Aptargroup Inc (ATR) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup's third-quarter 2011 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Introducing today's conference call is Ralph Poltermann, Executive Vice President and Treasurer for AptarGroup.

Please go ahead, sir.

Thank you, Jonathan.

Before I make my usual introduction, I want to be sure that you are all aware of a change taking place relating to our investor relations activities. I'm approaching my 30th anniversary with the Company, and have decided to retire at the end of this year to start a new chapter in my life. So this call today will be my last one. Matt DellaMaria is taking over my investor relations responsibilities, and I've worked very closely with Matt over the past couple of years. And many of you have already have had the opportunity to meet him. I'm confident that it will be a smooth transition for you. I've enjoyed and will certainly miss the engaging discussions we have had over the years. I wish all of you continued success in the future.

Turning to our discussions of the results, I would like to point out that the information that will be discussed on the call today include 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 day 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 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 begin our discussion with a review of our consolidated results for the third quarter, our expansion in India, and our outlook for the fourth quarter. Afterwards, I will briefly comment on the results of our Beauty & Home segment. Steve will follow me with his comments on the Pharma and Food & Beverage segments, and then Bob will review our financials in more detail. Looking to our quarterly performance, we are pleased to report record third-quarter results.

All 3 segments continued strong core sales growth. Currently translation effects also contributed to our sales growth. We also achieved record third-quarter earnings per share, primarily on the strength of our Pharma segment. As you saw in our press release, we are expanding our presence in India, which is an important and growing market for us. The acquisitions allows us to better serve our Personal Care and Food and Beverage customers, and the clean-room facility will enable us to provide locally produced delivery devices to our pharmaceutical customers.

Looking ahead, while we are pleased with our strong year-to-date performance, we are seeing some caution on the part of certain customers as we look ahead to the fourth quarter, primarily due to global economic uncertainties. We believe this is a temporary situation until there is a more stable economic outlook, particularly in the US and Europe. However, we are encouraged as we look ahead to 2012. We have a lot of project activities, and our market-focused organization continues to discover many new market applications for our unique delivery solutions. Also, with our strong balance sheet and broad geographic presence, we are well-positioned for any temporary slowdown in any one particular region.

Currently, earnings per share for the fourth quarter are projected to be in the range of $0.57 to $0.62 per share, compared to the prior year fourth-quarter record of $0.59 per share. Turning now to the Beauty & Home segment, compared to the prior year, reported sales for the third quarter increased 12%. Changes in exchange rates positively affected sales by 6%, and tooling sales contributed another 2%. Excluding changes in exchange rates, sales in the Personal Care market increased 8%; sales to the Fragrance Cosmetic market increased 5%; and sales to the Household market increased 15%. Overall segment income declined for approximately 7%, due to product mix, certain underutilized capacity, primarily towards the end of the quarter, and higher professional fees.

Turning to products, Estee Lauder introduced a new Coach fragrance with our fine-mist pump that initially launched in Coach stores, and is now being rolled out on a global basis through expanded retail channels. [Opaticalio], one of the largest fragrance companies in Brazil, chose our fine-mist pumps and custom over caps for 3 of their latest men's fragrances. And last but not least, also [Unilevel] relaunched their [adult] lotion range, using our dispensing closures.

I would now like to turn to call over to Steve.

Thanks, Peter. Good morning, everyone.

I'll provide my comments on the Pharma and the Food & Beverage segments, and then turn the call over to Bob to review our financial results. First, looking at the Pharma segment, we had another strong quarter in Pharma, and the momentum we saw in the first half of this year continued into the third quarter. Reported sales increased 25%, changes in currency exchange rates accounted for 10% of the growth; with tooling sales actually declining on a year-over-year basis, and had a negative impact on the top line of about 3%.

On a constant-currency basis, sales to the prescription market increased 8%, and that includes about a 4% decrease coming from reduced tooling sales. And sales to the consumer health market increased significantly, and were up 32% over the prior year; and tooling sales did not impact the sales growth in the consumer market -- or in consumer healthcare market. Now, looking at new products -- as you're probably aware from our Analyst Day event last month, our new ophthalmic preservative-free device is on the market with TRB's VISMED eye lubricant product. We continue to be very excited about the opportunities in the ophthalmic category. In Europe, Zambon Pharma launched a spray form of their successful flu treatment, called Fluimucil, using our throat-spray delivery system. Also 2 skin treatments, 1 for dermatitis, 1 for acne, were launched in Europe using our lotion pumps. And finally, a Brazilian pharmaceutical company recently launched a nasal saline product using our nasal spray device.

