Aptargroup (ATR) Q2 2026 earnings call transcript

Introducing today's conference, call as Mrs. Mary Scafidis, Senior Vice President, Investor Relations and Communications. Please go ahead. Hello, everyone, and thanks for being with us today. Joining me on today's call are Stefan Tanda, our President and CEO, Vanessa Kanu, Executive Vice President and CFO, and Gail Tuyah, our CEO Designate and President of Aptar Pharma.

Our press release and accompanying slide deck have been posted on our website under the Investor Relations page. During this call, we will be discussing certain non-GAP financial measures. These measures are reconciled to the most directly comparable GAP financial measure, and the reconciliations are set forth in the press release. Please refer to the press release disseminated yesterday for the reconciliations of non-GAP measures to the most comparable GAP measure discussed during this earnings call.

As always, we will post a replay of this call on our website. I would now like to turn the conference call over to Stefan.

Thank you, Mary, and good morning, everyone. As many of you know, this is my final earnings call as CEO of Aptar before I will retire later this year. It has been a tremendous honor to lead this company and work alongside our talent and teams around the world. I'm incredibly proud of what we have accomplished together and confident that Aptar is well-positioned for continued success.

With Gail Tuyah assuming the role of President and CEO on September 1, I am assured in the future success of the company and excited as a shareholder.

Gail and I have worked closely together throughout this transition and for much of the last decade. I know Aptar will greatly benefit from his deep experience, leadership, and vision.

Gail is joining us on the call today and will be sharing our outlook towards the end of the call.

On a personal note, leading Aptar has been the greatest privilege of my career. What I will remember most is not any single accomplishment, but the people I've had, the opportunity to work alongside and the relationships I have built with employees, customers, the investment community, and partners around the world. I have always believed that great companies are built by great people.

And Aptar is fortunate to have an exceptional team, a strong culture founded in performance and purpose, and a consistent focus on execution, innovation, agility, and value creation.

While there is always more work to do, I believe Aptar is entering its next chapter from a position of strength. I am excited about the future of Gail's leadership and remain confident in the company's ability to deliver profitable growth and create long-term value for shareholders. And now, back to the business at hand. Let me begin my earnings remarks by highlighting our second quarter results.

And later in the call, our CFO, Vanessa Kanu, will provide additional details on the key drivers for the quarter. I am pleased to report that all three of our segments delivered positive sales growth during the quarter, and we delivered adjusted EPS results above our guidance range due, in part, to better than expect its farmer performance. The farmer segment continued to perform well, driven by strong demand across our injectables, consumer health care, and prescription businesses, highlighting the strengths of our innovation-led portfolio and the dedication of our teams around the world.

We saw continued momentum in injectables supported by demand for our last-americ components used for biologics, vaccines, and GOP-1 therapies, which, according to a recent survey, showed that 11% of Americans are currently taking GOP-1 for weight loss up from just 3% in 2024.

Consumer health care benefited from strong nasal decongestion and IKEA solution sales. Prescriptions of growth in central nervous system therapeutics and asthma COPD applications, which have offset the anticipated de-stocking-related decline in emergency medicines.

Beyond pharma, beauty benefited from double-digit core sales growth in prestige fragrance, while closures saw a strong beverage demand, particularly in bottled water. Operational performance in both segments improved progressively from the first quarter.

Shifting gears from performance highlights, I want to spend a few minutes discussing how we continue to strengthen the pipeline and long-term growth of pharma. Beyond our core delivery systems, we continue to expand the capabilities we bring to customers across formulation development and analytical services, regulatory support, and patient engagement. A few good examples include the patent applications we announced during the quarter related to inhaled and nasal GOP-1 therapies.

While these programs remain in the early stages, they build on formulation expertise that we currently provide to customers and demonstrate our continued exploration of capabilities that could create future growth opportunities in the delivery of biologics and other high-value therapeutic areas.

Turning to active material science, our U. S. patent application for NSORP has been approved. NSORP is designed to address unacceptably high levels of nitrosamine impurities in pharmaceutical products.

The FDA has issued guidance on nitrosamine. It's predicted carcinogenic potency categorization and recommendations on when a manufacturer should recall a product. As a first-of-its-kind packaging-delivered solution, Aptars NSORP technology is intended to give pharmaceutical companies a new tool to reduce risk, meet regulatory demands, and deliver safer products.

