Aptargroup Inc (ATR) 2010 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup's third quarter 2010 results conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session with instructions following at that time. Introducing today's conference call is Mr. Ralph Poltermann, Executive Vice President and Treasurer of AptarGroup. Please go ahead, Sir.

Thank you, Tyrone. 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.

The 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 website as a service to those investors who are not able to listen today, information contained in the replay will be dated and should be used for background information only. The Company undertakes no obligations to update material changes to forward-looking information contained therein. Participating on this call today are Peter Pfeiffer, President and Chief Executive Officer of AptarGroup; Steve Hagge, Executive Vice President and Chief Operating Officer; and Bob Kuhn, Executive Vice President and Chief Financial Officer. I would now like to turn the conference call over to Peter.

Thank you, Ralph. Good morning, everyone. I will comment on our overall results and outlooks and then discuss our Beauty and Home segments. Steve will follow me with his comments on our Closures and Pharma segments, and then Bob will review our financials.

Focusing especially on the quarter overall, this was another strong quarter for us. The broad-based positive demand trends that we saw in the second quarter continued into the third quarter this year. The strong cost sales drove but partially offset by the adverse translation effect from a weaker Euro. Increased volumes in every segment allowed for better utilization of our facilities, and this, combined with our continued focus of cost control, led to both increase earnings over the prior year in each segment and an all-time high quarterly earnings per share.

Looking forward, we are coming up against tougher comparisons in the fourth quarter. The rebounding markets and the strong Euro relative to the Dollar led to record fourth quarter earnings last year. Overall, our outlook for the fourth quarter is based upon our expectations that we will be returning to more normal patterns. There continues to be at a high level of new project activities, particularly in the food and beverage market, and in the fragrance and cosmetic markets.

Turning now to some specifics of our Beauty and Home segments performance. We saw improved -- improvement in both sales and income for the Beauty and Home segments in the quarter. Compared to the prior year, reported sales increased 11%. Changes in exchange rates negatively affect the translation of sales by 5%. Excluding currency changes, cost sales increased 16%. Demand from all three of the primary markets served by the Beauty and Home segments increased during the quarter. Excluding changes in exchange rates, sales to the fragrance and cosmetic market increased 25%, sales to the personal-care market increased 4%, and sales to the household market increased 26%.

Turning to a couple of new products. Our fragrance pump and decorative accessories is used on L'Oreal's [Fosbutern] fragrance for men, and one of our [prime] fragrance pumps is used on [Louden's] new fragrance DKNY [perfume] for women. I would now like to turn the call over to Steve.

Thanks, Peter, and good morning, everyone. Again, I will provide my comments on the Closures and Pharma segments, and then turn the call over to Bob to review our financial results. First, looking at the Closure segment. Compared to the prior year, reported sales in the quarter increased 11%. Changes in exchange rates negatively impacted sales by 3% and, therefore, excluding the currency changes for sales increased by 14%.

The pass-through of higher resin costs accounted for 6% of the sales increase. Excluding currency changes, sales to the personal care market increased 7%. And sales to the food-beverage market were up 16%. Segment income from both in absolute dollar amount as well as a percentage of sales standpoint increased over the prior year. A few examples of new products in the segment, in the closer segment were; number one, one of our European cosmetic customers is using our Pinpoint dispensing system for a new eye cream product, and our closures are also used on a series of new Procter and Gamble Pantine customized hair care products that are specially designed for different hair structures.

Now, looking at our Pharma segment, reported sales increased 2%, excluding a 6% negative impact of changes in exchange rates on translation. Core sales increased 8% in the quarter. Higher custom tooling sales accounted for about 3% of the increase, and the remainder of the increase was due to increased sales of both our metered dose inhalers as well as pumps.

