(ATR) 2007 Q1 法說會逐字稿

Welcome to AptarGroup's first quarter 2007 results conference call.

At this time, all participants are in a listen-only mode.

Later, we'll conduct a question-and-answer session.

Introducing today's conference call is Mr.

Ralph Poltermann, Vice President and Treasurer of AptarGroup.

Please go ahead, sir.

Thank you, Giovan.

Before we begin, I would like to point out that the discussion to follow includes forward-looking comments and 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.

The information 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 website 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.

Participating in this call today are Carl Siebel, President and Chief Executive Officer of AptarGroup.

Peter Pfeiffer, Vice-Chairman, and Steve Hagge, Executive Vice President and Chief Financial Officer.

I would now like to turn the conference over to Mr.

Siebel.

Thank you, Ralph.

Good morning, everyone.

This is Carl Siebel speaking.

I will briefly discuss the quarter and outlook before turning it over to Peter Pfeiffer and Steve Hagge for their comments.

I'm pleased to report we had an exceptionally strong first quarter which resulted in record first quarter sales and profits.

We reported increased sales and profitability by every segment in the quarter.

In the beauty and home segment, higher demand from the fragrance, cosmetic and personal care markets accounted for the increase.

Closure segment sales increased primarily due to strong demand from the personal care and household markets.

Pharma segment sales increased primarily due to higher product sales, especially sales of metered-dose valves.

As noted in our press release, changes in the exchange rates had a positive impact on sales during the quarter.

You may recall that we reported some productivity problems in our closures operation in France during the fourth quarter of last year.

We have been focusing on improving this operation and I'm pleased to report that we've seen some improvement in their results and we expect further improvement as the year progresses.

The overall strength of our business allowed us to report record operating income for the first quarter despite incurring higher stock option expense during the first quarter of this year.

We continue to benefit from the broad-based strength of demand across our segments and a fairly high level of new product activity, both our own innovations as well as new applications by our customers for our products.

Looking forward, we expect the positive momentum to continue into the second quarter of 2007.

Diluted earnings per share for the coming quarter are expected to be in the range of $0.96 to $1.01 per share on a pre-split basis versus $0.77 per share in the second quarter of 2006.

This would represent increase in the range of 25% to 31%.

We also announced that the board approved an 18% increase in the annual dividend rate as well as a two-for-one stock split.

These actions demonstrate management's and the board's positive expectations for the future.

Our cash-generating ability and strong balance sheet positions us well to take advantage of strategic opportunities should they present themselves.

On a personal note, my decision to retire at the end of this year was announced as well as effective upon my retirement, the selection of Peter Pfeiffer to succeed me as President and CEO and the expansion of Steve Hagge's role to include Chief Operating Officer responsibilities.

I worked for the company for most of my professional life and I'm ready to step back from being involved in the day-to-day management of the company.

I would like to point out that I'm in good health and retiring now will allow me to spend more time with my family and to pursue other interests.

I plan to continue my present role in the day-to-day management of the company through the end of the year.

I also plan on continuing to be associated with the company by serving as a director.

In closing, I would like to point out that I'm proud of my contribution to the development of our strong management team and I'm confident that AptarGroup will continue in the same successful course for many years to come.

Now, I would like to turn it over to Peter.

Thank you, Carl.

Good morning, everyone.

This is Peter Pfeiffer speaking.

Before moving forward to Steve's discussion about the quarter results, I would like to take a moment to comment on Carl's decision to retire even though this won't happen until the end of the year.

Those of us who know Carl, know that he has the energy and the stamina to continue working for many years to come.

But we also recognize the fact that he has other interests to pursue and can certainly understand his decision to make more time for his family.

Carl has been part of our company for 45 years and has been our CEO since 1996.

Under his leadership, AptarGroup has grown to become the dominant player in our industry.

Since Carl became CEO, revenues grew from $560 million to over $1.6 billion, and profits also nearly tripled in the same period.

In addition, Carl led AptarGroup to develop or acquire many innovative [INAUDIBLE]-dispensing technologies that have helped the company become the leader in our field.

Carl has also done an excellent job of developing our people and has built a strong and experienced senior management team.

