Aptargroup, Inc.: Form 10-Q for the period ended Sep 30, 2025

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, OR AS OTHERWISE INDICATED)

RESULTS OF OPERATIONS

(1) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under “Non-U.S. GAAP Measures.”

NET SALES

We reported net sales of $961.1 million for the quarter ended September 30, 2025, which represents a 6% increase compared to $909.3 million reported during the third quarter of 2024. The U.S. dollar weakened against most European currencies resulting in a positive 4% currency translation impact at the consolidated level. Current year acquisitions also positively impacted consolidated sales by 1%. Therefore, core sales, which excludes acquisitions and changes in foreign currency rates, increased by 1% in the third quarter of 2025 compared to the same period in 2024. Strong product volume growth in our Aptar Pharma and Aptar Closures segments more than compensated for lower tooling sales and the pass through of lower resin costs.

Reported net sales for the first nine months of 2025 increased 3% to $2.81 billion compared to $2.73 billion for the first nine months of 2024. Foreign currency exchange rates and acquisitions each positively impacted our consolidated results by 1% during the first nine months of 2025. Therefore, core sales, which exclude acquisitions and changes in foreign currency rates, increased 1% for the first nine months of 2025 compared to the same period in 2024. As mentioned above, volume growth in our Aptar Pharma and Aptar Closures segments more than compensated for lower tooling sales and the pass through of lower resin costs.

(1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

The following table sets forth, for the periods indicated, net sales by geographic location based on shipped to locations:

For discussion regarding net sales by reporting segment, please refer to the analysis of segment net sales and segment Adjusted EBITDA on the following pages.

COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)

Cost of sales (“COS”) as a percentage of net sales increased to 62.2% in the third quarter of 2025 compared to 61.4% in the third quarter of 2024. While our sales and royalty growth continued to be driven by our Pharma segment, sales within this segment were negatively impacted by a mix of lower margin applications compared to the same period in 2024. We also were negatively impacted by lower productivity and an increase in certain input costs.

For the first nine months of 2025, COS as a percentage of net sales decreased to 62.1% compared to 62.5% in the same period in 2024. This decrease is mainly due to the improved mix of higher-margin Pharma product sales and royalties along with favorable productivity driven by volume and savings from cost management initiatives.

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Selling, research & development and administrative expenses (“SG&A”) increased by approximately $7.2 million to $148.8 million in the third quarter of 2025 compared to $141.6 million during the same period in 2024. Excluding changes in foreign currency rates, SG&A increased by approximately $2.4 million in the quarter mainly due to higher legal fees in our Aptar Pharma segment. SG&A as a percentage of net sales decreased to 15.5% in the third quarter of 2025 compared to 15.6% in the same period in 2024.

Our SG&A expenses increased by approximately $11.5 million to $455.2 million in the first nine months of 2025 compared to $443.7 million during the same period in 2024. Excluding changes in foreign currency rates, SG&A increased by approximately $6.3 million in the first nine months of 2025 compared to the first nine months of 2024 mainly due to the higher legal expenses discussed above. We also incurred higher bad debt costs during the first nine months of 2025 due to a reversal of a specific customer reserve in the 2024 period. SG&A as a percentage of net sales remained consistent at 16.2% in the first nine months of 2025 and in the same period in 2024.

DEPRECIATION AND AMORTIZATION

Reported depreciation and amortization expenses increased by approximately $8.2 million to $75.2 million in the third quarter of 2025 compared to $67.0 million during the same period in 2024. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $5.8 million in the third quarter of 2025 compared to the same period a year ago. This increase is due to recent acquisitions and higher capital investments made to support our growth strategy. Depreciation and amortization as a percentage of net sales increased to 7.8% in the third quarter of 2025 compared to 7.4% in the same period of the prior year.

Depreciation and amortization expenses increased by approximately $14.5 million to $210.8 million in the first nine months of 2025 compared to $196.3 million during the same period a year ago. Excluding changes in foreign currency rates, depreciation and amortization increased by approximately $12.0 million in the first nine months of 2025 compared to the same period a year ago. As discussed above, this increase is due to recent acquisitions and higher capital investments made to support our growth strategy. Depreciation and amortization as a percentage of net sales increased to 7.5% in the first nine months of 2025 compared to 7.2% in the same period of the prior year.