Turning briefly to new products. Our preservative-free pump called Free Pod has been selected by Novartis Consumer Health as a preferred dispensing system for a leading European over-the-counter decongestant called Otrivin. And one of our nasal spray pumps is used on a new medication called PecFent by Archimedes Pharma that was recently approved in Europe for the treatment of breakthrough cancer pain. Now, I'll turn it over to Bob to discuss our financials.

Thank you, Steve, and good morning, everyone. I'll provide my comments and then Peter, Steve, and I will be happy to answer your questions. First, commenting on the consolidated results for the quarter. As you have seen, our overall reported sales increased 9%. Changes in currency rates negatively impacted reported sales by approximately 5%. As a result, excluding currency changes, sales increased 14% in the quarter.

From a geographic standpoint, sales to customers by our European operations represented approximately 56% of net sales compared to 58% last year, while sales to customers by our US operations accounted for 29% of sales in both years. Reported diluted earnings per share increased to an all-time high of $0.68 per share compared to the $0.48 per share reported in the prior year, or $0.51 per share excluding the reorganization charges recorded last year in the third quarter. Free cash flow, which we define as cash flow from operations less capital expenditures, was roughly $56 million for the quarter versus $49 million in the prior year. Our cash flow from operations for the quarter was approximately $83 million, which was consistent with the $83 million in the third quarter of the prior year.

Capital expenditures were approximately $27 million in the quarter compared to $34 million in the same quarter of last year. During the quarter, we spent about $25.8 million to buy back 600,000 shares of our stock, and a repurchase authorization at the end of the quarter was approximately 2.3 million shares. The mix of debt at the end of the quarter is now roughly 60% fixed versus 40% variable, and the average interest rate is around 4.25%. On a gross basis, debt to capital is about 20%, while on a net basis it is zero. We plan to take advantage of the relatively low long-term interest rates by terming out in the fourth quarter of this year $100 million of borrowings through a private placement.

Taking a look at the nine months. Reported and organic sales increased approximately 15% since changes in exchange rates had no affect on the translation of sales for the sales year-to-date. Reported diluted earnings per share year-to-date increased to $1.90 per share versus the $1.27 per share reported last year, or $1.32 per share excluding the reorganization charges that I mentioned earlier.

Looking forward, presently we expect D&A for all 2010 to be in the area of $135 million. With capital expenditures expected to be approximately $130 million. I would like to remind you that these amounts could vary depending upon exchanges in exchange rates. The effective tax rate for the full year 2010 is expected to be between 31.5% and 32.5%.

Lastly, we currently estimate that diluted earnings per share for the fourth quarter of 2010 will be in the range of $0.53 to $0.58 per share compared to the $0.52 per share reported in the prior year, or $0.54 per share in the prior year if you exclude reorganization charges. The average exchange rate for the Euro to the US Dollar in the fourth quarter of last year was almost $1.48, whereas the end of the third quarter 2010 rate of $1.36 was used for our forecasted range. At this time, Peter, Steve, and I would be glad to answer any of your questions.

Thank you. (Operator Instructions) In the interest of fairness to all participants, please limit yourself to two questions, and one follow on question. You may then come back into the queue if you have any additional questions. (Operator Instructions) We have a question from Ghansham Panjabi, of Robert Baird. Your line is open.

Hey, guys. Good morning. Hey, you know, as you look at four Q versus three Q, it looks like FX will be quite a bit more favorable. But your guidance is over $0.10 below, on a sequential basis. Are you assuming, you know, some sort of a slowdown in sequential sales? Or maybe higher cost, or makeshift that would justify that?

I think, Ghansha, if you look at the fourth quarter of this year, we are coming to a normal pattern in [inaudible] this initial statement. Usually the fourth quarter is a little bit weaker than the third and second quarter of the year, so it's a normal thing. I'd like to remind you that the fourth quarter-these last two fourth quarters in 2008 and 2009, were somehow a little bit special. In 2008, we saw the first impact of the crisis. Everybody was turning down their inventories, so this was really a very difficult quarter for us.