While I will face certain challenges when stepping into the CEO role in 2008, I am confident that we have the right people in place, not only at senior management level but throughout the organization, to ensure AptarGroup will continue in our successful course for many years to come.

I am pleased that Steve Hagge will also be assuming additional responsibilities in 2008 as Chief Operating Officer.

Steve and I have worked very closely with Carl over the years, developing and executing our strategy and we intend to keep this strategy intact and maintain our customer-driven focus and the core values that have rewarded our shareholders, employees and customers around the world.

I now would like to turn it over to Steve who will discuss our results.

Thanks, Peter.

Good morning, everyone.

I'll review our financial highlights and then Carl, Peter and I will be happy to answer your questions.

Looking at the first quarter, as Carl mentioned, our reported sales increased approximately 20%, with changes in exchange rates accounting for about 6% of the increase while acquisitions accounted for approximately $6 million or 2% of the 20% increase in sales.

Sales of custom tooling decreased about $4 million in the quarter from the previous year to approximately $8 million with the majority of the decrease coming in sales to our Pharma market.

Excluding changes in exchange rates, the beauty and home segment sales increased 17% and this was mainly comprised of an 18% increase in sales to each of the personal care and the fragrance cosmetic market.

Again, excluding changes in exchange rates, our closure segment sales increased 10% and this was due mainly to a 22% increase in sales to the household market and a 17% increase in sales to the personal care market.

Looking at our Pharma segment, sales increased 10% and as Carl mentioned, this is largely due to increased sales of our metered-dose aerosol valves.

Stock option expense on a pre-tax basis for the first quarter totaled $8.7 million, or $1.6 million higher than the $7.1 million recorded in the prior year.

Again, as Carl talked about in his comments, we indicated in our fourth quarter results that we were adversely affected by operational difficulties at our closure operation in France.

As we've continued to focus on this operation, we continue to see improvements -- we see in the first quarter, a sequential improvement in the area of about $1 million from this operation.

Bottom line, we reported $0.82 compared to $0.55 per share in the prior year, or 49% increase.

From a geographic standpoint, sales to customers by European operations represented 62% of net sales this year versus 61% of sales last year, while sales to customers by our U.S.

operation accounted for 27% of our sales this year versus 31% of our sales last year.

Free cash flow, defined as cash flow from operation less capital expenditures, for the quarter was approximately $8 million versus $6 million in the prior year.

Our cash flow from operations for the quarter was approximately $34 million in the current year and compared to $32 million in the prior year, while our capital expenditures were around $26 million in both years.

We spent approximately $12 million to repurchase approximately 182,000 shares during the quarter at an average cost of $65.65.

At the end of the quarter, the remaining number of shares authorized for repurchase was around 1.8 million.

The mix of debt at the end of the quarter is approximately 50% fixed and 50% variable, with an average interest rate of around 5.7%.

On a gross basis, debt to net capital is around 24%, while net debt to net cap is approximately 12%.

Looking forward, based upon current exchange rates, we expect depreciation and amortization in 2007 to be in the area of $120 million, while cash outflows for our capital expenditures in 2007 are expected to be $140 million which is up somewhat from the $137 million we gave several months ago.

Capital expenditures in 2007 are expected to exceed depreciation and amortization primarily due to the previously-announced expansion of our pharmaceutical facility in France.

Now, looking at our stock option expense on a pre-tax basis for the year, we estimate that the expense for the year will be as follows: As I mentioned, we had a negative impact in the first quarter of $1.6 million compared to the prior year.

We expect to be even with the prior year for expense in the second quarter and a decrease in the expense of $500,000 in the third and a decrease in expense of $400,000 in the fourth for a net impact of a positive $700,000 for the full year.

Finally, the effective tax rate for 2007 is expected to be in the area of 31% to 32%.

At this time, we would be glad to answer any of your questions.

[OPERATOR INSTRUCTIONS] Our first question comes from Ghansham Panjabi from Wachovia.

Hey, guys, good morning.

Good morning.

Carl, congrats on a very successful career, and Peter and Steve, congrats on your move.

Thank you.

On the Pharma segment, income growth, you mentioned that part of this is due to metered-dose inhalers, some outsized growth there.

