price increase uh but we're very transparent uh and again that's because we've built that muscle uh 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 is an important
distinction and what's interesting is i mean you see that over time um 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 um so that's that's good to hear and what we all also hear is your product typically as a as a portion of the whether it's the retail price on the shelf yeah or think about about a drug is typically a small fraction, so they're focused on some other items.
That's correct, yep.
You mentioned tariffs. I've got a different question about it, but just, you know, we kind of have this 150 days, I think now we're focused on Section 301 tariffs is how we're gonna 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 um whether it's to get ahead of price increases whether it's you know we've got some certainty on tariffs where customers may be trying to sneakily build some inventory
or is is that not something that we haven't really seen that and we were watching for that you know is uh are we are people gonna you know pre-buy uh to get ahead of you know um expected changes in tariffs and uh you know we were very acute in in looking for this you know even last year but also you know also now we we don't really see that um you know we may have you know 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 of any big impact there
okay um i want to get to the exciting stuff because aptar is one 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 and you're prepared your marks nasal delivery is a big part of that injectables is a big part of that I think other folks this isn't a healthcare 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 you know I'm looking at things that are out there in public domain that we know about and be missed cardamist nefi things that are more it's easier for the from a patient compliance standpoint getting back to that seven to eleven percent growth which seems to be sort of the 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 gave us that that flow chart which almost looked 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 um you know as you look at it 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 yeah yeah um so let me just maybe start with uh the range is a long-term range so it's not a 12-month range um uh but i think so but so again emergency medicine you kind get these you know one-time effects but when you look at over a longer term period we absolutely expect to continue that compounding that you that you just described and and honestly Gabe I think a lot of the examples you gave are just exactly the reasons why we're very excited the examples you gave of you know nephi ember mist 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 nephi it's epinephrine uh which is you know we all know you jam it into your thigh as an injection um and now being nasally uh delivered um you've got a big part of the population that may not necessarily like my my children to start with right they don't like uh needles uh and so there would be perfect uh case studies for why you know nefi 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 you know it grows like gangbusters these things do take uh years to grow insurance companies you know adoption and so on and so on but this is a very exciting development uh for us and some of the other uh 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 you know the broader population demographics um but also other broader pressures across healthcare so aging population but also you know the cost of hospitalization is very very high it's one of the biggest problems that we have and so this move towards self-administration patient can treat themselves at home without a nurse or some kind of a supervision because you can administer through the nose versus having somebody help you with an injection or god forbid you do it wrong uh because you're you know so um um you know careful about uh uh your fears around uh 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 um and we're also seeing more and more research around you know the nose to brain overall and uh depression um is uh is a key area also you know other um um you know uh diseases such as you know parkinson's alzheimer's you know all of these are being our areas being researched for um nasal you know administration of uh of um of the drugs so very very exciting for us uh as i kind of shared that slice of the market that we that we we play so well in this is all just fantastic this is exactly our sweet spot so at risk of and the highest in our portfolio so as that grows very good for our margins as well um i think you guys put out a
press release on May 28th, and unfortunately Guy was not here, he's CEO-elect, head of 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, which a lot of people are really excited about, again we're not at the healthcare conference but so again just from the packaging guys perspective presumably people might you know 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 is already proven can you walk us through maybe some of the technical aspects is it a truncated timeline that we should think about is like or so this
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 um you know glp1 being delivered not only as an injectable not only as an oral uh but potentially you know through the nose um and aptar you know just given our know-how uh in this uh in this space we just filed you know patents on this uh to give us points a couple of weeks ago um and uh 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, you know, there's so many different potential, you know, routes to market for this licensing, so many other, you know, opportunities that may come along with it. And of course, you got you got the device sale as well. So this really shows our innovation in this area, really leading in this area. But also, you know, this is something that could unleash, you know, a lot of potential future revenue for us. And, you know, the other exercise goes, it goes back to the the nasal administration but it's also interesting you know back to the innovation thing you know as we talk about glp1 you know maybe getting a little bit less questions now but a quarter or two ago it was all about what's going to happen to your injectables because now glp1s are going to be you know through oral and we always said this is there will be a market right we don't see this as being cannibalistic to uh uh to the injectables uh 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 tract. 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 tooting horns, you guys are the only company out there that could do all three. You have active packaging for oral, solid dose, right? You have injectables, and you also have
One hundred percent. One hundred percent. So very exciting. And then the other thing is, I would say, you know, just to, you know, as we think, as we're talking about, you know, injectables, GLP-1s are, of course, very important, but that's not the only driver of our injectables growth. You know, biologics are a huge driver of our injectables growth. When you looked at the slide on the pipeline, you know, just a few slides ago, you know, we saw biologics being a big part of that. It's, in fact, I think it was the second biggest area in our pipeline. So 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, Annex One also being a big driver. And so these are all areas, you know, to your earlier question, Gabe, that, you know, we are quite excited about and we think supportive of that long-term, you know, 7% to 11%.