Okay. I got you. Just another question, if I could. You know, you've sort of hinted in the quarters past that pharma margins are already at the higher end of your sustainable range. You know, the new -- what you reported in the third quarter-31.5% is a new record. Can you just, kind of take us through what drove the variance, relative to your own forecast? Thanks.

Well I think, Ghansha, it was due to the volume that we had going through, and the mix of products and customers that we were selling to. And again, I would point out that, you know, we've said consistently that we expect margins in that part of the business to be in the area of 25% to 30%. And that the 31.5% is really somewhat of an outlier. But we would expect it to trend back into that 25% to 30%, as we go forward.

Was there a specific new product that drove that?

Again, it was overall mix and volume. So I think it was more-not one specific issue that drove it.

Got you. Okay. Thanks so much.

Thanks.

Thank you. Our next question is from Mark Wilde, Deutsche Bank. Your line is open, Sir.

Yes, I wondered if you could give us just a little more color in what you're seeing? In terms of pace of new products-introductions across the portfolio. And then, related to that, whether you think you're picking up real share in any of these segments.

Good morning, Mark. We have seen quite some new product introductions, especially in the high end of the perfume and cosmetic markets. This is driving the growth, for the time being. And we also are seeing some new product introductions, in some areas of the personal care end-especially in the food and beverage area. So those two areas- especially for the beverage and high-end of the fragrance cosmetic market-is driving the growth, for the time being.

I guess overall, Mark, we still think that we have-in the worst-case, maintain market share. And in several of our product lines, actually increase market share, over a year ago.

Okay. Can you give us any color on where you think you're making the best share gains?

Again, I think in the high-end fragrance cosmetics. We've got a lot of the winners in that marketplace. And if you look at the personal care products, the new Pantene project that we have with Procter and Gamble, we've won. So again, I think it's pretty broad-based. And again, I don't want to leave out the pharmaceutical side, with the most recent pain medication. We're on all new nasal spray pain medications, that have been out in all of 2009 and 2010.

Okay. That's helpful. Thanks, Steve.

Thank you. Our next question is from George Staphos, of Bank of America. Your line is open, Sir.

Thanks. Hi, guys. Good morning and good afternoon. I guess I want to come back to the fourth quarter guidance commentary. If I heard you right, thus far there's been no slowdown. Pharmaceutical seems to be doing fairly well, from volume and mix standpoint. Fragrance, you're picking up volume, in the high-end. And looking back historically, over the last 15 years in our quarterly model-typically, you don't see more than a few million dollars of variance fourth quarter versus third quarter.

In fact, even in the fourth quarter the [rate], which was obviously going into the great recession. Your EPS only dropped about, I guess, 11 cents. So, here you're guiding from an even greater drop. I'm just trying to figure out, sequentially from the third quarter, fourth quarter- I'm not talking about year-over-year comparisons. Why are you guiding to a greater drop, based on history, you've ever seen before?

Good morning, George.

Good morning, Peter.

First of all, congratulations to the award you have won.

Don't worry about that, but thank you.

Answering your question. The drop from the third to the fourth quarter is really coming from -- coming more to a normal pattern, as I already mentioned. We have seen in the last quarters of this year, in 2010, the rebound of the economy. There was a lot of activity, in almost all areas. Where people were pushing their sales, and we had the opportunity to supply them. Because we were able to immediately bring up our capacity.

So now in the fourth quarter, we are coming back to a more normal speed of the market. The holiday season-is already supplied, for the third quarter. So, it's not a specific reason. There are some growth patterns, especially in the high-end, as you mentioned, the fragrance cosmetic market. And food and beverages is doing very well also.

Okay. So, it sounds like, based on the fact that maybe the sequential momentum has slowed, you're trying to build some conservatism in here. But it also sounds like levels of volume have dropped, from third quarter. Would that be fair?