Could you just give us some is more color on this?

Was it inventory-related or something else?

No, the increased profits in the Pharma segment was mainly because of more sales of products we have had compared to last year, less sales in custom tooling, and this has helped quite a bit in the margin side.

Okay.

Obviously you've seen a big acceleration in earnings growth over the past few quarters.

How much of this earnings acceleration would you attribute to momentum from your acquired businesses relative to just pure organic growth and along the same vein, can you comment on the health of the M&A market at this point as you see it?

I think if you look back at the acquisitions, as you can see, over the last couple of quarters, it has been a part of the growth, but the biggest part has been our internal growth and we would expect that to continue, Ghansham.

We're up to about 12% internal growth in the quarter, organic, and we were about 12% in the fourth quarter.

So, I think acquisitions certainly are going to continue to play a part in our future growth and there is still quite a bit in the market.

And so it is still an active market.

We plan to be an active participant.

Okay, great.

Thank you.

Our next question comes from George Staphos from Banc of America Securities.

Thanks.

Hi, everyone, good morning, good afternoon and I would echo the congratulations to everybody.

The first question I had, if we look at beauty and home profit growth, could you remind us why it should be growing so much more quickly than the volume growth?

Obviously it is a high-class problem to have but help us fill in some of the blanks there.

George, I think number one, evidently, the higher sales allowed for better absorption of fixed overhead.

That's one side.

At the same time, we've been able to sell a higher percentage of our higher-margin products, and of our new products, specifically in the sampling area, we have continued on a successful track and considerable growth, again with better margin products.

I believe it is a combination on one side of the absorption effects overhead and through increased sales, new product introduction and also the consequence of our efforts to reduce cost.

You'll remember the restructuring plan we had in our French operations on the perfumery/cosmetics side which we executed successfully, which met our expectations in terms of savings and return on that investment.

So, that third element, both in our fragrance operations in France and also in our fragrance operations in Germany helped to improve the margin.

Okay.

Carl, just briefly, you mentioned sampling as the highlight in new products.

Was there any one or two other new products within beauty and home that were big drivers there?

Well, we continue in the SeaquistPerfect segment of the business to be very successful with the introduction of our -- with selling our locking actuator, which has excellent margins and which is creating additional momentum there.

Right.

And also our Bag-On-Valve systems where again, we have increased our capacities in the United States of these products and we're selling them extremely well.

And again, they have excellent margins.

On the sampling side, we expect our Imagin sampling product which is really extremely innovative, to gain momentum and in fact, at this point, the existing capacity is sold out.

Okay.

Carl, that's great.

We appreciate the color in terms of guidance for the second quarter.

How long, given what you're hearing from your customers, given what you know, obviously there are no guarantees here, can you keep up core growth over 10%?

When, perhaps, do you anniversary a tougher quarter, if you can remind us, when would you expect growth to come down to a more normal Aptar level, or do you see 12% -- low double-digits as the foreseeable future in the next several quarters?

Well, we've given a positive outlook for the second quarter, and based on our present order backlog, the second quarter looks pretty good.

Looking beyond the second quarter is much more difficult.

I understand.

As you just mentioned, George, the comparisons will be also tougher for the third and fourth quarter because we had 10% and 16% growth in 2006 over 2005 in those quarters.

However, we believe that there are some fundamental changes for our business.

If you look at the coincidence of the European economy, growing much faster than was still expected at the end of last year and very healthy growth rates in Germany and also in other European countries.

Still, while decelerating, the U.S.

economy is also growing healthily and then, so that's our existing traditional markets but now comes the evolution which you are aware of in southeast Asia and South America where new portions of the population increase in purchasing power and since our -- the products of our customers in the perfume business are sort of seen as affordable luxury, we believe that and our customers tell us that there is a very strong additional demand coming in from these people who have not had access to this in the past.

And then some customers told me that in Russia, there is an enormous growth.

Eastern Europe is also growth.

So there are considerable fundamental changes this year which are helping us.

But again, as I said at the very end, it is very difficult to forecast for beyond one quarter in our business and so we have those tough comparisons in the third and fourth quarter.

I don't know whether I gave you enough color with that.

We empathize on the forecasting as well.