Now, looking at our Food & Beverage segment, reported sales in the quarter increased 25%. Movements in currency exchange rates accounted for 4% of the increase, and higher tooling sales contributed 3% to the top line. The pass-through of higher resin cost on sales of dispensing closures accounted for another 7% of the increase. Excluding currency changes, sales to the food market increased 13%, while sales to the beverage market, again excluding currency changes, increased significantly, and were up 42% over the prior year. Food & Beverage segment income increased slightly over the prior year, which includes the negative effects of the higher structure cost for this new segment, as well as start-up costs associated with our new manufacturing facility in the US.

Now, looking at new products, Sweet Baby Ray's Barbecue Sauce rolled out a new inverted bottle using our SimpliSqueeze, no-drip, silicon-valve technology. C&H brand agave syrup hit the shelves with our pour-spout closure that also utilizes our SimpliSqueeze valve; and again, this brand is promoting the "no-drip cap." In Argentina, 2 different honey producers launched packages using our dispensing closures, each with the SimpliSqueeze valve. And finally, in the Slovak Republic, [Dopcek] line of mineral waters launched a range of children's water products using our sports flip-top closures. We continue to be very optimistic about the opportunities we're finding in a variety of Food & Beverage categories we serve and will serve in the future.

Now I'll turn it over to Bob to discuss the financials.

Thank you, Steve, and good morning, everyone. I'll provide my comments, and then Peter, Steve, and I will be answered answer your questions at the end.

First, commenting on our results for our quarter, as announced in our press release, our reported sales increased16%. Excluding currency changes, sales increased 10%. Higher tooling sales accounted for about 1% of the overall top-line growth. From a geographic standpoint, sales to customers by our European operations represented approximately 57% of sales this year, versus 56% of sales in the prior year; while sales to customers by our US operations accounted for 27% of sales, versus 29% last year.

Reported diluted earnings per share increased 6% to a third-quarter record of $0.72 per share, compared to $0.68 per share in the prior year. Free cash flow, which we defined as cash flow from operations less capital expenditures, was approximately $71 million for the quarter, versus roughly $26 million in the prior year. Our cash flow from operations for the quarter was approximately $119 million, compared to approximately $53 million in the prior year. Capital expenditures were approximately $48 million in the quarter, compared to $27 million in the same quarter of last year.

Regarding our repurchase activity during the quarter, we spent about $38.8 million to buy back approximately 800,000 shares of our stock. The mix of debt at the end of the quarter is roughly 65% fixed, versus 35% variable; and the average interest rate is slightly -- is around 3.5%. On a gross basis, debt to capital is about 23%; while on a net basis, it is roughly 2%. Taking a look at the first 9 months -- similar to the quarter, our year-to-date reported sales increased approximately 16%; and changes in exchange rates accounted for 6% of the increase, resulting in an organic sales increase of 10%. Once again, custom tooling sales represented about 1% of that increase.

Reported diluted earnings per share year-to-date increased 9%, to $2.08 per share, versus $1.90 per share last year. Looking forward, presently we expect depreciation and amortization for 2011 to be in the area of approximately $135 million, with capital expenditures expected to be in the area of $170 million. I'd like to point out that these amounts could vary, depending upon the changes in exchange rates. The effective tax rates for the full-year 2011 is expected to be between 32% and 33%. And, lastly, we currently estimate that diluted earnings per share for the fourth quarter of 2011 will be in the range of $0.57 to $0.62 per share, compared to the record fourth-quarter results of $0.59 per share reported in the prior year.

At this time, Peter, Steve, and I will be glad to answer any of your questions.

(Operator Instructions)

Ghansham Panjabi, Robert W. Baird.

Relative to your original guidance for the third quarter, I'm trying to get a sense of the volume trajectory and whether it was in line with your internal expectations. More specifically on the pharmaceutical side because it was up quite a bit relative to the second quarter.

Overall we were a bit higher in the Pharma part of the business and, as Peter talked about, we saw a bit of a drop-off in the Beauty & Home side in the last part of the quarter that we had anticipated in the beginning. So those 2 a bit offset each other. So we ended up coming in pretty close from what we expected from an overall earnings perspective.

