Aptargroup Inc (ATR) 2015 Q4 法說會逐字稿

Welcome to the AptarGroup's 2015 fourth-quarter conference call.

(Operator Instructions)

Introducing today's conference call is Mr. Matt DellaMaria, Vice President of Investor Relations. Sir, please go ahead.

Thank you, Michelle, and welcome, everyone.

Participating on the call today are Steve Hagge, President and Chief Executive Officer; and Bob Kuhn, Executive Vice President, Chief Financial Officer and Secretary. Steve will begin our call with an overview of our performance. Bob will then discuss some financial details, and then we'll open it up for questions.

Information that will be discussed on today's call includes some forward-looking comments. Actual results or outcomes could differ from those projected or contained in the forward-looking statements. Please refer to AptarGroup's SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements.

We will post a replay of this conference call on our website. AptarGroup undertakes no obligation to update the forward-looking information contained therein.

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

Thanks, Matt, and good morning, everyone.

Yesterday, Aptar reported another strong quarter and full year, with improved operating margins compared to the prior year across each business segment. Despite some challenges, we were able to grow our top line on a core basis, and achieve record fourth-quarter and annual net income and earnings per share.

Our Beauty and Home segment continued to see softness in the personal care market, although we were encouraged to see year-over-year core sales increases to the beauty market for the first time in 2015. We've adapted to the softer market conditions with a Company-wide focus on cost containment, and we benefited from lower input costs.

We continue to enter and expand our product portfolio within new application fields. Our airless serum dropper, originally developed for the skin market, is now featured on a new luxury hair serum product in Europe. Also in the home care market, we are entering the dish care market in Asia, and continue to see opportunities to grow in this market.

In our Pharma segment, demand for our delivery solutions in the prescription drug and injectables markets offset weak demand from the consumer healthcare market. We continue to see success with our nasal spray pump being used for allergy medications going over the counter, including the newly announced Rhinocort, which had previously been a prescription-only treatment.

We continue to enter new application fields. Our nasal spray pump is featured on the first FDA-approved, ready-to-use, needle-free nasal spray product called Narcan, a life-saving medication that can stop or reverse the effects of an opioid overdose. Our Pharma segment is also leveraging the new airless serum dropper that I talked about earlier, which was developed in our Beauty and Home segment, on a new wound care product recently launched in Europe.

Our Food and Beverage segment was negatively impacted by beverage demand seasonality. While we continue to benefit from lower input costs, we also remain focused on containing cost and improving operating efficiencies. We continue to see success with our closures featuring the SimpliSqueeze valve for inverted packaging, and we recently helped launch several new Heinz mayonnaise and barbecue sauces in Latin America. In addition, we continue to grow within the bottled water market, as our closures are featured on several new plain and fruit-flavored bottled water launches globally. Overall, Aptar is well positioned to grow over the long term in different markets we serve, as we continue to leverage both our technologies and processes across our three business segments.

We also remain in excellent financial condition. In 2015, we executed on our balanced capital allocation strategy. We completed our accelerated share repurchase program, increased our dividend, and announced a strategic acquisition just after the end of the year. We will continue to invest in projects that will drive profitable growth and returning value to shareholders.

Now, looking ahead, we don't anticipate significant changes in the various macro challenges that existed in the fourth quarter. The foreign currency exchange environment is expected to continue to have a negative impact on our first-quarter reported results. We will remain flexible to adapting to changing market conditions, with a continued focus on containing cost, while we invest in innovation and new solutions that will help our customers grow their businesses. We also look forward to completing the Mega Airless transaction, and moving forward with our plans to grow our expanded Airless platform globally.

I'd like to turn it over at this time to Bob Kuhn, who will cover a few financial details.

Thank you, Steve, and good morning, everyone. I'll briefly cover a few details, and then we will turn it over for questions.

