Call Transcript (2004)Full Document 

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AptarGroup, Inc.
First Quarter 2004 Earnings Conference Call
Apr. 16. 2004 - 8:00AM CT

Call Transcript

         Ladies and gentlemen, thank you for standing by. Welcome to the
AptarGroup 2004 first-quarter and year-end results conference call. At this
time, all parties are in a listen-only mode. Later, we will conduct a
question-and-answer session. Today's conference call is being recorded. If you
have any objections, you may disconnect at this time. To introduce today's
conference call is Mr. Ralph Poltermann, Vice President and Treasurer of
AptarGroup. Sir, please go ahead.

         Ralph Poltermann, AptarGroup Inc. - VP, Treasurer

         Good morning, everyone. Before we begin, I would like to point out that
the discussion to follow includes some forward-looking comments and that actual
results or outcomes could differ materially from those projected or contained in
the forward-looking statements. To review important factors that could cause
actual results to differ materially from those projected or contained in the
forward-looking statements, please refer to AptarGroup's SEC filings.

         Information in this conference call is relevant on the date of this
live call. Although the Company will post a replay of this conference call on
its Web site as a service to those investors who are not able to listen today,
the information contained in the replay will be dated and should be used for
background information only. The Company undertakes no obligation to update
material changes in forward-looking information contained therein.

         Our speakers for today are Mr. Carl Siebel, President and Chief
Executive Officer for AptarGroup, and Mr. Steve Hagge, Executive Vice President
and Chief Financial Officer. I would now like to turn the conference over to Mr.

         Carl Siebel, AptarGroup Inc. - President, CEO

         Thank you, Ralph. Good morning, ladies and gentlemen. This is Carl
Siebel speaking. I'll briefly discuss the quarter and the outlook before turning
it over to Steve Hagge, who will provide more detailed information about our

         In yesterday's release, we reported record first-quarter sales and
income. Overall, sales increased due to higher volumes, custom tooling sales and
the impact of the weaker dollar on the translation of foreign sales.

         Looking at the markets, excluding the foreign currency translation
effects, sales to all of our markets increased. Sales to the food and beverage,
household and personal care markets were strong, while fragrance/cosmetics sales
increased slightly over the prior year. Sales to the pharmaceutical market
increased primarily due to custom tooling sales.

         As we have pointed out in the press release, most of the increase in
tooling sales related to one custom project for a pharmaceutical customer.
Excluding the

impact of foreign exchange and this specific custom project, pharmacy sales
decreased from the prior year. We noted that this pharmaceutical customer
informed us of their decision to cancel the launch of the product related to
this project and this investment. As a result, previously expected sales in late
2005 and beyond 2005 relating to this specific project will not be realized. The
custom project was to create a new dispensing system for an existing product for
which we are supplying, since quite some time, the current dispensing device. We
evidently expect sales of this current system to continue into the future with
this customer.

         Operating income as a percent of sales for the quarter was negatively
impacted by the following -- first, price competition; second, weakness in
pharmaceutical product sales; third, the higher cost of imports to the U.S. from
the weaker dollar; and finally, increased material costs.

         Our outlook is generally optimistic for the second quarter of 2004. The
momentum we experienced in the first quarter is expected to continue into the
second quarter. We also anticipate that pharmaceutical volumes will improve in
the second quarter and expect this trend of improvement to continue throughout
the year.

         If we put aside any potential impact from the tax refunds mentioned in
the press release, we anticipate that diluted earnings per share for the second
quarter of 2004 will be in the range of 58 to 63 cents per share, versus the 58
cents per share recorded in the second quarter of 2003.

         Now, Steve can provide more details about the tax refunds in a moment.
I would like to turn it over to Steve now for his review of the financial

         Steve Hagge, AptarGroup Inc. - EVP, CFO

         Thanks, Carl, and good morning, everyone. I will review the financial
information and then Carl and I will be happy to answer any of your questions.

         Looking at the quarter, as Carl indicated, we reported sales increase
of 19 percent, whereas sales, excluding the impact of foreign currency
translation, grew at approximately 8 percent from the prior year. Our custom
tooling sales in the quarter increased $11 million over the prior year with most
of that increase coming from tooling sales related to the pharmaceutical market.

         Looking at sales to each of the markets for the quarter, excluding
changes in exchange rates, in the personal care market, we were up in the upper
single digit area. We were up slightly in the fragrance/cosmetic market. We were
up around 10 percent, including tooling sales, in the pharmaceutical market, up
in the low teen area for household and up almost 30 percent in the food market,
and our other non-packaging was about flat.

         As Carl mentioned, if we exclude the tooling in pharma sales, we would
have been down slightly if you exclude exchange rates.

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