And then on India, can you touch on the strategy difference between building a plant for pharmaceuticals in Mumbai and the acquisition you announced yesterday? What I'm trying to get at is whether the Pharma capacity is for product that gets exported out of the region and whether the acquisition is to serve the local region.

Most of the capacity we are building in India is for the local market. There will be some small amounts being exported, but always staying within the Asian region.

Including the pharmaceutical business?

Including the pharmaceutical business, yes.

Ghansham, just want to follow-up on that. I think it's important to know -- Peter's exactly right. We sell to local customers in the Indian market, but some of our customers' business is an export business. So indirectly, it's actually being produced in India and being sold in different areas of the world, particularly in the generic market.

James Armstrong, Vertical Research.

You commented that certain customers are becoming cautious. Do you think this is just customers destocking into the end of the year, meaning it might reverse into the first quarter? Or is it just general slowdown that won't reverse but will normalize as the economy starts to normalize back out?

This is mainly a reaction of our customers on the uncertainty which is existing on the economy today. We know that they have been filling up the pipeline. They were restocking, and now to the end of the year, they do not want to have make the same mistake as they did in 2008, 2009 when the crisis hit them. It's only a cautionary reaction of our customers, I suspect.

You mentioned underutilized capacity in the Beauty & Home segment. could you give us more color where that capacity is. What would you need to see longer term to either close or move that capacity to elsewhere in the world?

Basically this is a reaction of the more cautionary reaction of our customers. The underutilized capacity is in some areas of dispensing closures or also in the Bag-On-Valve area, different reasons.

Jim, if I could expand a little bit on Peter's discussion, underutilized capacity, we will rarely shift production from 1 region to another because we're producing for the local customers anyway. So as Peter said, it tends be product-line specific. In this case, it affected some of our closures operation. As Peter said before, there was a little tail-off at the end of the third quarter in terms of volume. So while we're making cost-reduction decision and activities, it's not fast enough, if you will, compared to the volume declines.

Okay. That's really helpful. And just lastly, congrats, Ralph, on your retirement. I hope -- good luck going forward.

Jason Rodgers, Great Lakes.

Congratulations and good luck to Ralph. Looking at the Beauty & Home. I'm sorry. I missed it as far as the growth in fragrance and cosmetics and personal care for the quarter.

The personal care business grew about 8% in the third quarter, and our fragrance/cosmetic grew about 5%. And household, which is a much smaller base, grew about 15%.

It's all excluding exchange rate.

Looking at the Food & Beverage, it's good to see a lot of activity there. I was wondering about the household product area and the trend to go inverted, if you're seeing any acceleration there, or is it pretty steady?

Overall, I'd say, Jason, on that side, it's pretty steady. We haven't seen any particular movement to inverted the household area. It's much more of a trend right now in the food market, particularly with condiments.

And any early thoughts for CapEx for next year?

We're in the process right now of pulling together our 2012 budgets, so I don't have a pinpoint answer for you there. But this year, as we spoke throughout the year, was a bit of an unusual year in terms of high CapEx. So I wouldn't expect it next year, we would see that same level. We would probably be at or slightly above depreciation. But it wouldn't be similar to this year.

George Staphos, Bank of America.

It's actually Benjamin Wong filling in for George, who's on another call. What are your customers expecting for the holiday selling season on the fragrance side?

We don't have a clear picture there (inaudible) our customer. The information which we are getting from the market, the Christmas business in Europe and in the United States seems not to be too bad. So it's not really negative news from this side.

Has any of the customer caution that you called out, has that filtered into new-product introductions that you should be seeing a new term?

We are always working with our customers on new products and projects. And the pipeline for this also in the personal care and in the food -- fragrance area it's pretty good also going into the next year.

Could you provide an early read on trends in October?

We really don't comment [into] quarters. I think you can see in the forecast, we were slowing down particularly in the Beauty & Home markets at the end of the third quarter. We expect to be somewhat cautious as we go through the fourth quarter in terms of overall sales activity.

Mike Hamilton, RBC.

Could you give a little commentary on trends you're seeing through the quarter in emerging markets, and notably in South America?