In looking at how our business segments performed in the quarter, I'll start with our Beauty and Home segment. Despite another challenging quarter, operating margin improved to 6.7%, compared to 5.2% in the prior year, primarily due to our continued cost-containment efforts and lower input costs. Weak conditions in certain markets resulted in lower sales volumes compared to a year ago, and core sales declined 1%.

On a positive note, core sales to the beauty market increased 6% over the prior year. And this was the first quarter in 2015 that we saw year-on-year growth. Core sales to the personal care market decreased 7%, and core sales to the home care market were even with the prior year.

Our Pharma segment had another excellent quarter, achieving an operating margin of 28.7%, and core sales growth of 6%. Core sales to the prescription market increased 10%, primarily driven by increases in demand for metered dose inhalers and nasal delivery systems. Core sales to the consumer healthcare market decreased 4%, and this is mostly due to certain customers choosing to reduce inventory, and continued weakness in eastern Europe compared to the prior year. Core sales to the injection market increased 7%, due to broad-based global demand.

Looking at Food and Beverage, despite a difficult quarter with core sales declining 1%, operating margins improved to 7.9%, compared to 6.1% in the prior year. Looking at each market, core sales to the food market were even with the prior year, and core sales to the beverage market decreased 3%, driven primarily by softer demand for functional beverage closures, due to the seasonality of this business.

Capital expenditures were approximately $43 million in the quarter, and $149 million for the year. Our free cash flow in the quarter was approximately $50 million, compared to $78 million in the prior year. For the year, our free cash flow was approximately $175 million, compared to $153 million a year ago, or an increase of approximately $22 million.

In summarizing our annual performance, we had a very strong operational year. We increased our EBITDA margin to 20%, compared to 18% a year ago. We also improved our return on invested capital to 14%, up from 13% in the prior year. Looking at our balance sheet capitalization at the end of the year, on a gross basis, debt to capital was approximately 42%, while on a net basis it was approximately 21%.

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

(Operator Instructions)

Our first question comes from the line of George Staphos with Bank of America Merrill Lynch. Your line is open. Please go ahead.

Hi everyone, thanks for the details. Congratulations on the year. My first question is around Food and Beverage. I just wanted to determine a little bit more why the effective seasonality was more pronounced seemingly this year versus prior fourth quarters?

Related to that, guys, looking at last year's performance, I don't recall Food and Beverage having a particularly strong fourth quarter 2014, so it was an easy comp again. Again, same question. Anything else we should be concerned about relative to Food and Beverage having a sluggish quarter?

No. I think it's a good question, George. It was actually a bit softer than we'd anticipated going into the quarter. What we were hearing from our customers in the food and beverage market, both condiments as well as beverage, frankly, is they were more conservative on the inventory levels that they wanted to carry into 2016.

Now, what we would anticipate however, is we haven't lost any business, and we're still very encouraged about the level of activity we have. We typically start somewhat slower in the first quarter, and then we see that ramping up particularly in the second and third.

Lastly, and I think you touched on this, if I take a look at overall food and beverage for the year, and if I just break out back to product sales, if I break out the resin that's come down, as well as tooling, we'd be up in the area probably about 8% on a year-on-your basis. While it is a little bit below our target of 10%, I think overall it's still been a pretty strong year. Again, coming back it's a bit lower than we anticipated, George.

Steve just to be clear, the 8% I missed, is that the adjusted, if you will, core growth for the quarter, or more for the year?

No, that was meant for the year. For the full year we were up about 2%. There's about 4% is effective negative on tooling that were less this year than last year, so we've tried to strip that out.

We had about a 2% negative impact on sales price of passing through the lower resin. If you take the 2% plus the 4% plus the 2% gets you to the 8%.

Okay, appreciate that. Then a related question, just in terms of the overall environment. Consumer health care was sluggish again. You mentioned, I think, there was some de-stocking. In the past we had asked whether you anticipated any greater-than-normal inventory de-stocking to be required by your customers, given that there had been some very strong volume growth earlier in the year. Just help us understand how long you think this de-stocking will last, and any other color you have on CHC?