Additionally, we announced a collaborative system framework for injectable therapies, providing customers with earlier insight into assembled system performance for injectable therapies.

These expanded capabilities help customers make more informed development decisions, better managed risk, accelerate development timelines, and address the expectation of the United States pharmacopoeia. Taken together, these investments continue to advance our strategy, focusing all the way from drug formulation to the patient, and deepen our role in the pharmaceutical development process.

During the quarter, we also saw several milestones that reinforce the strength of our core pulmonary, nasal, and injectable delivery platforms.

In respiratory health, products utilizing Apto technologies received FDA approvals across both rescue and maintenance therapies for asthma and COPD, further validating the performance and regulatory track record of our pressurized meter dose inhaler or PMDI platform.

Kiazi received approval from the UK, Metzins, and Healthcare Products Regulatory Agency for the world's first PMDI utilizing HFA 152A, one of the next-generation propellants with low global warming potential. This achievement is particularly meaningful because in 2023, Apto was selected by the US Food and Drug Administration to conduct research on next-generation propellant PMDI's through our nanoform business, recognizing our deep expertise in inhaled drug delivery.

It is encouraging to see the first approval with this new propellant come to market, helping expand patient access to essential respiratory therapies while helping to reduce environmental impact.

We continue to see growing interests in nasal delivery across a widening range of therapeutic areas. A recent example is Eli Lele's announced acquisition of a tie-backly centered on an intranasal therapy for treatment-resistant depression that has received the FDA breakthrough therapy designation, and the program has begun initiating phase III trials.

We believe this highlights and confirms a broader trend. We have been discussing for some time now, nasal delivery is increasingly being explored not only in allergy, migraine in emergency Metzins, but also in central nervous system disorders where rapid onset and direct access to the central nervous system may provide meaningful therapeutic advantages. One of the most significant developments during the quarter was the FDA's update to multiple product-specific guidance documents for generic inhaled therapies.

These changes remove certain requirements, including certain clinical studies and bioequivalence testing, representing a significant shift in the FDA's expectations for generic PMDI development.

We believe this is a positive development for Aptar, as the streamlined requirements should help bring more generic, inhaled products to market more efficiently, while also highlighting the value of the scientific expertise and data generated through our collaboration with the FDA.

Moving to beauty, we continue to focus on premiumization, differentiated consumer experiences, and dispensing technologies that help our customers stand out in increasingly competitive categories.

We had the first commercial launch of our auto-loading, dosing chopper technology for Dermalogica's future code booster skin care product. This technology features an auto-loading dropper cap, which fills the applicator with the same dose after each use and addresses consumer needs around dosage control, convenience, and clean usage.

I also want to highlight that a new range of fragrances by French corner have launched in the Middle East market, featuring our proceeds fragrance pump.

Lastly, enclosures, recent launches showcase our ability to improve convenience functionality and the overall consumer experience through differentiated dispensing solutions. Hint is featuring our tap-top closure for clean, convenient, directional dispensing on its new line of flavorful dipping sauces in North America. In China, our closure with Simply Squeeze Valve is being used for easy, one-handed, spill-free hydration on the go. In terms of sustainability, there are several notable recent accolades to touch on.

Apta was named a CDP supplier engagement leader for the sixth consecutive year. This assessment highlights companies that are engaging their suppliers on climate change and supporting efforts to address emissions throughout the value chain.

We have also been named one of the world's most sustainable companies by time for the third consecutive year, and we have been named among the magazine's top 100 America's Best Companies. This inaugural list highlights top U. S. -based companies during the nation's 250th anniversary.

The America's Best Companies 2026 ranking identified the top performing companies based on employee satisfaction, financial performance, as well as sustainability performance and transparency. Aptar is ranked within the top five companies nationwide in the engineering, manufacturing, and medical technology category, and is ranked in the top 10 companies nationwide for sustainability and transparency.

I also want to provide an update on litigation. Recently, the court issued a favorable ruling for Aptar in our litigation against ARS pharmaceuticals related to Aptar's proprietary nasal drug delivery technology and confidential manufacturing know-how. The court granted our motion to amend the complaint to maintain our state law trade secret misappropriation claim and denied ARS motion to dismiss the remaining claims.

We were also pleased that the court transferred the later filed California action brought by ARS to New York under the first file rule, ensuring the related matters will proceed in a single jurisdiction.