From a sales perspective, we did very well. Our Latin American operations overall grew about 17% this quarter, and Asia was up even higher. It was closer to 30% in Asia. Latin America continues to consistently do well, and most of that tends to be beauty driven. But as Steve alluded to, we're starting to some other [C&C] projects there as well. Overall, we like the momentum that Latin America is bringing.

Tom Mullarkey, Morningstar.

Your press release touched upon the start-up costs associated with the new US facility. I was hoping you could provide some additional color about how the facility is ramping up?

Right now, we're basically on time. Initially when we got into the facility, we're rehabbing it. We're looking to start production at the end of this year. But really what's going into more production at the start of the beginning of 2012. So we're on time, and generally we're within budget where we anticipated as we get through the end of October.

Concerning the expansion into India, and perhaps all your emerging-market businesses, do they typically return -- generate returns in line with the Company averages or slightly above to account for higher hurdle rates in those emerging markets?

I would say generally speaking, if you break it down by segment, our Pharma operations in emerging markets do return very similar margins that I would say a Western Europe and US businesses are doing. On the Personal Care and the Food & Beverage side, it really it comes down to size and scale.

So a little bit like the Food & Beverage, depending on the size of the business, we have to put some structure cost into it. Generally speaking, they're increasing margins, but not at where the Western Europe and the US would be.

And are your new expansions into India -- how far away are they from reaching the size and scale that you want them to eventually get to? A few quarters or a few years?

I think in the Pharma side, we're going to be moving some business in, and that's probably a year or so away from where we get to scale. Margins on that tend to be somewhat higher from the start. But the acquisition that we made, we still actually expect that to be accretive in the first year. We're buying an existing base of business, so that's not a typical start-up site on that, Tom.

Chris Manuel, Wells Fargo.

Congratulations, Ralph, and best wishes on your future endeavors. And Matt, I guess it'll be a lot less hairy situation now on the IR front. Best wishes there as well. Couple questions for you, a few scattered around. But with respect to the slow-down that you began to see in October, is that broad-based across all the different pieces that you're in, as well as geographically? Or are you seeing any differences that you can perceive in customer pull rates between say, Europe, South America, North America, et cetera?

In the Beauty & Home area, it's North America and Europe where we are seeing a certain slow-down. It's incoming order. The order backlog still is reasonably good. In the emerging markets like Asia and China and South America, business is still very strong. So we don't see the same slowness in those regions.

Peter, as you walk the streets in Europe, we all see the news here every day and hear about more concerns economically and some things there as well. Does it feel more like 2008 there than it does say in some other parts of the world to you?

First of all, Europe is not one country; Europe is very diversified. We have certain areas in Europe where we have some economic problems and there are other areas which are still doing very well. The 2 big economies in Europe, Germany and France, are, I think, still in very good shape. For me it's always a surprise what you read in the media does not really fit what you feel and see on the streets in those 2 areas.

There are other countries, like Spain, Italy, like Greece, there are certainly economic problems. But they are visible and they are smaller countries in Europe. So, there is no consistent one picture of Europe.

Bob, I know you've been working through starting up some new facilities, as well as some of the activity in down the Carolinas as well. Were there any more startup expenses or things this quarter, or are there any more that phase through the remainder of the year?

Yes, Chris, we still have, if you will, the ramp-up in the general Food & Beverage structure. And that combined with the ramp-up in the North Carolina facility, total in the quarter was about $1.5 million. And also, we would expect that to be a similar number also into the fourth, as Steve said, as that facility is going to come on-stream.

And that, as we get to 2012, in theory should be --?

Should be -- Correct. Yes. So we won't have the structure cost anymore, and it'll be on a comparable basis.

The tooling levels are beginning to wane a bit; 1% in the quarter. How do you feel about new customers coming to you looking for product launches or components of that nature? In an earlier comment, you talked about still seeing a good pipeline in the near term, but frequently they come to you and it's something that develops 6, 12, 18 months out.

I hearken back to 2009 or so when tooling was negative for you year-over-year and then it took a big ramp up in 2010. Maybe this is just normalization. I want a sense of comfort that we're not seeing customer slowing as well.

Chris, let me give you little bit of color, because while it was 1% on the consolidated basis, you really got to look at the individual segments. As Steve alluded to in his comments, Pharma was actually down about $3.5 million, so that negatively impacted their sales by about 3%. But if you look to the Beauty & Home, that was about $9 million. That was pretty good sizable growth. And Food & Beverage, which has been pretty strong, as you indicated, for about the past year and a half, was also up about $1.6 million.