I think on CHC we had a little bit of the de-stocking, but frankly the biggest issue we've had is some of our larger pharmaceutical customers' sales into eastern Europe, primarily Russia. Given some of the challenges this year, we've seen some dysfunction as they've been selling product.

We've been seeing it pick up in our sales to our local Russian customers somewhat offsetting that, but there's been a bit of a timing difference. As we look forward to our budget for 2016 in CHC, we actually see a pretty healthy year going for the full year. I think we'll be past all the inventory corrections, and we'll be much more equalized in terms of what we are doing in the Russian market.

Okay. Last question, and I'll turn it over. The new product environment in the past, you said -- I'm paraphrasing here -- that it's never been as buoyant as you had seen this year looking out. You mentioned that it still is positive.

Just wondering if you could put a bit more of a finer point on that, whether it looks as good as it has in the past, or maybe it's decelerated somewhat. Some of the customers have seemingly said more recently that they're expecting to promote a little bit less, so I just wanted some color there. Thank you.

Again, it's a tough question overall because of the different markets, but in general I think it's still, George, still a very positive side. I think today with challenges that our customers are seeing in the market to get sales, they're becoming also looking back at innovation as a way to pick that back up -- particularly consumer health, food and beverage, and our beauty and home market.

We actually saw last year an increase in the number of launches, for example, on the fragrance side, which is somewhat -- we actually didn't anticipate that as we went in the year. As I talk to customers, again I would say there's a cautious optimism going into this year. It's certainly not bullish, but there's not a big negative that the world's going to come apart.

All right, thank you.

Thank you. Our next question comes from the line of Adam Josephson with KeyBanc. Your line is open.

Thanks, good morning everyone. Congratulations on a really good year. Steve, one on margins. Your EBITDA margin last year was the highest you've earned in well over a decade, obviously despite only 1% core sales growth.

Now, how much of that margin performance would you attribute to Pharma growing more strongly than the other segments? How much to the lower raw materials, and how much to good execution on your part? Do you think that 20% margin is sustainable? I realize that 20% margins is your long-term target, but obviously you haven't hit that target for a very long time until 2015.

I think it's a good question. It's a bit of a challenge, because you bring up quite a few things. Certainly we've seen good growth in our Pharma business, which is up about 8% on a core basis for the full year. That is a positive contributor, given the margins.

But I think what really has been very helpful, and one of the things we at Aptar look at, is the broad diversification of our business. If you looked at the margin improvements in terms of our Beauty and Home business, we're up about 120 basis points, and a little over 200 basis points in Food and Beverage. That's been a substantive contributor.

To answer your question looking forward, it's been Pharma; but it's also been very good operating results. Certainly we've been benefiting by some of the lower materials. It's hard to get all of those pieces specifically identified, but all of it added.

As we look forward, as you pointed out, Adam, the 20% is our targeted long-term EBITDA growth, our EBITDA margin target. If you get some additional growth, which we think will be coming in both Beauty and Home and even in Food and Beverage, we think it's sustainable, whether it is quarter to quarter or for a full year, but long term we think that's sustainable.

Thanks for that, Steven. Another longer-term question on your core sales growth. While you hit your long-term EBITDA margin target in 2015, you obviously fell short of your long-term core sales growth target for -- and you've fallen short of that every year since 2011. Given that it's been four years since you've hit that 6% to 8%, have you considered revising that, just in light of everything you're seeing in the global macro?

Again, we're not looking to revise it. I think we still are comfortable with the positions we're in. We certainly have gone through some turbulent economic times over the last couple years, and up to even 2014 we were up to 5% core growth, so pretty close to the low end, at least, of our target. But at this time we're not looking to adjust our long-term growth rate.