Well I think it's fair, particularly-- what, I think, you look at the upper end of the fragrance cosmetic market-volumes are continuing to increase. We're seeing more, like Peter said, more of a normal type status in our personal-care volume business, into the fourth quarter. And pretty consistent in our pharma business. So again, I don't think there is any one issue that is out there, but I would say that, consistent with what you're hearing, our customers continue to be pretty conservative in what they're looking at, on the forecasting. So, we still have some pretty short-term horizons of what we're looking at.

Okay, Steve. I'll turn it over. Thank you.

Thank you. Our next question is from Chip Dillon, of Credit Suisse. Your line is open.

Yes, and good morning, and afternoon. You indicated in the closure segment that the non-currency sales change was, you know, roughly resin pass-through-and I guess the other part would be volume. Is that half-and-half split approximately correct? Can you give us some color, on the beauty and home segment side?

On the on the beauty and home segment side, it's much less influenced by the resin cost factors. So, the core growth there is primarily volume driven.

We're estimating that probably price in that site, is probably about 1%.

Got you. And would you say, of the remaining growth, which obviously is extremely impressive. How much of that would you say is, sort of lingering catch-up from the recession? And how much of it would you say it represents true underlying growth?

There is certainly still some catch up, from the recession. Because you remember that- the cosmetic market is high-end, was the most hit by the crisis. And they still are recovering from this. Also, a lot of new activities in this market. There is some refilling of the inventories, certainly, also going on already. So, it's basically both-sell through and increase of inventories.

Got you. And then last before I turn it over. You talked in September about some of your new product's initiatives-especially, I think, in the beverage dispensing, like the Smart water drinks that Coke has. Are you-and I know it's coming from a small base, but does the whole idea of people not having a screw top on their classic bottle, but some other kind of dispensing system. As the economy seems to be getting better, are you seeing that pick up some, as consumers might be willing to spend more?

Well, I think you're seeing two things going on. One, in the food and beverage market-we are really riding the wave of people moving to more convenience. That side's not only in the beverage part, but also in the food part of the business. So I think what we're seeing is our customers-that we are selling to-are really looking to try to differentiate their product, make it easier for the consumer to use. So that is certainly a trend we see- and one that we see continuing, over the next several years. Particularly, with a lot of the new projects that we started to talk about in September, and at our last conference call.

Got you. Thank you.

Thank you. Our next question is from Greg Halter, of Great Lakes Review. Your line is open.

Good morning, guys.

Good morning, Greg.

We've been hearing this with some of our other companies, but wondering if you are -- and I don't know if your business lends itself to any of this, or not. Are any of your businesses geographically being hit by component shortages?

Yes, there was certainly one issue in the third quarter, where one of our suppliers had to fire-this was in the medical component area, for our high-end business, fragrance business, and also partially for the pharma business. And fortunately, we were able to mitigate this problem, with our interim supply we have. You might remember that we have a company called [Cofocolloy] in France, which could take some of these problems off the market.

But generally, I think, Greg, what we're finding is-outside of the issue that Peter talked about, which we were able to recover from-we've been able to back up. And be able to have most of our supply pretty well solidified, as we go into the three quarters.

And you're not really dealing in the types of electronic components that seem to be a issue these days?

No, from ours-in fact,I think electronics is -- it's such a small percentage. We don't have hardly anything in that area.

Okay. And, I know you're going through a ERP implementation. I'm just wondering if you could provide the status of that.

This is another project we have started, about three years ago. And the implementation is going very well. We are continuing to roll out the systems all over the world. So for the time being, it's a pretty positive project development.

Okay. Thanks. I will get back on.

Thanks.

Thank you. Our next question is from Mike Hamilton, of RBC. Your line is open.

Hello, everyone.

Hey, Mike.

Was wondering if there was anything worth noting on resin. You highlighted pass-through, but was there any impact on the speed, at which prices changed in the quarter?