We're up about $20 million year-to-date over last year. So if anything, I would say no. We don't see a real slow-down. We see customers, particularly in the food side, wanting unique devices that are unique to them. So if anything, no, we don't see a slow-down in that area at all. The Pharma side is really more difficult because it tends to be very project-based. So it tends to be very lumpy; not linear as some of the others, the Food & Beverage Beauty & Home would be.

Tim Burns, Cranial Capital.

If I knew the retirement age was 40 years old, I would have put my application in it Aptar a long time ago.

It's all that anti-aging lotion, Tim.

And some Grecian formula. But that's another story. Hey Steve, I had a question for you. The India situation, are there existing multinational customers in India, or are they mostly local separate entities that you've done business with let's say out of China or something?

I think it's really 2 areas. On the Beauty & Home side, it's a heavy multinational. Unilever, for example, is a very large player in the Indian market, with P&G and L'Oreal actually trying to get into the market. In the Pharma side of the business, it tends to be that mid-tier generic manufacturers. So it's a little bit different profile based on the segment that the business is in.

As far as the FDA approval of products that you're participating in, we all know it's a god-awful long process. Do you at some point get the trigger and begin to ramp up before anybody knows?

Well, actually before that, we do. Because what we're doing is reacting with our customer. So if our customer's getting ready for a launch in anticipation of the FDA, we'll be seeing that and they may be investing capital for that. The difficulty is that they have to make a calculated bet whether they get through the FDA, and we've seen cases where in some instances they haven't made it and they've actually invested the capital. We will be having an advanced look, normally from our R&D activities, and from our customers ramp-up to get ready for production.

So India's going to become a diversified market. It's going to become Pharma as well as personal care, beauty, things of that nature. Is that what you're saying?

Absolutely, and we're also looking at it in the Food & Beverage side. So it is a different type of product. We actually have to be outside of the Pharma area, which they're actually selling more to the Western markets, but in the local markets, we're actually adapting our products to local styles, the local dispensing needs.

You're one of the first -- well, I don't want to say first, but a lot of people have viewed India as an enormous opportunity but also one that you really have to be careful with. I take it, given your export experience and local on-the-ground experience, you know what you're doing.

I would add to that for the non-Pharma, the acquisition that we did, it's a partner that we've been working with for more than 12 years. So we've had a long-standing relationship with them. They are licensees. They understand our business very clearly. So you're right, we have a lot of good underground intel, but it's something, really, we've been cultivating for a long time.

Over here, people are economizing really aggressively, starting with where they shop. In many cases, it's now Wal-Mart or some of the lower-priced chains. And then it's value-purchasing wherever they are. How does that fit in with the relatively highbrow, really unique products that Aptar brings to the marketplace?

First of all, in Europe, we're not seeing this yet, because I think the crisis has not really hit the final consumer. That is the tendency to go for more value for the money. This is a general trend. But there is always also a certain kind of luxury I want to spend of, especially in the high end of the fragrance area. For the time being, I would say it's normal business.

Brian Rafn, Morgan Dempsey.

If you looked specifically at the US and Europe as trading blocs, the systemic problem is a little different. Europe's a little behind the US, I think, in the [reflation] coming through the economic cycle. Ours here in the US is a little more of a political, election, tax, budget, deficit. Europe a little more of a banking system issue. Are you seeing any caution or malaise differentiation between US-based customers versus Europe customers in delays?

I think there is a certain delay. In Europe, we have seen not as big a drop in the business in the last crisis, and we were out of the crisis a little bit earlier. In the US, people continue to be very cautionary. So in Europe, now, the customers are following the trend of the United States. As you said, we are a little late in Europe in this respect.

As you dovetail on this, as you look at that specific malaise, shift of value, Steve has always talked about product differentiation, packaging, ergonomics, colors, sizes, shapes. Does that design become more important or less important during times of economic malaise, or is that something that's just delayed?

I think it will be the same as in the normal times. People, our customers, are fighting for shelf space. And they want to differentiate their products. They want to have their specific look. They want to stick out of the shelf. And this battle is ongoing even in times of economic crisis.

And then anything, any progress in the beverage area on the dairy area?