RESTRUCTURING INITIATIVES

For the three and nine months ended September 30, 2025, we recognized $2.2 million and $5.8 million, respectively of restructuring costs related to initiatives to better leverage our fixed cost base through growth and cost reduction measures. For the three and nine months ended September 30, 2024, we recognized $3.9 million and $9.7 million of restructuring costs related to these initiatives, respectively. The cumulative expense incurred as of September 30, 2025 was $70.5 million.

Restructuring costs for the three and nine months ended September 30, 2025 and 2024 were as follows:

During the three months ended September 30, 2024, pension curtailment accounting was triggered as a result of restructuring in one of our entities in Europe. In addition to the costs above, the remeasurement of this pension obligation resulted in a $1.9 million curtailment gain. The curtailment gain is included in the line miscellaneous income (expense), net in the Condensed Consolidated Statements of Income.

OPERATING INCOME

Operating income decreased approximately $1.4 million to $136.9 million in the third quarter of 2025 compared to $138.3 million in the same period a year ago. Excluding changes in foreign currency rates, operating income decreased by approximately $7.9 million in the quarter compared to the same period a year ago. Cost management efforts were more than offset by higher cost of sales, depreciation, amortization and legal expenses noted above. Operating income as a percentage of net sales decreased to 14.3% in the third quarter of 2025 compared to 15.2% in the prior year period.

For the first nine months of 2025, operating income increased by approximately $18.4 million to $394.8 million compared to $376.4 million in the same period of the prior year. Excluding changes in foreign currency rates, operating income increased by approximately $11.5 million in the first nine months of 2025 compared to the same period a year ago. This increase was driven by sales growth from our Aptar Pharma segment and effective cost management efforts which more than compensated for higher legal expenses. Operating income as a percentage of net sales increased to 14.0% in the first nine months of 2025 compared to 13.8% for the same period in the prior year.

INTEREST EXPENSE

Interest expense increased approximately $1.2 million to $13.5 million in the third quarter of 2025 compared to $12.3 million for the same period of the prior year. During 2024, we replaced more than $370 million of private placement debt having interest rates between 1.2% and 3.5% with term loan and revolving credit facility borrowings having current interest rates between 2.9% and 5.6%.

Interest expense increased $3.2 million to $35.7 million in the first nine months of 2025 compared to $32.5 million during the same period in 2024 due to higher rates on current year borrowings as discussed above. See Note 6 - Debt to the Condensed Consolidated Financial Statements for further details on our current debt structure.

NET OTHER INCOME (EXPENSE)

Net other income increased $25.6 million to $30.7 million in the third quarter of 2025 from $5.1 million in the same period of the prior year. On July 28, 2025, we executed our call option to purchase an additional 31% equity interest in our investment in BTY. As a result of this additional investment, we remeasured our previously held minority equity interest in BTY at fair value resulting in a gain of $26.5 million. Following the transaction, we recognized a redeemable noncontrolling interest related to the remaining 20% equity interest held by the selling shareholder. This interest is classified in mezzanine equity and is subject to remeasurement based on a predetermined redemption formula. We also realized improving returns from our equity method investments with a $1.8 million improvement over the prior-year quarter, which was partially offset by a $1.2 million lower remeasurement gain on our investment in PureCycle. During the third quarter of 2024, we also reported a $1.9 million gain on pension curtailment for a facility closure in Europe.

Net other income increased $31.0 million to $40.8 million of income for the nine months ended September 30, 2025 from $9.8 million of income in the same period of the prior year. As discussed above, we realized a $26.5 million remeasurement gain on an additional investment in BTY discussed above. We also realized approximately $6.3 million in higher equity results from affiliates which more than compensated for the $1.9 million gain on pension curtailment realized during 2024.

PROVISION FOR INCOME TAXES

The effective tax rate for the three months ended September 30, 2025 and 2024 was 17.1% and 23.8% respectively. The lower effective tax rate for the three months ended September 30, 2025 reflects a benefit related to the gain resulting from remeasurement of equity investments to fair value upon Aptar becoming the majority shareholder in the invested companies (4.2%) and a deferred tax benefit resulting from the release of a valuation allowance (2.7%). The effective tax rate for the nine months ended September 30, 2025 and 2024 was 20.4% and 22.7%, respectively. The lower effective tax rate for the nine months ended September 30, 2025 reflects deferred tax benefits from the valuation allowance releases (3.1%) and a benefit related to the gain resulting from remeasurement of equity investments to fair value upon Aptar becoming the majority shareholder in the invested companies (1.6%). The tax rate for 2024 reflects tax incentives in certain non-U.S. jurisdictions from intellectual property development activities and greater excess tax benefits from share-based compensation than in 2025.

NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.

We reported net income attributable to AptarGroup, Inc. of $127.9 million and $318.4 million in the three and nine months ended September 30, 2025, respectively, compared to $100.0 million and $273.6 million for the same periods in the prior year.

APTAR PHARMA SEGMENT

Operations that sell proprietary dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form our Aptar Pharma segment.

(1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities, gains and losses from remeasurement of equity method investment and other special items. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under “Non-U.S. GAAP Measures.”

Net sales for the Aptar Pharma segment increased 6% in the third quarter of 2025 to $445.4 million compared to $420.6 million in the third quarter of 2024. Changes in currencies positively affected net sales by 4%. Therefore, core sales increased by 2% in the third quarter of 2025 compared to the third quarter of 2024. The majority of the sales growth is due to higher volumes in our prescription drug, injectables and active material science solutions divisions. Core sales of our products to the prescription drug market increased 3% on strong demand for our products used on central nervous system and emergency medicines applications along with higher customer royalties. The 11% core sales decline in the consumer health care market was mainly driven by softer nasal decongestant and nasal saline volumes. Sales of our products and services to the injectables market increased 18% on strong demand for higher value elastomeric components, which are used in a number of end markets including biologics and GLP-1, while active material science solutions increased 3% mainly on strong diabetes product protection technologies growth. Digital Health currently does not represent a significant percentage of the total Pharma sales.

Net sales for the first nine months of 2025 increased by approximately 4% to $1.30 billion compared to $1.24 billion in the first nine months of 2024. Changes in currency rates positively impacted net sales by 2% during the first nine months of 2025. Therefore, core sales increased by 2% in the first nine months of 2025 compared to the same period in the prior year. Strong volume growth and royalty increases more than compensated for lower tooling sales and pricing adjustments to secure longer-term contracts. Core sales of products included in our prescription drug division increased 7% on strong demand for our emergency medicine and central nervous system solutions along with higher revenues received from customer royalties. Core sales in the consumer health care market decreased 11% as higher demand for our eye care solutions was offset by lower sales of nasal decongestant, nasal saline and cough and cold products. Injectables core sales increased by 6% despite a challenging comparison to the first half of 2024 which experienced a 14% increase in revenues related to a catch-up period following an enterprise resource planning system implementation. Core sales of our active material science solutions increased 8% mainly on higher demand for our active film and diabetes treatment technologies. Digital Health currently does not represent a significant percentage of the total Pharma sales.

(1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the third quarter of 2025 increased 9% to $165.8 million compared to $151.6 million in the same period of the prior year. This increase was mainly due to strong prescription drug, injectables and active material science solutions sales growth along with the higher customer royalties. As a result, our Adjusted EBITDA margin improved to 37.2% in the third quarter of 2025 from 36.0% in the third quarter of 2024.

Adjusted EBITDA in the first nine months of 2025 increased 9% to $465.1 million compared to $425.3 million in the same period of the prior year. This increase was also mainly due to the strong core sales growth in prescription drug, injectables and active material solutions along with higher royalty income discussed above. Overall, our Adjusted EBITDA margin improved to 35.8% in the first nine months of 2025 compared to 34.2% in the first nine months of 2024.

APTAR BEAUTY SEGMENT

Operations that sell dispensing systems and sealing solutions to the beauty, personal care and home care markets form our Aptar Beauty segment.

(1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities, gains and losses from remeasurement of equity method investment and other special items. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under “Non-U.S. GAAP Measures.”

Reported net sales for the quarter ended September 30, 2025 increased 8% to $327.8 million compared to $302.9 million in the third quarter of the prior year. Changes in currency rates and acquisitions each positively impacted net sales by 4% in the third quarter of 2025. Therefore, core sales remained flat in the third quarter of 2025 compared to the same quarter of the prior year as higher tooling revenues and tariff pass throughs were offset by slightly lower product sales. Core sales to the beauty market decreased 5% on lower sales of skincare applications for the indie brand market as well as softer demand for our prestige fragrance dispensing technologies. Personal care improved by 13% on strong sales of our hair care and body and skin care applications, while home care core sales decreased 18% on lower sales of our products to air care and automotive customers.