Okay, Steve, thanks. Bob, just one on seasonality of your business, just for forecasting purposes. How would you describe the seasonality of your business? Consequently, how much higher would you say second- and third-quarter earnings typically should be than first- and fourth-quarter earnings?

Well, I would have to go back and historically look at it, but I would say in general, Q1 and Q4 tends to be our weakest quarters. If I just split the year in half and take first half and second half, I would say the first half is slightly more than 50% of the overall results of the year, while the back half would be slightly less than 50%.

Then you have that option to expense issue that drag down 1Q relative to the other three quarters, right?

Correct. That would have been included in my analysis.

Got it, thanks.

That's about $0.05 more in the first quarter.

Terrific, thank you.

Thanks, Adam.

Thank you. Our next question comes from the line of Ghansham Panjabi with Robert W. Baird. Your line is open. Please go ahead.

Hi guys, good morning. First off, you mentioned an improvement in beauty. Can you give us some more color in which categories and maybe even which regions are growing within that specific business?

Yes. I think in the beauty side what we're seeing -- and this has been a continuing trend for us, and frankly ties in a bit to our Mega Airless acquisition, it tends to be -- the facial skin care market has been some of the fastest-growing over the last several years. That continued coming back into the quarter.

The other side that I think was also positive is we began to see a bit of recovery in Latin America. We had good beauty growth in our Latin America markets, also in the Asian markets for us, while Europe and the US were pretty flattish to slightly up. Again, when I look at the overall trends, it tends to reflect where our customer's at, and the significant share we have in that market place.

Okay. I'm sorry if I missed this, but did you break out core sales growth by region -- Europe, Asia, et cetera?

I have not, but I can do that for you. Looking at Q4, the US -- and again, this is all segments blended together now on a consolidated basis -- US core sales were up 1% in the fourth quarter. Europe was down 1%. Latin America was up 21%. Asia was down 5%.

Okay, and then one final one as a clarification on the margin expansion question. How much benefit is there from just the US being relatively larger from a geographic mix perspective, given the stronger dollar? Does that factor in at all?

No, in fact, it's almost neutralized, because what we're doing is while we get some transaction positive bringing some product in from Europe, overall the different regions come back. It's not a big impact in terms of the split, Ghansham. In terms of the growth drivers, it's more cost containment for us, as well as efficiencies in terms of production.

Okay, great. Thanks so much, guys.

Thanks.

Thank you. Our next question comes from the line of Chris Manuel with Wells Fargo Securities. Your line is open. Please go ahead.

Good morning, gentlemen. I wanted to come back and maybe circle around -- if I look at full year, to an earlier point, core sales up 1% for the full year. But if it's feasible, could we parse that up a little bit? Thinking about recognizing that raw materials or even purchased products that are made from raw materials that you guys use are a pretty significant chunk of that, and those have fallen quite a bit.

How would you think about that 1% on a core volume basis, not just core sales -- meaning maybe ex-tooling, which you talked a little bit about being a couple points, and material costs. Would we be thinking about something that's 4%, 5%, 6%, perhaps understating that number?

4% to 5% to 6% would be I think high, Chris, but certainly you're going to have, I would say, the product sales themselves would be higher than what you've got; because we've at our top line, included in that is resin pass-through that was a negative for the year. That's probably 1 point to 1.5. You've got some of that coming back in.

Tooling for us across all of Aptar really wasn't a major factor. There's a small difference between years. That wasn't a material driver. In terms of core, you would probably be closer to 2% to 3%, rather than the 1%.

Okay, that's helpful. Then if we could switch gears a second, I think your new facility over in France for Stelmi should be finished? Can you maybe give us an update on where you are there? Do have it qualified, or a time line now as to when commercial activity or commercial sales will be coming out of the new facility?

Yes. In fact, I was actually at the facility with Bob. We went back in October to the facility. All of our equipment is now in the facility. The building construction has been basically competed at this point.

We're right now going through the validation process. We would anticipate that's going to occur through the first and second quarter, and we will start having sales coming out of that -- out of the new equipment coming out into the third quarter.