I want to ask a general corporate question and then maybe two on the other businesses. Stefan told us that he's going to be retiring in March. um he was an outside ceo now uh like i said guile who heads up pharma is an internal candidate um just a fresh set of eyes you've worked with him now obviously i think at least maybe for me it seemed like he was kind of being groomed um i think it's going to be a good internal promotion um but are there any things that you see that it might you know during the toya era that um you know might be in in focus operationally commercially or anything like that um you'd call out for us
yeah i mean yes gael is uh has been so first you know um we wish stefan the best in his retirement he chose to retire he um uh is very excited about his future plans with his wife they fly planes you know they go hiking i mean he's got the whole you know frankly the rest of us are just jealous uh about all the things the fun things he plans to do uh 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 Gael as well is not only is he an internal candidate but he also knows all the segments very very well and I think that's important and you know and you know 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 I think, you know, Gael, you know, I've worked with him 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 he's now going through the transition with Stefan. You know, you'll find in Gael a very sort of, you know, Gael is, he likes to study things. you know he he's very much data driven very thoughtful um you know wants the facts uh which as a cfo goodness gracious you know thank you let's only let's talk facts um you know but i you know you'll also see in gael a very very strong drive for innovation um and i think you're going to see that you know from him as well but i think you know you're going to see you know you know being somebody who's been with apter 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 not 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, you know, what potentially comes next.
Data-driven. Data-driven, yep. Beauty, I think Q1 growth was in the 3% range. Margins a tick below. You talked about having to re-qualify a supplier on some particular applications. Target is 15 to 17%. You're pretty close. Do we need that, and you also mentioned-
We're also close. That's the frustrating part, Gabe. Let's just call a spade a spade.
We're really close, yeah. you're close um i wanted to ask about you mentioned d stock high-end fragrance versus kind of mass siege 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 we've done a lot which is my comments about the frustrating part is we've we've done so much and we've come so close um and then of course we saw some of these operational challenges which you know set us back a little bit so that's the the my comments around just being frustrated it's it really is within distance um if you look at you know the work we've done in beauty for the last you know couple of years you know we've shut down you know 10 plants we've you know um you know right sized you know the labor force you know to the tune of you know 10 11 12 percent um so the the organization has not sat back uh has done a lot of work around cost management in beauty and continues to do a lot of work around cost management in beauty um we did go through this de-stocking cycle which you know obviously was a headwind to the top line. And in manufacturing, volumes matter, right? Volumes matter for your absorption and all of those different things, right? So we are excited that we're now seeing volume growth in beauty after that long period of de-stocking. So we saw growth in Q4, we saw growth in Q1. The margins, they don't just rebound in your first quarter of growth. So we do need to see this consistently, but we're absolutely optimistic that we will start to see improvements in the beauty margins and we need to get through these uh you know short-term uh operational hiccups that you mentioned like the you know the fire and the new supplier and you know having to incur additional costs and uh you know that should all be you know behind us uh we think you know by uh at the end of the first half and you know hopefully we're expecting to see sequential
improvement in the margins as we go forward and similar similar last question for you 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 could promote, we're hitting
another wave of inflation. How should we think about that? Yeah, closures, closures, again, newer segment, as I mentioned earlier, and, you know, we've been pretty good in from a growth perspective in closures, our products, again, that reported growth tends to, you know, depending on resting pass through and and so on um you know but if you kind of strip that out and just look at what's happening to the products revenue and closures we've done pretty well um and we've typically grown better than market as i mentioned earlier through innovation you know converting categories uh and so on and we actually expect that to continue we're expecting 2026 to be a good uh growth year uh for for closures there again uh as we kind of look at you know the last um you know 12 to 18 months we've been at the lower end of our our target margin range we have not been in the last couple of quarters because uh of some operational challenges some you know maintenance issues that we've had to deal with the closure steam continues to work uh pretty diligently through those issues um and there again we did say that we expect that to continue um you know into uh into the first half but again we expect sequential improvement in the closures margins uh 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.