For the first nine months of 2025, reported net sales of $968.3 million increased 2% compared to $951.7 million reported in the first nine months of the prior year. Changes in currency rates and acquisitions each positively impacted net sales by 1% in the first nine months of 2025. Therefore, core sales remained flat during the first nine months of 2025 compared to the same period in the prior year. Core sales of our products to the beauty market decreased 7% during the first nine months of 2025 due to softer demand for our prestige fragrance technologies and facial skin care products. However, personal care core sales improved 11% over the prior year on higher sales of our hair care and body and skin care products. Core sales of our home care market products declined 1% on lower demand from our customers selling air automotive products.

(1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

Adjusted EBITDA in the third quarter of 2025 decreased 1% to $39.7 million compared to $40.2 million in the same period in the prior year. This is primarily attributable to the increase of certain input costs and lower product and tooling margins. Adjusted EBITDA margin declined from 13.3% in the third quarter of 2024 to 12.1% during the third quarter of 2025 due to the items mentioned above along with higher tariff costs which are mostly passed through to customers with no margin.

Adjusted EBITDA in the first nine months of 2025 decreased 2% to $124.0 million compared to $126.0 million reported in the same period in the prior year. This decrease was mainly driven by lower prestige fragrance and facial skincare volumes mentioned above along with increases in certain input costs. These factors, along with the pass through of higher tariff costs, led to our Adjusted EBITDA margin declining from 13.2% in the first nine months of 2024 to 12.8% during the first nine months of 2025.

APTAR CLOSURES SEGMENT

Operations that sell dispensing closures, sealing solutions and food service trays to the food, beverage, personal care, home care, beauty and other markets form our Aptar Closures segment. Our food protection business and elastomeric flow-control technology business continue to report through the Aptar Closures segment.

(1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities, gains and losses from remeasurement of equity method investment and other special items. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under “Non-U.S. GAAP Measures.”

Reported sales for the quarter ended September 30, 2025 increased approximately 1% to $188.0 million compared to $185.8 million in the third quarter of the prior year. Changes in currency rates positively impacted net sales by 2%. Therefore, core sales for the third quarter of 2025 decreased approximately 1% from the same quarter of the prior year. During 2025, liquid coffee creamer product sales were reclassified from our food market to the beverage market to better align with how those products are currently managed. All prior period amounts have been revised to conform to the current year presentation. Higher product sales of 3% could not offset the decrease in tooling sales and the pass through of lower resin costs. Sales to the food market decreased 4% on lower tooling sales while product sales increased slightly across a number of applications. The 9% increase in beverage market sales was mainly due to higher sales of our closures on bottled water and functional drink products. Personal care sales declined 8% during the third quarter of 2025 mainly due to lower hair care sales, while other sales were flat.

Net sales for the first nine months of 2025 increased approximately 1% to $548.7 million compared to $540.7 million in the first nine months of 2024. Changes in currency rates did not impact net sales. Therefore, core sales increased approximately 1% in the first nine months of 2025 compared to the same period in the prior year. As mentioned above, during 2025, liquid coffee creamer product sales were reclassified from our food market to the beverage market and all prior period amounts have been revised to conform to the current year presentation. Product sales contributed a 5% improvement for the first nine months of 2025 but was partially offset by lower tooling sales and the pass through of lower resin costs. While core product sales to our food and beverage markets each increased 3% and 6% respectively, both were negatively impacted by 2% lower segment tooling sales compared to the first nine months of 2024. For the food market, we reported strong product sales of our closures for salad dressing, spread, jellies and honey, granules and powders and food protection products. Core sales to our beverage customers increased during the first nine months of 2025 on improving functional drink and bottled water application sales. Personal care core sales declined on lower tooling and sales of our hair care solutions while the other markets improved by 2% on stronger sales of our laundry and dish care products.

(1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.

(2) Other includes beauty, home care and other markets.

Adjusted EBITDA in the third quarter of 2025 decreased 5% to $30.3 million compared to $32.0 million reported in the same period of the prior year mainly due to lower tooling sales and lower productivity. Our Adjusted EBITDA margin declined from 17.2% in the third quarter of 2024 to 16.1% during the third quarter of 2025 due to the items discussed above along with higher tariff costs which are mostly passed through to customers with no margin.

Adjusted EBITDA in the first nine months of 2025 increased 4% to $89.5 million compared to $86.3 million reported in the same period of the prior year. Our profitability was positively impacted by the higher product sales discussed above along with our cost improvement initiatives which more than compensated for a lower tooling contribution and lower productivity. This led to our Adjusted EBITDA margin improving from 16.0% in the first nine months of 2024 to 16.3% during the first nine months of 2025.