Thanks for the color.

The last question, I'll turn it over.

Steve, what's going to change for you in terms of your responsibilities -- I know you're changing your title but what's going to change for you day-to-day with the additional responsibilities and how do you make up that loss of capacity on the finance side?

I think a couple of things.

Peter and I will be working through that through the remainder of the year in terms of where the responsibilities will go.

But it will be increasing some of the operational responsibilities in terms of where our business unit is today.

So, today I've got certain operational responsibilities for closures and we'll be evaluating what additional responsibilities I'll take when we start 2008.

And then from the financial side, we'll also be evaluating what I'm going to need to be able to leverage the time to be able to give up certain parts of that, to be able to focus on the operations.

So, that's something we'll be really more focusing and developing through the remainder of the year, George.

Okay.

Thanks.

I'll be back, guys.

Our next question comes from Chris Manuel from KeyBanc Capital.

Good morning, gentlemen.

Good morning, Chris.

Congratulations on coming retirement and congratulations again to you, Peter and Steve.

Thank you.

A couple of questions.

First, I would like to dig a little deeper into the question George just asked concerning organic growth and potential going forward.

Normally, you guys are -- historically your organic growth rate has been in that 6% to 8% range.

But you rattled off a bunch of different factors there, including more penetration into these developing markets.

And I know over the last three to five years, you've really done a lot of work to expand the footprint in these developing markets.

With economies picking up in Europe and as you continue to get more traction and more products into these developing markets, should we begin to think about the more normalized organic growth profile instead of being a 6% to 8% maybe that ticking up closer to a 7% to 9% or an 8% to 10% or something in that range?

Again, to make longer term forecast; it's risky and difficult.

Certainly, we believe that there is a potential for improved growth over a certain period at this point.

What to -- to now go and say it will be 9%, 10% instead of 7%, 8% I think would be too risky to venture into that.

But essentially, we believe that we have gained market share over the last two years on one side and as I said, we have -- we are seeing additional parts of the population in developing countries to grow into purchasing power regions where they can afford the products of our customers which we supply to.

By the way, also, may I remind you that in effect, most of our growth goes through our customers into these countries.

So, we see -- we see the growth of our -- especially our European and U.S.

fragrance customers.

But they are exporting a very high percentage of their business.

And their explanation for their demand on us is really the export which they have to these regions.

Okay.

Let me come at it a different direction as well.

And it looked like in the quarter, personal care both in your beauty and home and in your closure segment were up high teens.

And are you beginning to see any propensity from folks that want to -- I would say sample-size market, but three ounce or less that we have to have now for on airplanes, to go to more dispensing systems where traditionally on small shampoo bottles and mouthwash bottles, et cetera, we've only had a twist-on or twist-off cap.

Have you begun to see any material change in the buyers wanting, or your customers, wanting dispensing systems on those type of products?

We have seen some signs of that.

But it is difficult for us to really quantify the impact.

The only, maybe, area where I think that we see a quantifiable conversion is in the sampling area where and through our new easy spray pump system, we have been able to sell the sampling pumps at a price point to our customers which allows for conversion from using stoppers on vials to using more pumps.

And that is certainly an area, and we also believe we have seen some advertising of customers promoting, in effect, the sale of what we call sampling products instead of using them as give-aways to try to sell them to people traveling and who are in effect looking for smaller packages because of the restrictions in air travel.

Okay.

One last question.

It is actually for you, Peter.

In the Pharma segment, have you begun to -- you mentioned aerosol valves or metered-dose valves were substantially stronger.

Can you give us an update on where you are with respect to the counting systems on the metered-dose valves?

Is that something you've begun to see?

Is that something that we should start to see later in this year?

And as well as, I think you've indicated in the past, that dry powder should begin to see applications possibly in '08.

Can you give us an update on what the future product pipeline looks like in the Pharma business?

Concerning the counting system, which we call Landmark, we're working with a couple of customers which are testing the product and which want to introduce it but it is not yet clear how long they will take to come to the market.

The same basically is true also for the dry powder system.

This will take really a long time because this has to go through the approval process at the FDA and we do not see any products coming through the market beyond 2010 or even later.

So, it is a long shot, the dry powder inhaler.