No, I think overall we've seen prices throughout all of 2009 -- excuse me, 2010, in both US and Europe being higher than they were a year ago. So if you will-we've been on the catch-up, on the resin pass-through. I think as we've talked before, as resin goes up, as we pass on more of a dollar per dollar in that area, it squeezes our margins-particularly in the closure segment. So, it doesn't necessarily squeeze the profits, but it squeezes the margin percentages. So, we expect not significant movements in the resin, going into the fourth quarter, but again, that's hard to always project.

Thanks, Steve. Is there anything worth noting, on geographic capacity? Where you are on European alignments, that took place over the last couple years? And then, if you could follow-up with that, on what you're seeing in emerging market growth.

Mike, our primary focus for the time being is really the emerging markets. Where we wanted to grow, and bring capacities to these countries. But the growth is for the time being, especially Asia and Latin America. In Europe we have pretty-served with our capacities to serve the market, so there is no big changes ongoing. At least for the time being.

And I would add, Mike, on the emerging market growth. It's really been for the year, that the nine months has been very consistent across all four regions. The difference being that in the US and Europe, it's more of a recovery, if you will, from the decreases we saw in 2009. But both in Latin American and Asia, it is a continued growth from 2009, because those markets did not feel the impacts from the economy downturn in 2009.

Thanks for the help.

Thanks.

Thank you. Our next question is from George Staphos, of Bank of America. Your line is open, sir.

Thanks. A couple quick questions here. You mention that you are seeing a pickup in products in high-end fragrance, Peter. Are your customers expecting a relatively good Christmas and holiday selling season? Or would these projects be more indicative of what they are expecting-say for Valentine's Day, in the springtime?

I'm seeing the focus, for the time being, is more on the Christmas sales. What we are hearing is that they are pretty positive, for this Christmas season. Everybody is bringing up new product lines, new launches. So, it seems that they are pretty positive. In preparing of Valentine's Day, this will be going through the end of the fourth quarter mark. For the time being, it's very difficult to say what's happening for that.

Okay. And one quick question on pharma. Taking it back, I guess on Ghansham's question from earlier. Realizing that 31.5% is an outlier, relative to what you expect, to being normal range. You mentioned that volume and mix had been the drivers of the margin in the quarter. You are expecting-I guess-a move back to the normal range. Would that suggest that pharma has slowed down and/or the mix has deteriorated?

No, I think it's again -- it's not one specific, George. We would expect pharma to move back within the range as it's been-really for the last five, six years. So,there's nothing I'd say unusual, in terms of the growth patterns. That we continue to be on strong [flow] on the products that we're on. There's nothing that specific, that would have any big negatives in the pharma sector.

Okay. Thank you.

Thank you, sir. Our next question is from Jason Brown, of KeyBanc Capital Markets. Your line is open.

Good morning, guys. Wanted to expand a little bit, on the question around fourth-quarter guidance. Given the commentary in your press release, it sounded like you might be seeing signs of a slowdown, in the US and Europe. Clearly, you're not going to grow at the same rate as second-quarter and third-quarter. But wondered if there was anything there- either in conversations with your customers, or the rate of new product launches that had precipitated those comments. And then also, if you could give us a little color around what type of organic growth you're factoring in, for your guidance.

It is partially true. We are seeing another really slowdown. But, normalization of the business-especially for the flow to business in North America. Which seems to show that- the people are on the normal sales level now. There is no replenishment anymore, and no increase of inventory. Growth patterns are mostly in the same range, as we always said. In the 7% to 8% range.

On a consolidated basis. But we really don't comment on a quarterly basis, Jason, on any of the specific growth side of the sales volume, for the upcoming quarter.

Okay. That's fine. Then I guess, as you look at 2011. Given that we've had the de-stocking in 2009, and the replenishment in 2010. Would you anticipate being -- I know you're not giving forward here guidance here either. But, in terms of your long-term growth assumptions, would you anticipate being in line with those in 2011? Or would these tough comps probably mean that you would be below?