What is good for us right now is we're on target in terms of cost. We're on target in terms of timing. Frankly, I think right now we're really very enthusiastic about the quality of the equipment we've got, and what may be a nice boost in our production capability as we look into the second half of this year and in 2017.

That's helpful, thank you.

Thank you. Our next question comes from the line of Mark Wilde with BMO Capital Markets. Your line is open. Please go ahead.

Good morning. Bob, could you give us some sense for the overall resin benefit in the fourth quarter? I'm not sure I heard that number.

Sure. Looking on the income side, it was roughly about $3 million for the quarter, and that roughly breaks out about $2 million for Beauty and Home, and $1 million for Food and Beverage.

Okay. All right, that's helpful. Then Steve, in the wake of the news on Mega Airless, I'm curious about your interest in doing further M&A activity this year, and what the focus areas might be, and whether the turmoil in the emerging markets might be an opportunity for you?

I think -- it's a good question, Mark. What's nice about the Mega transaction for us, while I think it strategically fits very well, it's not so large that it's going to prevent us from doing other transactions. We have other potential acquisitions we're going to continue to look at.

Certainly from the balance sheet leverage-wise, we have plenty of room after the Mega deal to continue to expand. We're going to continue what we've done in the past, and that's look for well-run, good, strategically fitting acquisitions. I wouldn't anticipate that slowing down at all in 2016.

Okay. Finally, any thought, any impact on any of your businesses from this zika virus?

We've been thinking about that. Today as you're aware, there's not a vaccine out there that's been developed for that. As we look, are people going to be -- it could positively impact us from insecticides being used to kill the mosquitoes. But I think it's really -- ultimately, it's too early to tell.

Okay, good enough. I'll turn it over, and good luck in 2016.

Thank you.

Thanks, Mark.

Thank you. Our next question comes from the line of Chip Dillon with Vertical Research. Your line is open. Please go ahead.

Yes, thanks. Good morning, Steve and Bob. First question, I must have missed a number. You were going through the core sales and you said beauty was up 6% and then something was down 7% and home care was flat? What was that minus 7%?

The minus 7%, Chip, was personal care.

Personal care, got you, okay. Then not put you on the spot, when you look at the first-quarter guidance, it's in line or maybe even slightly in the mid-point below a year ago. I know that we now are lapping some of the currency issues, hopefully.

You certainly would have more confidence? Maybe why do you think you would have confidence to grow the back nine months of the year? I know the comparisons get be tougher because you had such a good 2015, but could you give us a little help as you think about the back nine months versus the first quarter?

First of all I think -- keep in mind on first quarter, the currency -- if you're talking about currency fluctuations, certainly the euro is going to probably see a bit less volatility. But we've got quite a bit of volatility going on with the Brazilian real, the Chinese yuan. You've got other things we need to look at, because we're using year-end rates to do our projections going forward.

You are getting some currency, as you can see, in terms of the numbers. Otherwise, the other side I at least tried to point out in the press release is that while we don't see the market as negative, it's certainly not bullish out there. We've got a lot of our customers being somewhat cautious, and that's our view as we go into the first quarter to see how the year is going to start.

Okay, that's good. Then as you -- you might have given this, I don't think I missed it, though. Could you update us on your plans for CapEx for 2016? What should we assume for interest expense and a tax rate?

Sure. For 2016 capital, we're estimating capital expenditures at about $160 million. We're also anticipating D&A to be around $150 million. Those exclude anything coming potentially on top of that from Mega. We're continuing obviously to invest in the Pharma capacity growth that we've seen.

The interest expense should be up slightly over -- you've got two effects. You've got about another $1 million coming on the US financing part of the Mega transaction, and then you've got slightly more, as well, on the additional $225 million private placement that we concluded in February. You've got about another month and a half, two months roughly, on that. I would say about $2 million to $3 million extra.