Okay.

Is that what you added -- what did you add the capacity for, or are you adding for, in the plant in 2008?

This is partially for metered-dose inhalers.

There is an increased demand from our major customers for this.

But we are also preparing the production for the Landmark, for the counting device, so both of these two products are foreseen for the new building, we are producing or building now.

Okay.

Thank you very much, gentlemen.

Our next question comes from Ross Gilardi from Merrill Lynch.

Good morning.

Thank you.

Good morning.

Best of luck to everyone again on their new roles and Carl certainly you on your retirement.

Just a few questions.

First of all, could you comment a little bit more on the sequential earnings improvement in the closure segment?

Of course, you talked about some of the operational difficulties in France, making progress there.

But also seems like something else is really helping you.

I think if you look at the closure side, Ross, you're getting, as you mentioned, the sequential improvement in terms of the European operations.

Also, that we're having strong growth in the other segments.

We're starting to see some products in the U.S.

market coming into the household market, which had good strength for us in the quarter.

Our personal care business has been good.

And frankly, the mix of our product has done well, which has also had a positive impact on the profitability.

So, we were able to see profit improvement from closures really on a worldwide basis in the U.S., Europe, Latin America, so it was pretty broad-based strength based on product sales and mix.

Okay.

And then could you talk a little bit more about the month-to-month demand trends during the first quarter?

Was there any discernible change from month to month, or was it pretty steady?

Again, I think it's pretty steady.

March was certainly a very good -- has been historically one of our stronger months and that continued in '07.

Okay.

And then could you comment on your attitude toward share repurchase with the stock at its current level?

Again, we've been in the market consistently.

We still think that today, the price of the stock is still a reasonable level and we would anticipate still being in the market as we go into the second quarter.

Okay.

Then just lastly, if you do do a larger acquisition which you've consistently outlined as -- or at least acquisitions in general, as a priority for cash flow, would you consider using your stock as an acquisition currency in your efforts to maintain an investment grade balance sheet?

Yes.

We would definitely -- we've historically always considered both cash and equity as potential acquisition vehicles, so we would look at both.

Okay.

Thank you.

Our next question comes from Claudia Shank from J.P.Morgan.

Thanks very much.

Good morning.

Good morning, Claudia.

Just sort of sticking on the uses for cash; I wondered if you could prioritize how you're thinking about your cash and then maybe comment, too, on, if given the increase in your organic growth rates, you feel like there is a change in your normal Cap-Ex requirements.

Let me take the priorities and I'll turn it over to Carl to talk about some of the shorter-term issues in terms of capacity.

We've looked from a cash flow standpoint, our priorities have been -- the acquisitions have been our number one priority in terms of looking at the cash we have, and as I think I mentioned earlier in the call, the acquisition market continues for us to be relatively active.

We're looking at operations or potential activities really throughout the world.

So, that still is our number one.

Second though has been the dividends and stock repurchase issues that we've had.

So, we happen to be in I think a fortunate position that we've got the ability with our balance sheet today to continue to be moving our dividend up, still being repurchasing stock and also have a very strong potential to do medium into even a large size acquisition.

So those tend to be the priorities, but there have been some capacity issues with the strength of the business.

I'll turn it over to Carl and let him comment on that.

Yes, Claudia.

When we were budgeting last year, we were -- you will appreciate not expecting the kind of growth we are seeing now in the first half of this year.

As a consequence, we have now, in some areas, specifically in the perfume pump, the fragrance pump area, we have some broad-based capacity constraints.

And now we're planning to add to our initially planned envelope for 2007 some capital expenditures now in order to meet the market requirements.

Okay.

Do you think in '08 you're probably looking at another year then of elevated Cap-Ex?

I think we'll have to come back and really position as we go through the second half where the demand cycle is going to go.

Okay.

And then the only other question I had was just on your corporate expense.

It was a little bit higher than I thought it was going to be this quarter.

I don't know if there is anything going on there and how we should think about that going forward.

You've got about three things in there.

The biggest, as you can see, the increase was about $1.6 million in the stock option.

Yes.

You've got a little bit of currency -- what I call normal inflationary type increases, but we also had some timing issues which I don't think you'll see recurring.