CORPORATE & OTHER

In addition to our three reporting segments, we assign certain costs to “Corporate & Other” which is presented separately in Note 16 – Segment Information of the Notes to the Condensed Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities, gains and losses from remeasurement of equity method investment and other special items) primarily includes certain professional fees, compensation and information system costs along with certain equity method investments which are not allocated directly to our reporting segments.

For the quarter ended September 30, 2025, Corporate & Other costs decreased to $13.3 million from $15.4 million in the third quarter of 2024. Improved performance of certain equity method investments along with lower incentive compensation costs led to the current quarter improvement compared to the prior-year period.

For the first nine months of 2025 Corporate & Other costs decreased to $54.1 million compared to $57.5 million reported in the same period of the prior year. This decrease is mainly due to the improved performance of our equity method investments and lower costs to evaluate acquisition targets, which more than offset higher incentive compensation costs, including higher accrual rates for certain equity compensation programs.

NON-U.S. GAAP MEASURES

In addition to the information presented herein that conforms to U.S. GAAP, we also present financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period over period comparison of operating results by removing the impact of items that, in management’s view, do not reflect our core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the unaudited Condensed Consolidated Statements of Income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measures to arrive at these non-U.S. GAAP financial measures.

In our Management’s Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales and other information, which we define as “constant currency.” Core sales, which excludes the impact of foreign currency translation is a non-U.S. GAAP financial measure. Core sales growth is calculated as current-period core sales less prior period core sales divided by prior period core sales multiplied by a hundred. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current-period foreign currency exchange rates. As a result, management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of acquisitions when comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.

We present earnings before net interest and taxes (“EBIT”) and earnings before net interest, taxes, depreciation and amortization (“EBITDA”). We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude restructuring initiatives, acquisition-related costs, purchase accounting adjustments related to acquisitions and investments, gain or loss from remeasurement of equity method investment, net unrealized investment gains and losses related to observable market price changes on equity securities, and other special items. For the three and nine months ended September 30, 2025, "Other special items" include costs incurred related to non-ordinary-course litigation regarding matters under "Legal Proceedings" within Note 12 - Commitments and Contingencies as these costs do not reflect our core operating performance. Our Outlook is also provided on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as exchange rates and changes in the fair value of equity investments, or reliably predicted because they are not part of our routine activities, such as restructuring initiatives, acquisition-related costs and other special items.

We provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. “Net Debt” is calculated as interest-bearing debt less cash and equivalents and short-term investments while “Net Capital” is calculated as stockholders’ equity plus Net Debt. Net Debt to Net Capital measures a company’s financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents and short-term investments when evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.

Finally, we provide a reconciliation of free cash flow as a non-U.S. GAAP measure. Free cash flow is calculated as cash provided by operating activities less capital expenditures plus proceeds from government grants related to capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives.

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FOREIGN CURRENCY

Because of our international presence, movements in exchange rates can have a significant impact on the translation of the financial statements of our foreign subsidiaries. Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Argentine peso, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements. Conversely, a strengthening U.S. dollar has a dilutive effect. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies.

During the nine months ended September 30, 2025, the U.S. dollar was weaker compared to all European currencies and Thai baht. This resulted in an additive impact on our translated results during the third quarter of 2025 when compared to the third quarter of 2024.

QUARTERLY TRENDS

Our results of operations in the fourth quarter of the year are typically negatively impacted by customer plant shutdowns in December. Several of the markets we serve are impacted by the seasonality of underlying consumer products. This, in turn, may have an impact on our net sales and results of operations for those markets. The diversification of our product portfolio minimizes fluctuations in our overall quarterly financial statements and results in an immaterial seasonality impact on our Condensed Consolidated Financial Statements when viewed quarter over quarter.

Generally, we have incurred higher stock-based compensation expense in the first quarter compared with the rest of the fiscal year due to the timing and recognition of stock-based expense from substantive vesting for retirement eligible employees. As of September 30, 2025, our estimated stock-based compensation expense on a pre-tax basis for the year 2025 compared to 2024 is as follows:

LIQUIDITY AND CAPITAL RESOURCES

Given our current level of leverage and our ability to generate cash flow from operations, we believe we are in a strong financial position to meet our business requirements in the foreseeable future. We have historically used cash flow from operations, our revolving and other credit facilities, as needed, as our primary sources of liquidity. Our primary uses of cash are to invest in equipment, capacity expansions and as working capital for the continued growth of our business and to achieve our strategic objectives. We also use cash to pay quarterly dividends to stockholders, invest in the acquisition of new businesses and repurchase shares of our common stock. Due to uncertain macroeconomic conditions, including rising interest rates, inflation and the impact of tariffs and related trade restrictions, if there was a prolonged decrease in customer demand and that decrease adversely impacted our cash flows from operations, we would have the ability to restrict and significantly reduce capital expenditure levels and share repurchases, as well as reevaluate our acquisition strategy. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.