You know I think right now-we're right now going through our budgeting process, and getting a look at some of the numbers. It's really too early to start to project to that. I will say that our customers continue to be -- they're not negative, as we are going forward. I wouldn't say they are jumping up and down with optimism, but they're pretty positive as they're looking forward at their portfolios. We'll talk more about 2011, as we get toward the end of the year.

Thanks. And then the last question was on- you mentioned a new drug, I believe. [Pecscense] from [Marcamedis] Pharma that got approved in Europe. I think they're also trying to approve a drug in the US. But really, are any of these acute pain drugs either individually or collectively-you know, can these have a meaningful impact in the next one, two, three years?

I don't think-individually, probably not. It's more the collective side. And you can start to see, this is our fourth new product that we're on for pain medication. So, the momentum for a new category that we've seen is-that is growing. And we see that as very positive for the business, over the next several years.

Have you tried to put any numbers around that category at all yet?

That's difficult, because there's a lot of products still being under test, under that. So, it's difficult for us to estimate right now when they will get to the market. The only thing what we have seen is- we've seen a lot of success going into 2010. Which we think is positive, as we look at 2011 and 2012.

Okay, great. Thanks, guys.

Thank you. Our next question is from Greg Halter, of Great Lakes Review. Your line is open.

Yes. Directionally on capital spending for 2011-would you believe that it would be higher or lower, than your 2010 figure?

You know, all I can really talk is directionally. I would say the additional project activity that we talked about in the second quarter for food and beverage. We're starting-some of those projects, due to timing, will carry over into 2011. So, we are seeing some carry-over of what I would say 2010 project activity, into 2011. So, I would say directionally, we would see an increase.

And your corporate expense for the quarter. Or corporate expense and other was up I think 80% for the quarter and 23% for the nine months. Can you comment on the components behind that?

You know, really, the majority of that relates to timing of some of the expenses. In corporate, you've got the, obviously, professional fees, and things of that nature. So it's difficult for us, other than the stock options, which are included there in the first quarter- you know, are typically higher. But, from a color standpoint, it's really just mostly due to the timing, when some of those expenses are falling.

Okay. And on a geographic basis, saleswise, especially in Europe. Are there any particular countries that are strong or weak, given some of the issues that occurred earlier in 2010? Around Greece and Spain, and so forth?

Yes, certainly in Europe-a different basis, in the growth of the economy. There are the traditional weak ones-which are Spain, Portugal, and Greece. Sometimes even also Italy. We have some rather good ones, which are sometimes France. But, if they continue to have their strikes there, it will destroy this too. And Germany's doing reasonably well. So, it seems Germany is the biggest economy in Europe. It is like, a little bit like, the locomotive, for the overall economy in Europe.

Okay. I don't know if you mentioned the custom tooling sales figure? In terms of dollars for the quarter.

No, we didn't, Greg, but I can give that to you. On a reported basis, it was almost the same level it was in Q3 2009. We were at about $13.4 million. Last year in the third quarter, we were about $13.2 million. If I am isolating currencies, it is up about $900,000 over last year.

On a organic basis?

Correct.

Okay. All right. Thank you.

Thanks.

Thank you. Our next question is from Tim Burns, of Cranial Capital. Your line is open.

Good morning, and good afternoon.

Hi, Tim.

Steve, I might ask you to tell George Staphros that Valentine's Day has been canceled this year.

We'll make a note of that, Tim.

And I had a question for you. I didn't quite get it. But, in the EU, you said there was a new pinpoint dispensing system?

Well, pinpoint is being used on the new cosmetic dispensing system from a customer -- the name of the customer is Oraflame. But they are a fairly significant, primarily European, producer of cosmetic fragrance products.

Got you, got you. And the other question I had for you, in terms of food and beverage, in the emerging markets. The emerging markets-in some cases, the multinationals are coming at them with the very high-end packaging, whether it is Coke or PNG. In other cases, they're making products that kind of meet the discretionary demand. The food and beverage do better, moving forward, because beverages such as staple -- and does fragrance and cosmetics. Would volumes improve, if there were, let's say midmarket offerings? I guess that's questions for both of you guys.