On the tax rate?

On the tax rate we're targeting 32% to 33%.

Okay. Just to be clear, and I know you're still working through numbers with Mega, but whatever impact it has on D&A in CapEx would be on top of the numbers you gave us?

That's correct, but we're not expecting it to be materially different their capital versus their D&A.

Got you. Okay, thanks, guys.

Thanks.

Thank you. Our next question comes from the line of Brian Rafn with Morgan Dempsey Capital Markets.

Good morning, guys.

Good morning, Brian.

2015, tough year for small caps in manufacturing. You guys have been a beacon of growth. Hats off to everybody at Aptar. You did a fabulous job.

Thanks, Brian.

Give me a sense in the cosmetic perfume area. You guys talked about some strength. I think you said, Steve, that you were a little surprised at fragrance launches. Can you break it out? Does this spill over into 2016?

Can you give us a little more granularity maybe the upper prestige lines versus some of the lower-end economy lines in the fragrance area? How did that market -- was it more packaging reformulations, or was it just new brand launches? What was the strength there?

I think you saw some new brands coming out. You also saw some adjacent brands. You have main brand, and they would be sending out, or introducing new colors if you will, of that same brand.

Again, I want to go back, though. The other thing, Brian, that we did see is new formulations on facial care. In terms of -- that's a market that continues to increase for us. Again, it fits well with our Airless transaction.

As we look forward, remember we had a very challenging year in Latin America. We're hoping that market at least stabilizes and maybe gives us some potential to see some additional growth down there. I'd say it's cautiously optimistic going in. I don't see this, though, being a 10% or 15% growth in 2016. We get to 3%, 4%, 5%, will be a good year for us.

Okay. The Olympics in Rio de Janeiro, Brazil. Does that provide any catalyst for -- I'm thinking packaged food or beverage, product reformulations? Is there enough volume there from that event, or is it really a non-event?

Historically, any time you get an event of that size -- whether it was the World Cup or whatever, you typically get our customers introducing new products, selling more. Net-net, it tends to be a positive. I wouldn't call it though a needle-mover for overall Aptar.

Okay. When you look, Steve, across the different end markets and you look at new product-line launches with your customers, are you seeing any changes, number of units being launched, more regional versus international or nationally? Can you put any flavors, say 2015 going into 2016?

Again, it's going to be very different based on the three business segments. I would say that if you looked at where we've seen launches probably being a bit smaller than what they were in the past, they're a little bit more focused. I think that trend will continue in 2016, as it was more in 2015. Maybe more launches, but not as big of individual launches.

Okay. Anything on the size packaging reformulations, the old 16 ounces for a fixed price, now 12 ounces? Has that -- in these tough markets where you haven't seen a lot of sales growth in internationally, are you seeing package reformulations in size?

You're getting it going both ways. You're seeing it certainly at the club stores some of the larger, and you get two for one, or whatever those transactions may be. But you're also coming back and seeing in the dollar stores, where you're getting -- people's income is down, and they're re-formulating the package to be more specifically tied to be at a more affordable price, even if it's less long-term cost-effective for the consumer, they just don't have the money. We're seeing a bit of both of those. But again, I don't think a substantive change between 2015 and 2016.

All right. Again, great job in 2015. Thanks, Steve.

Thanks, Brian.

Thank you. Our next question comes from the line of Debbie Jones with Deutsche.

Hi, good morning.

Hi, Debbie.

I was hoping to talk about the broader trends in drug delivery methods, and how that will impact your strategy for M&A in that segment and Pharma going forward? I feel like if we look back prior to Stelmi there was a lot of talk about oral and nasal drug delivery, Stelmi moves into injectables, and now you have a little bit more dermal with Mega -- and how that the trends that we're seeing currently might impact you going forward, and where you would like to grow?