Cash and equivalents and restricted cash increased to $257.1 million at September 30, 2025 from $223.8 million at December 31, 2024. Total short and long-term interest-bearing debt increased from $1.03 billion at December 31, 2024 to $1.20 billion at September 30, 2025. The ratio of our Net Debt (interest-bearing debt less cash and cash equivalents) to Net Capital (stockholders’ equity plus Net Debt) increased to 25.1% at September 30, 2025 from 24.4% at December 31, 2024. See the reconciliation under “Non-U.S. GAAP Measures.”

In the first nine months of 2025, our operations provided approximately $386.3 million in net cash flow compared to $465.2 million for the same period a year ago. In both periods, cash flow from operations was primarily derived from earnings before depreciation and amortization.

We used $215.1 million in cash for investing activities during the first nine months of 2025 compared to $225.7 million during the same period a year ago. We spent $183.6 million during the first nine months of 2025 on capital expenditures. Additionally, we spent $28.2 million for acquisitions, net of cash acquired and $7.3 million for investment in equity securities during the first nine months of 2025.

Financing activities used $154.2 million in cash during the first nine months of 2025 compared to $137.7 million in cash used by financing activities during the same period a year ago. During 2025, we paid $89.3 million in dividends, purchased $190.0 million of our common stock that we placed into treasury stock and received proceeds of $14.9 million on stock option exercises. Additionally, we had net proceeds on our revolving credit facility of $151.1 million.

In October 2020, we entered into an unsecured money market borrowing arrangement to provide short-term financing of up to $30 million that is available in the U.S. No balance was outstanding under this arrangement as of September 30, 2025.

We have a revolving credit facility (the “revolving credit facility”) with a syndicate of banks which provides us with unsecured financing of up to $600 million, which may be increased by up to $300 million subject to certain conditions. The revolving credit facility is available in the U.S. and to our wholly-owned UK subsidiary and can be drawn in various currencies including USD, EUR, GBP, and CHF. The revolving credit facility was set to mature in June 2026, but on July 2, 2024, we entered into a new amended and restated agreement (the “amended revolving credit facility”) that extended the maturity date to July 2029, subject to a maximum of two one-year extensions in certain circumstances. As of December 31, 2024, €170.0 million ($176.0 million) was utilized under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary. As of September 30, 2025, we had utilized $187.0 million and €130 million ($152.6 million) under the amended revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary.

There are no compensating balance requirements associated with our amended revolving credit facility. Each borrowing under the revolving credit facility will bear interest at rates based on SOFR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The amended revolving credit facility also provides mechanics relating to a transition away from designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the amended revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the amended revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. Credit facility balances are included in revolving credit facility and overdrafts on the Condensed Consolidated Balance Sheets.

On July 2, 2024, we entered into a term loan with a syndicate of banks (the “Term Loan”). The Term Loan matures in July 2027. As of September 30, 2025, $141.1 million was utilized under the Term Loan facility.

Our amended revolving credit facility and corporate long-term obligations require us to satisfy certain financial and other covenants including:

(1) Definitions of ratios are included as part of the amended revolving credit facility agreement and private placement agreements.

Based upon the above consolidated leverage ratio covenant, we would have the ability to borrow approximately an additional $1.8 billion before the 3.50 to 1.00 maximum ratio requirement would be exceeded.

On July 6, 2022, we entered into an agreement to swap approximately $200 million of our fixed USD debt to fixed EUR debt.

On September 8, 2025, the Board of Directors declared a quarterly cash dividend of $0.48 per share payable on November 13, 2025 to stockholders of record as of October 23, 2025.

Our foreign operations have historically met cash requirements with the use of internally generated cash or uncommitted short-term borrowings. We also have committed financing arrangements in both the U.S. and the UK as detailed above. We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.

CONTINGENCIES

The Company is subject to a number of lawsuits and claims both actual and potential in nature. Please refer to Note 12 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements for a discussion of contingencies affecting our business.

