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AptarGroup (ATR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Jul 31, 2026

Source: earnings call transcript

Executive summary

AptarGroup Q2 FY26 — Adjusted EPS above guidance, strong Pharma performance

AptarGroup delivered Q2 FY26 adjusted EPS above guidance, primarily due to strong Pharma segment performance, particularly in injectables and consumer healthcare, offsetting anticipated declines in emergency medicine. While all segments achieved positive sales growth, profitability was pressured by unfavorable product mix and operational challenges in Beauty and Closures, which are expected to progressively improve. The company remains confident in its long-term growth prospects, focusing on disciplined execution and strategic resource allocation under new leadership.

Highlights

5

  • All three segments delivered positive sales growth in Q2 FY26.

  • Adjusted EPS of $1.42 was above the guidance range, driven by better-than-expected Pharma performance.

  • Pharma segment core sales, excluding emergency medicine, grew by 8% in Q2 FY26.

  • Beauty segment benefited from double-digit core sales growth in prestige fragrance.

  • Closures segment saw strong beverage demand, particularly in bottled water, leading to 14% core sales growth in beverages.

Concerns

5

  • Adjusted EBITDA decreased 3% to $213 million, with adjusted EBITDA margin declining to 20.7% from 22.6% YoY, primarily due to less favorable product mix and operational challenges in Beauty and Closures.

  • Adjusted EPS of $1.42 was down 15% year-over-year at comparable exchange rates, impacted by lower emergency medicine sales, operational issues, and higher depreciation/amortization and interest expense.

  • Pharma core sales were impacted by an anticipated $65 million decrease in emergency medicine sales for FY26, with approximately two-thirds incurred in H1 FY26.

  • Beauty's adjusted EBITDA margin declined 190 basis points year-over-year to 12.2%, attributed to lower product volumes, unfavorable mix, and timing of resin pass-throughs.

  • Closures' adjusted EBITDA margin declined 200 basis points year-over-year to 14.9%, temporarily impacted by new production line ramp-up and maintenance initiatives.

Guidance & targets

CategoryTargetConfidence
Adjusted EPS
$1.45 to $1.53
high materiality
High
Capital investments
$260 million to $280 million
medium materiality
High
Depreciation and Amortization expense
$310 million and $320 million
medium materiality
High
Emergency medicine sales decline
approximately $65 million
high materiality
High
Pharma core sales growth
7% to 11%
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Pharma
Impacted by anticipated decline in emergency medicine sales. Margin decline of 180 bps YoY due to unfavorable product mix from emergency medicine decline; royalties and productivity initiatives positively impacted margins. Excluding emergency medicine, adjusted EBITDA margin would have improved YoY.
Core sales growth (excluding emergency medicine): 8%Prescription core sales growth (excluding emergency medicine): 8%Consumer Healthcare core sales growth: 15%Injectables core sales growth: 9%Active Material Science core sales growth: -2%
—1% core sales growth—33.6% adjusted EBITDA margin
Beauty
Demand for beauty dispensing systems and pass-through of higher input costs compensated for lower tooling sales. Margin declined 190 bps YoY due to lower product volumes, unfavorable mix, and timing of resin pass-throughs. Sequentially improved from prior quarter.
Fragrance, facial skin care and color cosmetics core sales growth: 2%Personal Care core sales growth: 0%
—1% core sales growth—12.2% adjusted EBITDA margin
Closures
Strong volume growth in beverages and pass-through of higher input costs compensated for lower tooling sales. Margin declined 200 bps YoY due to ramp-up of new production lines and ongoing maintenance initiatives.
Food core sales growth: -1%Beverage core sales growth: 14%
—4% core sales growth—14.9% adjusted EBITDA margin

Product announcements

ProductTypeDetails
auto-loading dosing TROP technologylaunch
Prestige fragrance pumplaunch
Tap Top Closurelaunch
SimpliSqueeze valve closurelaunch

Deals & partnerships

Eli Lilly Acquisition of a company focused on an intranasal therapy for treatment-resistant depression.

The acquired company's program has received FDA breakthrough therapy designation and begun initiating Phase III trials. Aptar believes this highlights a broader trend in nasal delivery.

different PFS players in the market Collaborative system framework for injectable therapies.

Provides customers with earlier insight into assembled system performance for injectable therapies, making validation and qualification easier by working with different pre-filled syringe (PFS) players for fully integrated validation.

Risks & headwinds

Anticipated decline in emergency medicine sales FY26, with two-thirds incurred in H1 (majority in Q2), and remaining one-third in H2 (primarily Q3). Expected to abate by Q4.

Approximately $65 million decrease in fiscal year 2026.

Mitigation:Focus on resilience of the broader Pharma portfolio, which grew 8% excluding emergency medicine.

Less favorable product mix Q2 FY26

Contributed to 3% decrease in adjusted EBITDA and 190 bps decline in Beauty adjusted EBITDA margin.

Mitigation:Expectation of progressive improvement in Beauty and Closures.

Ongoing operational challenges in Beauty and Closures Q2 FY26, with progressive improvement since beginning of the year.

Contributed to 3% decrease in adjusted EBITDA and 190 bps decline in Beauty adjusted EBITDA margin, and 200 bps decline in Closures adjusted EBITDA margin.

Mitigation:Progressive improvement expected as maintenance issues abate and new production lines ramp up. Management is re-engaging with businesses to address shortfalls.