Certainly, I think some of the trends continue, which as you look at the biotech-type drugs, I think they're continuing to expand going back out. I think the Stelmi or Aptar Stelmi product line really helps that. Today with coated elastomer products is -- again, that's a new product we introduced in 2015 -- that should help our growth going forward.

I think the other thing that while it's a small area, we're seeing the one I talked about, this opioid emergency treatment is also a plus, and that's getting into different therapies. It's past allergies. It's past drugs for the lungs, and those are areas. We're continuing to work on those with our customers, and we're also looking at acquisition opportunities that can again fit well within the Aptar product line to be able to expand to our customers.

Okay, thanks. I'm going to ask a last follow-up. On Mega Airless, there's just nothing in your guidance for Q1 that's in there, not like a month?

No. Right now -- since we're not sure what the timing, while we still hope that will get done in the first quarter, we've got nothing in there for Mega, both either on a cost side or an income side.

Okay, great. Thank you.

Thank you. Our next question is a follow-up question from the line of Adam Josephson with KeyBanc. Your line is open.

Thanks for taking my follow-ups. Bob, just one clarification on FX. I know you said you were using year-end rates. What euro and real rate are you assuming for 1Q?

We would have used the end of the year spot rate, so for the euro that was roughly $1.09. I don't remember -- I might have it here for the real.

That's okay. Year-end I can find. But $1.09 for the euro, okay.

Yes, and I think it's about like $0.26 on the real.

Okay. Steve, in terms of economic comments, economic thoughts, you talked about each of your end markets, but did you see any notable signs of improvement or deterioration as the quarter progressed? Do you expect any improvement, given the presumed benefit of these lower oil and gas prices for consumers globally?

I think what we've seen is not as substantive change in the fourth quarter. As we look forward into 2016, we think it will be somewhat similar in the first quarter as it was to the fourth quarter.

While we're getting some changes to the oil prices here in the United States, you're getting offset to that in terms of certain taxes and other things that are going up. I'm not sure yet where the consumer is to that. At least our customers haven't been projecting big new launches to try to reflect that increased purchasing power in the US.

Again, you're starting to see some raw materials actually start to go up a bit here in the US, or even in the resin area. While it's not material in the first quarter, we're starting to see some increases.

Thanks, Steve. Related to that, how would you compare the environment today to say a year ago? Has it gotten any better or worse? It seems like it's been more volatile recently, but I would just be interested in your thoughts?

I would say it's maybe slightly better. I think people have gotten through the year. It wasn't a great year for a lot of our customers, but a lot of the restructuring that they've done they've had in place, and they're now looking to see where some of the growth will be. On whole, I would have it more of a slight positive on an overall basis than it was last year.

Thanks a lot, Steve, and best of luck.

Thank you.

Thank you. Our next question comes from the line of George Staphos with Bank of America Merrill Lynch.

Hi, guys. First question. Just want to follow-up on a couple of numbers, just to make sure I had them right. Latin America, you said core growth was up 21%. I think you said in answering one of the questions that you were hoping for 3% to 5% growth, I think in fragrance and cosmetic?

Did I get those correctly? The Latin American piece, is that mostly from fourth quarter, is that mostly pricing to offset currency?

Let me address the Latin American side, George. You've got three different factors coming in. We continue to transfer business from North America. It was previously manufactured and sold from North America into the regions down to Latin America. That penalizes a little bit our North America, and benefits our Latin America.

You do have really good growth continuing in some of the smaller markets for us, which is going to be beverage and food. We also saw very good growth in our Pharma, both CHC and RX down in Latin America.

We've also got the increased selling prices, really just passing on the higher inflation that we experienced in both 2014 and 2015. That's also built into that 21% core growth rate. I'm not sure on your second question, George, on the fragrance 3% to 5%?

I think Steve had made a comment that you wouldn't be looking for 10% growth this year, but 3% to 5% growth would be a good result. I'm not sure whether that was for fragrance and cosmetic, Beauty and Home more broadly, or what end market you were specifically referring to there?