,Let me try the food and beverage. First of all, I think what we have done is for food and beverage-not only the multinationals that are selling there- but it's a lot of what we call, major national regional players. Today, for example, we are on a product with a sports drink, which is one of the largest producers in China. So, we're are doing well on those, in differentiating that in terms of the food site. So I think, in those, what we are really doing is particularly with our new strategy, is adapting our new products to the local market needs-whether it's salsas in Mexico to different types of oils and such, that are in Europe. Again, we're seeing excellent growth, not only in the United States on the food and beverage, but across the world.

Okay. And it should continue?

Right now, we're so low on the conversion rate. There's still a lot of things that can convert. We see a lot of new applications. When we get into things, like nondairy creamers. Or, with the acquisition of our [fast] technology-we got into the orange juice category, which we hadn't been before. So, there's a lot of really exciting opportunities there.

Talking about the midsize fragrance cosmetic market. We have already traditionally been very strong, in this market. The reason why this market has not suffered so much, in the crisis, was because, [inaudible] some of the people are coming from higher end products, and selling and buying the midrange products. So, we are there. It has its place. And it's growing worldwide. I mean, this is the place where we are entering in emerging markets. It's mostly the midsize or lower end, of the fragrance cosmetic markets.

And the last question. Are these volume gains, or are these profitable volume gains?

These are profitable volume gains.

Okay. I would expect nothing less.Thank you.

Thank you. Our next question is from Mark Wilde, of Deutsche Bank. Your line is open.

Yes, I just wanted to follow-up, Peter. And see if-just in general terms, you or Steve could talk with us all little bit, about what you're seeing in the market for acquisitions right now. In terms of both, properties that might be of interest to you, and also value expectations.

Yes. We have always-as I've always mentioned, I've always a long list of possible acquisitions. And my comment of this is always, it takes two to tango. It takes two-it takes a seller, and it takes a buyer. The situation has little bit changed since the crisis. Now there's more money available, in the private equity sector. So the activity is picking up in the merger and acquisitions area. We are participating on that. We are looking for opportunities. But once again, our acquisitions have always-to have a strategic reason. We are not buying business, just for growth reasons.

Is it your view that, kind of, this slow recovery that we're in-has that kind of recalibrated people's -- seller's expectations of value?

You know, I think the expectation of values, what it has probably done, and this is one of the challenges in the market. As you know, you're doing a lot of future look at where expectations are going to go for growth of any business. And it's always difficult to come back and go-is the recession done? How fast is the growth? So, those areas continue to be a challenge. But, I'd say, multiples have come back and been-are not so bad, from where they were before. I think they've actually come back in line a little bit, for people that are trying to get transactions done.

Okay. Thanks, Steve.

Thank you. Our next question is from George Staphos, of Bank of America. Your line is open.

Thanks, guys. Last question. I also want to thank Tim for that news flash on Valentine's Day. I guess I'll have to call home, after this conference call. The end markets are really the product that you expect to benefit the most from, the realignment at this juncture. Which do you think has the most untapped revenue potential? Thanks very much, and good luck in the quarter.

I think when we look at it, I think partly it's because of the newness of the segment-will be food and beverage. I mean, it's one of our fastest growing, it's been 15 plus%. A lot of what we've done there. And also, within the pharma sector, the consumer health care side, which we've looked at. We see a lot of new opportunities, as we kind of drill down into more specific applications. All of them have got good growth size, but those are probably the two largest, of what we've got.

Thanks, guys. Good luck in the quarter.

Thanks, George.

Thank you, sir. And I'm showing no further questions, or comments at this time. I would like to turn the conference over to Mr. Pfeiffer, for any closing remarks.

Thank you very much. I would like to thank everyone for participating in today's call. Thank you and goodbye, until next time.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect, and have a wonderful day.