RECENTLY ISSUED ACCOUNTING STANDARDS

We have reviewed the recently issued ASUs to the FASB’s Accounting Standards Codification that have future effective dates. Standards that have been adopted during 2025 are discussed in Note 1 – Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements.

Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption.

OUTLOOK

We expect adjusted earnings per share for the fourth quarter of 2025 to be in the range of $1.20 to $1.28 and this guidance is based on an effective tax rate range of 19.5% to 21.5%. Our total 2025 estimated cash outlays for capital expenditures net of government grant proceeds are expected to be approximately $250 million to $270 million.

FORWARD-LOOKING STATEMENTS

Certain statements in Management’s Discussion and Analysis and other sections of this Form 10-Q are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in the Significant Developments, Restructuring Initiatives, Quarterly Trends, Liquidity and Capital Resources, Contingencies and Outlook sections of this Form 10-Q. Words such as “expects,” “anticipates,” “believes,” “estimates,” “future,” “potential”, “are optimistic” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act") and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results or other events may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment including, but not limited to:

• geopolitical conflicts worldwide and the resulting indirect impact on demand from our customers selling their products into these countries, and certain supply chain disruptions;
• our ability to protect and defend our intellectual property rights, as well as litigation involving intellectual property rights;
• cybersecurity threats against our systems and/or service providers that could impact our networks and reporting systems;
• the availability of raw materials and components (particularly from sole-sourced suppliers for some of our Pharma solutions) as well as the financial viability of these suppliers;
• the outcome of any legal proceeding that has been or may be instituted against us and others;
• lower demand and asset utilization due to an economic recession either globally or in key markets we operate within;
• economic conditions worldwide, including inflationary conditions and potential deflationary conditions in other regions we rely on for growth;
• competition, including technological advances;
• significant tariffs and other restrictions on foreign imports imposed by the U.S. and related countermeasures are taken by impacted foreign countries;
• the demand for existing and new products;
• our ability to successfully implement facility expansions and new facility projects;
• fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs;
• significant fluctuations in foreign currency exchange rates or our effective tax rate;
• the impact of tax reform legislation, changes in tax rates and other tax-related events or transactions that could impact our effective tax rate and cash flow;
• financial conditions of customers and suppliers;
• consolidations within our customer or supplier bases;
• changes in customer and/or consumer spending levels;
• loss of one or more key accounts;
• our ability to offset inflationary impacts with cost containment, productivity initiatives and price increases;
• changes in capital availability or cost, including rising interest rates;
• loss of royalty revenue due to contract expirations;
• volatility of global credit markets;
• our ability to identify potential new acquisitions and to successfully acquire and integrate such operations, including the successful integration of the businesses we have acquired;
• our ability to build out acquired businesses and integrate the product/service offerings of the acquired entities into our existing product/service portfolio;
• direct or indirect consequences of acts of war, terrorism or social unrest;
• the impact of natural disasters and other weather-related occurrences;
• fiscal and monetary policies and other regulations;
• changes, difficulties or failures in complying with government regulation, including FDA or similar foreign governmental authorities;
• changing regulations or market conditions regarding environmental sustainability;
• our ability to retain key members of management and manage labor costs;
• work stoppages due to labor disputes;
• our ability to meet future cash flow estimates to support our goodwill impairment testing;
• the success of our customers’ products, particularly in the pharmaceutical industry;
• our ability to manage worldwide customer launches of complex technical products, particularly in developing markets;
• difficulties in product development and uncertainties related to the timing or outcome of product development;
• significant product liability claims; and
• other risks associated with our operations.

Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please refer to Item 1A (Risk Factors) of Part I included in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional risks and uncertainties that may cause our actual results or other events to differ materially from those expressed or implied in such forward-looking statements.

A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our subsidiaries. Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Argentine peso, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements. Conversely, a strengthening U.S. dollar has a dilutive translation effect. Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.

The table below provides information as of September 30, 2025 about our forward currency exchange contracts. The majority of the contracts expire before the end of the fourth quarter of 2025.

As of September 30, 2025, we have recorded the fair value of foreign currency forward exchange contracts of $0.1 million in prepaid and other and $0.9 million in accounts payable, accrued and other liabilities on the Condensed Consolidated Balance Sheets. On July 6, 2022, we entered into a seven-year USD/EUR fixed-to-fixed cross currency interest rate swap to effectively hedge the interest rate exposure relating to $203 million of the $400 million 3.60% Senior Notes due March 2032 which were issued by AptarGroup, Inc. on March 7, 2022. This USD/EUR swap agreement exchanged $203 million of fixed-rate 3.60% USD debt to €200 million of fixed-rate 2.5224% EUR debt. The fair value of this net investment hedge is $33.8 million reported in accounts payable, accrued and other liabilities on the Condensed Consolidated Balance Sheets.

