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APTARGROUP, INC. (ATR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid growth and margin expansion: revenue $966.0M (+6% YoY), adjusted EBITDA $218.4M (+13% YoY; 22.6% margin, +140 bps), and adjusted EPS $1.66 (+18% YoY). Pharma (royalties, injectables, active materials) and Closures (food & beverage) led performance; Beauty improved modestly on tooling and personal care .
  • Results exceeded the high end of guidance; management highlighted strong execution and disciplined costs while noting tariff-related timing and end-market mix shifts (prestige fragrance) .
  • Q3 2025 guidance: adjusted EPS $1.53–$1.61, including a ~$0.06–$0.07 legal cost headwind from IP litigation; effective tax rate 20.5%–22.5%; FX assumption 1.15 EUR/USD. Management expects ongoing strength in Injectables and normalization in naloxone (emergency medicines) demand .
  • Capital returns were stepped up: $100M returned in Q2 via dividends ($0.45/share) and 452K shares repurchased ($70M); $210M returned in 1H 2025, signaling confidence and offering support to shares on beats and sustained margin expansion .

What Went Well and What Went Wrong

What Went Well

  • “We delivered a strong second quarter, exceeding the high end of our guidance range, delivering an adjusted earnings per share of $1.66, an increase of 18%” (CEO) .
  • Segment margin expansion broad-based: Pharma 35.4% (+130 bps), Closures 16.9% (+130 bps), Beauty 14.1% (+20 bps); consolidated adjusted EBITDA margin reached 22.6% (+140 bps YoY) .
  • Growth engines: Injectables core sales +9% (higher-value elastomeric components for biologics and GLP-1), Active Material Science core sales +11% (active film solutions), and food/beverage closures demand across regions .
  • Strategic moves and innovation: acquired Mod3 Pharma’s Phase 1/2 fill-finish clinical capabilities (Boonton, NJ FDA-inspected site) to accelerate OINDP adoption; Wake Forest PET study validated nose-to-brain insulin delivery using Aptar’s system; sustainability initiative: Freepod nasal pump now with 52% bio-based material for Haleon’s Otrivin .

What Went Wrong

  • Consumer Healthcare softness persisted in Europe due to elevated cough/cold inventories; CHC core sales down and visibility limited; U.S. showed better recovery than Europe .
  • Prestige fragrance remained subdued on tariff uncertainty, delaying launches and depressing sampling volumes; masstige growth helped but did not fully offset mix impact .
  • Anticipated naloxone normalization and IP litigation costs temper near-term EPS: Q3 guide includes ~$0.06–$0.07 legal expense headwind; management expects slower Pharma growth vs 1H as emergency medicines normalize .

Financial Results

Consolidated Performance (quarterly)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$848.1 $887.3 $966.0
Adjusted EBITDA ($USD Millions)$194.9 $183.3 $218.4
Adjusted EBITDA Margin %23.0% 20.7% 22.6%
Diluted EPS ($)$1.49 $1.17 $1.67
Adjusted EPS ($)$1.52 $1.20 $1.66

Q2 2025 vs Wall Street Consensus (S&P Global)

MetricConsensusActual
Adjusted EPS ($)1.586*1.66
Revenue ($USD Millions)956.9*966.0
EBITDA ($USD Millions)211.3*218.4

Values with * retrieved from S&P Global.

Segment Breakdown (Net Sales and Margins)

SegmentNet Sales Q2 2024 ($M)Net Sales Q2 2025 ($M)Core Sales Growth YoYAdjusted EBITDA Q2 2025 ($M)Adjusted EBITDA Margin Q2 2025
Pharma$414.5 $442.6 +3% $156.8 35.4%
Beauty$321.5 $334.8 +1% $47.1 14.1%
Closures$174.0 $188.6 +7% $31.9 16.9%
Total$910.1 $966.0 +3% $218.4 22.6%

KPIs (Q2 2025)