I'm sorry, that was -- what the question -- what I was trying to do is saying we were up, in the beauty area of Beauty and Home, we were up 6% in the fourth quarter. If I look out for the year given the launches et cetera that we're seeing, 3% to 5% we think year-on-year growth in the beauty part of the market would be a good year for us.

Okay, thanks for that. That's helpful. The second question I had, to the extent -- well, let me back up.

You mentioned that you don't think that you are losing share, and more likely gaining share, yet there's really nothing like Nielsen Scanner, let's face it, for your market. How are you keeping tabs of that? If you had to put a rough market share on new products within broadly Beauty and Home, Food and Beverage, and Pharma, what would it be for each -- on new products, your share?

Again, it's going to be definitional, I think. A couple things we do, we use a lot of different databases. We use Euromonitor. We'll use Nielsen data to try to come back, and also discussion with our customers. But it is challenging, because we're in a lot of different areas in a lot of different market places.

When I look at our new products side, what we're doing is, when we look at new products to definition, we have -- we're roughly running last year about 7% of new products sales that we define as new products sales. That's up from about 6% the year before. We're targeting to be a little over 8% in terms of 2016.

Again, those new products as we defined them, George, are not our new products that are let's call brand-new products, but also entering in new regions and new application fields for us. It's more all-inclusive for us.

Okay. My last question, there's obviously been a lot written over the years about channel shift, and the move from brick-and-mortar to online. Does that affect your business much at all? I'm sure the question has come up in past conference calls. I just don't recall what your views on that are.

Are there any end markets that provide a particular opportunity for you, given your product base? Thanks, guys. Good luck in the quarter.

It's an interesting question. Frankly, it's one that we're having discussions with across all three of our segments. Their whole distribution channel is now going from shipping cases of stuff to Walmart or to a drugstore, to shipping one-off containers through Amazon. The packaging criteria is changing for that, so we're working on several projects today, trying to define how our package needs to adapt to those new market conditions.

We think that this offers us additional opportunities to grow. But it's one that we have to stay very flexible with, because it's a very quick-changing market. I'm sorry I can't give you more to that, but certainly our customers are focused on it, and we have several very specific projects we're working on with them to try to deal with that.

Okay. Thank you, Steve.

Thank you. I'm showing a question from the line of Jon Anderson with William Blair. Your line is open.

Good morning, guys.

Hi, Jon.

A couple of quick ones. Bob, I wanted to come back to an earlier question on resin. You quantified the benefits in the fourth quarter at $3 million. Was that an income number - a pre-tax, after-tax? Then what are you modeling for the first quarter in terms of resin benefit?

That was a pre-tax number, Jon, on the $3 million. In terms of modeling, we're just assuming there's some movements between regions, between the US and Europe, but we're basically modeling flat. No change.

Okay. Then on the personal care business, I'm just wondering, given the results in the fourth quarter, maybe Steve you could talk a little bit about what you're seeing there? Is the decline in the fourth quarter end-market demand? Do you think -- is it slow-down in terms of some of the conversion activity at present, or there's some share impacts going on? Some color there would be helpful, and how you're thinking about that part of the Beauty and Home business as you look ahead to 2016? Thanks.

Yes, it tends to be a bit lumpy for us. We were seeing some of our hair care -- we sell quite a bit into the hair care market. That has been actually pretty soft for our customers, as the results saw for us. We actually come back into the sun care market, is another big market we sell into. That market had -- was flattish in the year.

We're seeing some inventory carry-overs. We're not getting as much refills right now into the sun care market as we originally anticipated. All those being said, it becomes very different business size in the different regions. We still are very bullish about the overall personal care market, but we just see some spotty issues in terms of the fourth quarter.

Great. Thanks a lot. Good luck.

Thank you.

Thank you. I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Steve Hagge for any closing remarks.

Thanks, Michelle. That concludes our call today. I'd like to thank everyone for joining us. Goodbye.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.