DISCLOSURE CONTROLS AND PROCEDURES

Management has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, the effectiveness of our disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2025. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures were effective as of such date.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our fiscal quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, which could adversely affect our business, financial conditions and future results. Other than the risk factors set forth below, there have been no material changes from the risk factors discussed in our Annual Report.

We are exposed to risks from lawsuits and claims, including product liability claims, as well as investigations, audits and other proceedings, which may result in substantial costs and expenses or interruption of our normal business operations. We are subject to a number of lawsuits and claims that arise in the ordinary course of our business, which include intellectual property infringement, product liability, commercial, employment, tort, business interruption and other litigation. For example, in May 2025, Nemera filed patent infringement actions against us in France and Germany relating to certain of our ophthalmic products. In October 2025, an EPO hearing invalidated Nemera’s main patent claim while allowing an amended claim to continue. In addition, in September 2025, ARS Pharmaceuticals Operations, Inc. filed an antitrust lawsuit against us in the United States District Court for the Southern District of California, alleging violations of U.S. competition laws related to supply of certain components and are seeking injunctive relief and damages. Refer to Note 12 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements for additional information regarding these actions.

We are also subject to indemnification claims under various contracts. Further, the failure of our products to operate as intended may result in a product liability claim against us. We believe we maintain adequate levels of product liability insurance coverage and robust quality control systems at our facilities. However, a product liability claim in excess of our insurance coverage or not covered by existing insurance may materially adversely affect our business, results of operations or cash flows.

In addition, we are subject to investigations, audits and other proceedings initiated by federal, state, international, national, provincial and local authorities, including regulatory agencies such as the FDA as a result of the products manufactured by our Aptar Pharma segment.

Current and future litigation, claims, investigations, audits and other proceedings or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome. In addition, these matters could lead to increased operating costs or interruptions of our normal business operations or could result in restrictions on our ability to manufacture or sell certain products or operate specific product lines. Litigation, proceedings and indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows.

Challenges to, or the loss of, our intellectual property rights could have an adverse impact on our ability to compete effectively. Our ability to compete effectively depends, in part, on our ability to protect and maintain the proprietary nature of our owned and licensed intellectual property. We own a large number of patents on our products, aspects of our products, methods of use and/or methods of manufacturing, and we own, or have licenses to use, all of the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products. We also rely on trade secrets, know-how and other unpatented proprietary technology. We attempt to protect and restrict access to our intellectual property and proprietary information by relying on the patent, trademark, copyright and trade secret laws of the U.S. and other countries, as well as non-disclosure agreements. However, it may be possible for a third party to obtain our information without our authorization, independently develop similar technologies, or breach a non-disclosure agreement entered into with us. For example, in March 2025, we filed a lawsuit against ARS Pharmaceuticals, Inc. and ARS Pharmaceuticals Operations, Inc. alleging that our confidential information and trade secrets were improperly disclosed and used. Refer to Note 12 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements for additional information.

Furthermore, many of the countries in which we operate do not have intellectual property laws that protect proprietary rights as fully as do laws in the U.S. The use of our intellectual property by someone else without our authorization could reduce or eliminate certain of our competitive advantages, cause us to lose sales or otherwise harm our business. The costs associated with protecting our intellectual property rights could also adversely impact our business.

We are also from time to time subject to claims from third parties suggesting that we may be infringing on their intellectual property rights. For example, in May 2025, Nemera filed patent infringement actions against us in France and Germany relating to certain of our ophthalmic products. In October 2025, an EPO hearing invalidated Nemera’s main patent claim while allowing an amended claim to continue. Refer to Note 12 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements for additional information.

Defending against such claims, or initiating legal action to protect our own rights, may involve significant legal expenses, operational disruptions, and diversion of management attention. Intellectual property litigation, which could result in substantial cost to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all or such litigation may result in restrictions on our ability to manufacture or sell certain products or operate product lines. Failure to protect our patents, trademarks and other intellectual property rights, or failure to successfully defend against intellectual property litigation, may have a material adverse effect on our business, consolidated financial condition or results of operations.