We had some timing of -- when we had some payments that came in through the first quarter that aren't recurring into the second, third or fourth.

Okay, that's perfect.

Thank you very much.

Our next question comes from Gregory Halter from Great Lakes Review.

Hello, guys.

Again, I echo the congratulations on the strong results.

The stock is up 5 points this morning so that's good as well.

Thank you.

Just wonder if that changes your thoughts on the share repurchase at all, or you would still remain a buyer even at these higher levels?

I think we'll continue to be -- we'll look at it on a regular basis but even at these levels, we still view the stock as an attractive investment.

Okay.

And related to that point, fourth quarter '06 diluted share count was 35.4 million and it rose to 35.9 million despite the repurchase.

I'm just wondering if you could walk us through that increase.

It has really been the stock price in terms of how the option -- when you have to come back and do the options coming back in to get to a diluted earnings per share number.

On the diluted side, you need to consider the outstanding options, so that's what's moving it up.

Okay.

All right.

And I wondered if you could comment on the competitive environment and if you see any disruption or no disruption from MeadWestvaco's purchase of Calmar.

Not really.

I think since the business in general is strong, the situation I suppose also of our competitors is reasonable.

We have not seen any major impact through the acquisition of Calmar by MeadWestvaco, so up to now there is no major change in the competitive environment and the only observation I may make is that we believe that we have gained through our new product introduction our broad geographic presence.

We've gained some market share over the last one or two years.

Okay, great.

And looking at some of the new products, I think last quarter, you had commented on the push to open system in the beverage market and just wondered if you could give us an update on that.

Yes, the push to open system will first come to the market in the personal care area and we expect a major marketer to come out in the second half of this year with this product.

And on the other side, we have been very successful selling our new closure, which we have developed for the beverage market.

We have been -- the product has been very well received, as judged in the performance in filling and also in the performance, leak-proofness and things like this and the way it is holding pressure to be superior to all other products in this category, and we believe that the original will be a very successful product helping our penetration in the very fast growing market of single-serve beverages.

Okay.

And that major marketer, would that be in the U.S., and can you mention who that is?

No, we cannot mention who it is, but it is in the U.S.

Okay.

I notice that L'Oreal had results that were probably the strongest in five to ten years.

I would presume they're a customer of yours since you've commented on them in the past.

I just wondered if you had any commentary you could add there as well.

Well, you are absolutely right.

They are our customer.

Most of the major marketers in our business are our customers.

They're in effect -- they and other customers of ours are all announcing very good results and good increases.

And we believe that the biggest reason is their exports to developing markets and to eastern Europe and Russia, coupled with the strengths of the -- regained strengths of the economy in western Europe.

Okay.

And I know a year or so ago, you had a resin situation in the Pharma area.

I wonder if you could comment on that as well as resin costs generally.

On the resin cost I will comment, and then I will give it to Peter.

On the resin cost we have seen some decrease.

We -- in the first quarter, we were back to first quarter levels of 2006, but we expect some increases both in U.S.

and in Europe in the second half or second quarter of this year.

Gregory, I'm not sure what you're relating to in the Pharma area.

We have from time to time some problems in this area if some types of Pharma-grade resins are stopped, and then we have to approve new resins.

This could be a problem for the time being.

Fortunately, we're not facing these kind of problems.

We had, I think Peter what Greg was referring to, about two years ago, we had some contaminated resin which cost us some quality issues.

That situation has been resolved and frankly, that was about two or three years ago at this point.

So, the challenges we had in some of the Pharma area in 2006 related to some quality-related issues that had a negative impact on the Pharma sector throughout part of 2006.

Okay.

That is what I was referring to.

One last one is, if you look out over the next three to five years, what kind of earnings per share growth rate do you think AptarGroup can produce?

Again, over a longer period of three to five year time period?

Do you have any sort of internal goals that you target to?

Well, I mean, Greg, I think we've talked about -- we would like to continue to grow our bottom line, or the earnings per share line, at a faster rate than we're seeing the top line growth.

That's been our focus.

It is really difficult -- from ours, we're looking at that 6% to 8% top line growth is where we see our markets going with the continual move to consumer convenience and marketer differentiation.