The work we have done on International Delights on the creamers and the milk side continues to expand, and we've actually added during 2011 additional capacity to serve that market. It's a continuing growing segment for us, and we anticipate it to continue through 2012.

The $170 million you're allocating on CapEx this year, can you break that out across Food Beverage, Beauty Home, and then pharmaceutical?

It -- there'd be a little bit, I would say generally speaking, Brian, it follows the sales ratio, if you will, with the 1 slight exception this year being the additional capital that we've allocated to the Food & Beverage segment. We talked about it I think on an earlier call, the volume of customer project activities, the new plant in Lincolnton. So I would say generally, our CapEx follows the size of the overall businesses, with this year, the bigger jump being move to the Food & Beverage market.

(Operator Instructions)

Brian Rafn, Morgan Dempsey.

Some of the new technology you guys have launched, bonded aluminum to plastic, the Bag-On-Valve, the metered dosages. How much of that new technology that you acquire and develop -- do you have to sell those applications fairly hard through to your customers? Or are your customers receptive enough to understand the technology in the market and they're shopping you, looking to procure that from you?

It's probably a little both of that. On the newest technologies, what we try to do is present the opportunities to the customers, understand the market in the areas they can use them at, which particularly would be for the bonded aluminum to plastic technology. Showing them areas where they can be able to benefit from that. And then there's other sides we see the customers coming back to us and having an issue in the market they want us to work on.

The robust demand that you guys have seen certainly in Food & Beverage. Would you say that is related to the organic development of the Food & Beverage area looking at more sophisticated technology relative to the cap and closure delivery? Or is it just your emphasis to target that area and capture more market share of business that's already there?

I think that it's a market that continues, as Peter says, we see this with our customers. They want to differentiate on the shelf, and they want more convenience. That market is moving to that. It's not necessarily having very sophisticated or more expensive dispensing systems, but being able to provide in a cost-effective way convenience of customers. And there we see that in different sub-segments of the Food & Beverage market continuing to expand, and we'd anticipate that going forward.

Are there any areas in the Food & Beverage that some of these more sophisticated delivery systems are not penetrating and might be, going forward over the next 3 or 5 years, areas that you could avail yourself to?

I think there's quite a few. Somebody made the analogy to the baseball analogy. I think we're in the second inning of a 9-inning game. We're still early on. We've got lots of projects coming out next year. We'll be getting into different sub-segments of these markets that we'll be able to announce when our customers come out.

You talked a little bit about the Christmas holiday for fragrances. Peter, can you differentiate any differences between the growth, the economic sustainability in the high end of the fragrance market versus the low end? Is any one category better or worse relative to demand that you're seeing?

That's really difficult to say. I think in both areas will be important for us. It's really very difficult to distinguish between those 2 in this respect.

Let me you ask you a little different, Peter. In the fragrance area, are you seeing more international, national launches, regional launches? Are you seeing product launches that are larger or smaller? Are they in the millions on new launches, or maybe the hundreds of thousands? Are you seeing anything that anecdotally might be a data point?

I know that this is your special area. You like this question. You asked already last year. I think it's mostly the big companies are international, and they are launching these products internationally. I've mentioned the 1 product which is globally now, the perfume, Estee Lauder.

It's now a global launched for Coach. These are typical launches for the big ones. Local areas are, for example in South America, O Boticario. This is a company which is not internationally active. These are local. It's rather big launches than the smaller ones.

Anything you guys are doing relative to international accounting standards? That's been kicked around with FASB, and we hear all kinds of dates, 2011, 2014.

We have been following the development on a regular basis, and we participate in all the update calls and things like that. We're taking a very cautious look at it. Most of our European operations have already adapted IFRS or some form of IFRS. But from our standpoint, we're not jumping the gun on anything. There's no advantage to getting out there sooner, so we'll follow the progression and see where it leads us.

(Operator Instructions)

I'm not showing any further questions at this time. I'd like to turn the program back to Mr. Pfeiffer for any further remarks.

I would like to thank everyone for participating on today's call. As I previously announced, I will be retiring at the end of this year. And this is my last earnings conference call as AptarGroup's CEO. The Company is in terrific shape, and this will be a smooth transition. The Company will be in the very capable hands of Steve Hagge and our experienced senior executive team. It has been a pleasure working with you over the years, and I wish all the best. Thank you very much, and goodbye.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.