Higher input costs (e.g., resin) due to recent conflicts in the Middle East Q2 FY26 and ongoing.

Largely offset through customer pass-throughs, but with some timing lag in Beauty (90 bps margin detriment in Q2).

Mitigation:Monitoring the situation closely and taking appropriate pricing actions to offset higher costs. Expected resolution of Beauty lag in Q3.

Higher depreciation and amortization expenses Q2 FY26

Contributed to 15% YoY decrease in adjusted EPS.

Mitigation:Associated with capital investments and acquisitions, implying a long-term benefit.

Increased interest expense Q2 FY26

Contributed to 15% YoY decrease in adjusted EPS.

Mitigation:Due to higher interest rates and a higher average debt balance, but company maintains a strong balance sheet with 1.49x leverage ratio.

Ongoing litigation against ARS Pharmaceuticals Ongoing

Approximately $4 million in legal expenses in Q2 FY26.

Mitigation:Favorable court ruling received, allowing Aptar to continue pursuing claims and consolidating related matters in a single jurisdiction, reinforcing IP protection.

What to watch in Q3 FY26

Beauty Segment Adjusted EBITDA Margin

Q3 FY26
Current 12.2%
Target Improvement from Q2 levels

Why it matters

Recovery in Beauty segment profitability is crucial for overall company margin improvement and addresses a long-standing operational concern.

Beauty's adjusted EBITDA margin for the quarter was 12.2%, and which, while improved sequentially from the prior quarter, represented a decline of 190 basis points year-over-year. This was primarily attributed to lower product volumes, unfavorable mix and the timing of resin pass-throughs.

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Q&A highlights

Asked about observed weakness in the Brazilian market for Beauty/Personal Care and when the Beauty segment is expected to achieve sustained volume and earnings growth, given its historical lag.

Stephan Tanda confirmed weak sales in Brazil due to cyclical factors and customer share shifts. He acknowledged Beauty's bottom-line performance as an area for improvement, noting Europe and Asia segments perform well, but Americas (North America and Brazil) face operational issues. Gael Touya stated he is re-engaging with the business and customers to build on strengths, adjust where needed, and focus on delivering commitments and future growth.

“On the 1 hand, we're very proud with the turnaround we've achieved in Europe, and I won't repeat all the things we did with shutting down plants, improving cost base and Europe is firmly in the target range. Asia has done very well and is well above that. But we have fallen short in the Americas for different reasons.”

asked by George Staphos · answered by Stephan Tanda

2 min read 8 chapters

Detailed narrative

CEO Transition and Leadership Outlook

Stephan Tanda is retiring as CEO, with Gael Touya assuming the role on September 1. Tanda expressed pride in the company's accomplishments and confidence in Touya's leadership, highlighting Aptar's strong culture and focus on execution and innovation. Touya emphasized his commitment to profitable growth, disciplined execution, and thoughtful resource allocation, aiming to build on the strong foundation left by his predecessor.

Pharma Innovation and Pipeline Strength

Aptar continues to strengthen its Pharma pipeline through expanded capabilities in formulation development, analytical services, and regulatory support. Key advancements include patent applications for inhaled and nasal GLP-1 therapies, approval of the U.S. patent for NSORP technology to address nitrosamine impurities, and a collaborative system framework for injectable therapies. These initiatives aim to accelerate development timelines and enhance patient safety.

Respiratory Health and Next-Gen Propellants

The company's PMDI platform received FDA approvals for asthma and COPD therapies, validating its performance. A significant milestone was the U.K. approval of the world's first PMDI utilizing HFA 152A, a low global warming potential propellant, following Aptar's collaboration with the FDA on next-generation propellant research. This development supports expanded patient access while reducing environmental impact.

Nasal Delivery Expansion

Aptar sees growing interest in nasal delivery across therapeutic areas beyond allergy and migraine, including central nervous system disorders. Eli Lilly's acquisition of a company focused on an intranasal therapy for treatment-resistant depression highlights this trend, confirming the potential for rapid onset and direct CNS access.

Generic Inhaled Therapies Regulatory Shift

The FDA updated guidance for generic inhaled therapies, removing certain clinical study and bioequivalence testing requirements. Aptar views this as a positive development, expecting more efficient market entry for generic inhaled products and validating its scientific expertise from FDA collaboration.

Sustainability Achievements

Aptar was named a CDP supplier engagement leader for the sixth consecutive year and recognized by Time magazine as one of the world's most sustainable companies for the third consecutive year. The company also ranked in the top 5 nationwide in engineering, manufacturing, and medical technology, and top 10 for sustainability and transparency in Time's inaugural "America's Best Companies 2026" list.

Litigation Update

Aptar received a favorable court ruling in its litigation against ARS Pharmaceuticals regarding proprietary nasal drug delivery technology. The court granted Aptar's motion to amend the complaint and denied ARS's motion to dismiss, also transferring ARS's California action to New York, consolidating related matters in a single jurisdiction. This is viewed as a positive step in protecting intellectual property.

Operational Improvements and Cost Management

Despite some ongoing operational challenges in Beauty and Closures, the company noted progressive improvement from Q1. SG&A as a percentage of sales decreased by 20 basis points year-over-year to 15.4%, even with $4 million in legal expenses for non-ordinary course litigation. These efforts contributed to adjusted EPS exceeding guidance.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.