We think that will continue.

So, ours is much more let's focus making sure that the bottom line is moving up at a faster rate than the top line.

Okay, great.

Thank you.

Our next question comes from Mike Hamilton from RBC Dain.

Congratulations, everyone.

Thank you very much, Mike.

Carl, it appears you're going to be very dizzy doing victory laps this year so take care of yourself.

Steve, if we could, I think you just gave a partial listing on the growth rates of product lines.

Could you run through real quickly, both organic without currency and then stripping out acquisitions, your growth across the board there if you've got it?

Okay.

Yes, I can go through these, at least give you some of the bigger numbers.

If you take beauty and home area, and again, these -- beauty and home area, and personal care grew 18%.

And excluding acquisitions also is 18%.

In the fragrance cosmetic, that was also up 18%, and 3% was coming from acquisitions.

Household was basically flat for us.

That gained about 17% is what we reported in terms of the growth and 16% -- excluding acquisitions.

Then if you take out the FX we would have been up 24%.

In the closure area, the personal care growth was 17%; excluding acquisitions was 12%.

Our household growth was 22%.

And our food -- we actually were down slightly due to some tough comparisons last year.

We're down about 7%, giving the total of around 10% in terms of growth; 7% excluding acquisitions, and including acquisitions at 14%.

And the Pharma would have been 10% growth, and there wasn't any acquisitions for that, and we reported 18%.

Fabulous.

Thank you.

A few detail questions.

On the tooling, a little light to total revenue than what we've seen, and I realize totally unpredictable, but to the degree you've got a feel for the longer term, would you expect that to be going back up again?

Yes, I think over the year -- last year we were in the area of $60 million.

We would expect that probably to be still in the area of $50 to $60 million and as you said, Mike, that's really tough because of the timing of when those projects get completed.

So, I don't see a major change from year to year on that at today's level.

A question strategically off of currency and I guess specifically, a weak dollar.

Obviously, you've got a very natural hedge going there.

But does the weak dollar, if it continues to trend, give you some things that you need to do either tactically or strategically to rebalance yourself?

I don't know, again, the weak dollar from an overall Aptar standpoint probably has a net positive impact from us on an earnings per share side.

The one negative with the weak dollar is imports back from Europe, particularly into the United States or where the dollar-based currencies are at.

We have always been trying to balance our production so we have more of our production produced in the currency that we're selling.

That is continuing so -- and those efforts have continued over the last several years.

That would probably be the only thing that in the short term if we needed to might be accelerating some of that.

That's still a big challenge particularly in our pharmaceutical area because there's huge regulatory issues surrounding that.

Yes.

Lastly, on the metered-dose strengths that Carl had mentioned earlier, is there any particular areas that you can speak to on what's going on there?

No.

What we're seeing is an increased use of metered dose inhalers because of the new introduction of combination product.

This has changed a little bit, the use in the pharmaceutical area so the new products are more and more used as metered-dose instead of the dry powder inhaler.

So, that's a trend which we're seeing in the short term.

But more trend rather than a particular product release here in the quarter.

Yes, I would say so.

Okay.

Thank you very much.

Our next question comes from Timothy Burns from Cranial Capital.

Carl, I read in Der Spiegel the other day that you're actually signed up to be a test driver for Porsche.

Is that true?

Oh, I would love this to be true!

Congratulations on a very, very successful career.

I've got another question for you.

You're in your backyard in a lounge chair with a huge stein of beer, an alt, ideally.

It's ten years later.

What new product or product line category do you think you would look at and say, wow, I had a role in that?

I believe one side will be our dry powder inhaler and the other side will be our sampling products.

Okay.

I think in those two areas, and the third may be the beverage, the beverage closures.

Gotcha.

Along the lines of what Chris Manuel talked about, it would be interesting to do a sampling product that actually dispenses Valium as you go through the security at all the airports.

I do have a question.

I have a question for Steve.

Steve, in the geographic mix that you provided, I got U.S.A.

and EU.

Was there an all other that I missed?

The net difference -- the other would be the rest of the world issues.

Okay.

I just wanted to make sure of that.

And where is the other question I had for you?

Oh, I guess this is an open question.