KPIValue
Cash from Operations ($M)$125.96
Capital Expenditures ($M)$63.43
Free Cash Flow ($M)$65.84
Effective Tax Rate20.0%
Cash & Equivalents ($M)$161.73
Net Debt ($M)~$917 (company-reported)
Leverage Ratio1.19 (company-reported)
Share Repurchases452K shares; $70M in Q2
Dividend$0.45 per share (paid Aug 14, 2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ2 2025$1.56–$1.64 (as of May 1) Actual $1.66 Beat
Adjusted EPSQ3 2025—$1.53–$1.61, incl. ~$0.06–$0.07 legal cost headwind New; legal costs headwind
Effective Tax RateQ3 2025—20.5%–22.5% (one-time tax benefit) New
FX AssumptionQ3 2025—EUR/USD 1.15 New
Segment OutlookQ3 2025—Strength in Injectables; naloxone normalization; elevated EU cough/cold inventory; modest Beauty & Closures New
DividendOngoing$0.45/share declared (May 22 & Aug 14 schedules) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Injectables + GLP‑1 demand2024 Injectables +10%; capacity/validation ramp Core sales +9%; higher value elastomeric components driving growth Strengthening
Consumer Healthcare (cough/cold) destockingWeaker season; inventory buildup; U.S. inflection in Q1 Europe still elevated; visibility limited; U.S. improved Gradual normalization (EU slower)
Emergency medicines (naloxone)Growth driver; lumpy distribution patterns Normalization ahead; caution due to policy signals; ~5% of company revenue context Moderating
Prestige fragrance & tariffsPrestige softness; masstige offset; tariff watch Subdued launches; sampling depressed; some clients at low inventories; EU‑U.S. trade clarity just came Near‑term headwind, potential 2H relief
IP litigation costsNot highlighted earlier$0.06–$0.07 EPS headwind in Q3; multi‑quarter legal spend New headwind
R&D/Services expansionSmartTrack validation; OINDP pipeline Acquired Mod3 Pharma clinical materials; expanded services footprint Building capabilities
Nose‑to‑brain (CNS) deliveryPlatform and pipeline noted Wake Forest PET study validated intranasal insulin to key brain regions Strengthening innovation narrative
SustainabilityStrong awards; footprint optimization Freepod nasal pump now 52% bio‑based for Otrivin Advancing execution

Management Commentary

  • CEO: “We delivered a strong second quarter, exceeding the high end of our guidance range… adjusted EPS of $1.66, an increase of 18% over the prior year quarter. Each of our segments contributed…” .
  • CFO: “Adjusted EBITDA of $218M, up 13%… consolidated adjusted EBITDA margins expanded by 140 bps to 22.6%… we anticipate Q3 adjusted EPS $1.53 to $1.61, including ~$0.06–$0.07 legal expenses” .
  • CEO on outlook: “Injectables is poised for another strong quarter… we anticipate challenging YoY comparisons as naloxone sales begin to normalize… elevated levels of cough and cold inventory in Europe to persist” .
  • Strategic: “We announced the acquisition of MOD3 Pharma’s clinical trial manufacturing capabilities… Phase 1 and Phase 2 GMP fill and finish services for OINDPs” .
  • Innovation: “Study demonstrated intranasal insulin using Aptar’s precision nasal spray system reached 11 key brain regions associated with memory and cognition” .

Q&A Highlights

  • Naloxone normalization: management flagged “extreme uncertainty” in non‑traditional channels; expect more muted growth next quarter or two; overall pharma growth will slow versus 1H .
  • Consumer Healthcare destocking: Europe’s deeper/longer downturn tied to inventory hoarding and weaker season; no share loss ex‑Russia; U.S. improved earlier .
  • Legal/IP costs: $5–$6M per quarter ($0.06–$0.07 EPS); multi‑quarter; defensive action to safeguard IP; no pipeline impact expected .
  • Beauty/tariffs: prestige softness timing; EU‑U.S. trade clarity came too late to influence Q3; China/Asia showing healthy regional demand; masstige fragrance and personal care solid .
  • Closures and beverages: broad‑based growth; innovation fueling demand; not seeing on‑the‑go beverage overstock issues impacting Aptar .

Estimates Context

  • Q2 2025 beat consensus on EPS, revenue, and EBITDA: adjusted EPS $1.66 vs 1.586*, revenue $966.0M vs 956.9*, adjusted EBITDA $218.4M vs 211.3*. Given Q3 EPS guide includes ~$0.06–$0.07 legal costs, near‑term consensus EPS likely shifts down for Q3 while full‑year estimates may hold on continued Injectables strength and margin discipline . Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based execution with consolidated margin expansion; Pharma royalties and higher-value mix plus Closures volume underpin quality of earnings .
  • Near-term headwinds: naloxone normalization and EU CHC destocking; model lower Pharma growth in 2H while Injectables and Active Materials offset .
  • Legal/IP costs are transitory but real; incorporate ~$0.06–$0.07 per quarter into Q3/Q4 EPS; strategic defense of IP with no pipeline impact anticipated .
  • Beauty recovery tied to prestige launch cadence post-tariff clarity and sampling normalization; masstige/personal care remain support pillars .
  • Capital allocation supports the equity story: accelerated buybacks and consistent dividends; reinforces management confidence .
  • Strategic services build-out (Mod3 Pharma) and nose-to-brain validation extend Pharma’s durable moat; expect continued pipeline-driven growth and royalty contributions .
  • Setup: With Q2 beats and Q3 caution, stock reaction catalysts revolve around Injectables continuity, cadence of beauty launches, and clarity on CHC destocking; monitor legal expense trajectory and tariff impacts into year-end .

Bolded beats/misses and all comparisons anchored to company disclosures; estimates from S&P Global where noted.