You know, the opportunities for acquisition although still out there, it appears there's only a few major names in the game.

And I think that favors you guys because you're so astute at buying smaller technology-oriented companies before other people can even realize them.

Is that an advantage, and also, the way you run your business as kind of a holding company where owner operators can stay in business but be part of a bigger group.

Do you view that as an advantage long-term?

Yes, certainly, that's an advantage.

We believe also that up until now, our acquisition policy has been reasonably successful as you mentioned.

Looking at opportunities, either geographic expansion or specifically new products and technologies, and buying smaller companies and growing them organically then inside has been part of our success.

We believe that recipe is still valid also going into the future.

We presently are, as we have been in the past, looking at several opportunities and there are always smaller companies who are very creative and where management and products fit into AptarGroup.

Gotcha.

And final question; right now, we're in kind of a sweet spot of tactical M & A and organic growth with new technologies being applied to both existing and new markets.

Who knows how long that continues.

I mean I hope it continues forever.

But could we run into a situation where growth goes to the low end and maybe breaks through the low end of that 6% to 8% and -- in a lot of mature markets, what happens is you start to recap the packaging or create new packaging for old packaging systems.

What would that mean to you guys or do you even believe it, I should say?

Well, we believe that the only way to continue our success is the innovation.

And we believe there are -- there will be continued possibilities for conversion and naturally continued potential for us in the developing markets in eastern Europe, Russia and so on, so that between our capability of innovation, capitalizing on our broad geographic presence which we have built and also naturally on our very long-term strong, experienced management team, we believe that we have the potential and the possibility to continue to grow for quite some time.

Yes, there will be ups and downs, evidently, but in total we are quite confident that based on the elements in our long-term strategy, we will be able to continue to grow.

Great.

Carl, thank you.

And when you're taking those victory laps in the Porsche, please wear a helmet, okay?

I definitely will.

My wife will take care of that.

See you.

Our next question comes from George Staphos from Banc of America Securities.

George, your line is open.

[OPERATOR INSTRUCTIONS] And we have a follow-up from Gregory Halter from Great Lakes Review.

Hi, guys, just one quick follow-up.

You talked about the constraints in meeting demand in some areas.

I'm just wondering if that has at all limited your sales in any particular area and whether or not you see that limiting sales at any point in '07.

Well, it has extended our lead times and it may have limited our sales a little bit, specifically in the fragrance area.

We're trying to respond to that as fast as we can.

Ok, great.

Thank you.

You're welcome.

Our next question is a follow-up from George Staphos.

Hi, gentlemen.

Michael Pak for George.

Congrats to all -- I would like to echo my sentiments.

A couple of quick questions.

The effect of private equity in your M&A markets that you're actively pursuing, are there any pharmaceutical type of demand from strategic -- are you seeing competition from strategic buyers?

Can you comment a little bit on that?

Are you talking, Michael, specifically in the Pharma market?

Well, Pharma and across your businesses.

I think how you look at any of the acquisition issues, except for some of the smaller ones frankly we've been involved in -- when you get to larger deals, you're getting a mixture of strategics and private equity that are playing, almost in every deal of any size.

I think that's irrespective of the market place.

So, we are coming across on the larger transactions -- certainly private equity has been and in some cases, a very -- been the most active player in terms of the money that has been out there.

I don't know that there's one specific sector that has more private equity that we've seen than another sector for us.

I see.

And another follow-up question if I may.

Related to the new travel regulations, are you seeing a lot more demand pickup due to increased disposal of the smaller containers, that flows through the travel gates if you will.

?

This is sort of a speculation on our side.

We have imagined that that should increase because if you walk through the airports and you see the number of products, even perfumes and so on, and personal care products thrown away.

This is really substantial.

So I think it is, it should be a part of the growth.

But that is really a speculation.

I think the other thing, too, that we're starting to see is I think the marketers are now anticipating that these rules are going to stay in place and that the smaller travel packages, they want them to look like the larger package and I think that, for us, should help because they want the same type of dispensing system.

Great, guys, thank you.

Mr.

Siebel, I'm showing no further questions.

Thank you very much.

I would like to thank everyone for participating in our call today.

So, thank you and good-bye.