The litigation remains ongoing, and the next phase will allow us to further develop the factual record. Overall, we viewed this decision as a positive step, allowing Aptar to continue pursuing the claims at the heart of the case and reinforcing the importance of protecting the intellectual property, technical expertise, and manufacturing know-how that differentiated us in the marketplace.

Now, I would like to turn the call over to an asset to provide additional details.

Thank you, Stefan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Our reported sales increased 6% to approximately a billion dollars, a new quarterly record, and core sales, which adjust for currency effects and acquisitions, increased 1% compared to the prior year. We achieved adjusted EBITDA of 213 million, a decrease of 3% from the prior year, and adjusted EBITDA margin of 20.7% compared to 22.6% in the prior year, primarily due to less favorable product mix and ongoing operational challenges in beauty and closures that have progressively improved since the beginning of the year.

Adjusted earnings per share were $1.42, compared to the prior year's adjusted earnings per share of $1.68 at comparable exchange rates.

Before moving to segment performance, I'd like to briefly address the higher input costs experience since the start of the recent conflict in the Middle East.

As anticipated, we experienced higher input costs during the quarter, which we largely offset through customer pass-throughs with some timing lag in beauty.

As we look beyond Q2, we continue to monitor the situation closely, and will also continue to take appropriate pricing actions to offset higher costs where necessary.

And with that, let's turn to our pharma segment results. Pharma core sales increased 1%, impacted by the anticipated decline in emergency medicine.

As previously discussed, emergency medicine sales are expected to decrease by approximately 65 million in fiscal year 2026. Approximately two-thirds of this decline has already been incurred in the first half of the year, with a majority of that having been in the second quarter, as we had anticipated. And the remaining one-third is expected in the second half of the year and primarily in the third quarter.

We continue to expect that the year-over-year headwind will abate by the fourth quarter. Excluding emergency medicine, core sales in our pharma segment grew by 8% in the quarter, demonstrating resilience of the portfolio.

Let me break that down by market, starting with our proprietary drug delivery systems. Prescription core sales decreased 7%. Excluding emergency medicine, prescription core sales increased 8%. Central nervous system and asthma, COPD therapeutics were drivers of growth in the quarter. Consumer healthcare core sales increased 15%, due to strong demand for nasal decongestant, eye care, and dermal solutions, supported also by strong tooling sales.

Injectable core sales increased 9%, with strong demand primarily for elastomeric components used for GLP1, biologics, and vaccines. Services also contributed positively in the quarter, and we continue to see strong pipeline built for Annex 1, GLP1, and biologics projects.

And for our active material science solutions, core sales decreased 2% in the quarter. Growth in probiotics and oral solid dose sales partially offset the decline in diabetes test strips, which reflected customer inventory normalization following robust growth in the prior year.

Pharma's adjusted EBITDA margin for the quarter was 33.6%, a 180 basis point decline from the prior year. The margin decline was anticipated and driven by short-term unfavorable product mix, primarily due to the decline in high-margin emergency medicine sales, while royalties and productivity initiatives continue to positively impact margins.

Excluding emergency medicine, the adjusted EBITDA margin for the segment would have improved year over year. Moving to our beauty segment, core sales increased 1% as demand for beauty dispensing systems and the pass-through of higher input costs more than compensated for lower tooling sales.

Looking at the two largest in markets for beauty, fragrance, facial skincare and color cosmetics, core sales increased 2%. Primarily due to strong sales growth for prestige fragrance bumps and color cosmetics.

Our turnkey indie beauty business also continues to perform well, benefiting from the growth of indie brands, which continue to capture consumer interest across the beauty market.

Personal care core sales were flat. Applications for hair care continued to show good demand but did not offset lower tooling sales from the prior year.

Beauty's adjusted EBITDA margin for the quarter was 12.2%, which, while improved sequentially from the prior quarter, represented a decline of 190 basis points year over year.

This was primarily attributed to lower product volumes, unfavorable mix and the timing of rest and pass-throughs. Moving to the closure segment, core sales increased 4% compared to the prior year.

Strong volume growth, particularly in beverages and the pass-through of higher input costs more than compensated for lower tooling sales.

Looking at the two largest in markets for closures, food core sales decreased 1% primarily due to lower tooling sales, which was partially offset by continued demand for our sauces and condiment dispense enclosures.

This end market also faced a challenging comparison from the prior year period of double-digit growth. Beverage core sales increased 14%, primarily driven by increased sales of bottled water and functional sports drinks.

The segment's adjusted EBITDA margin was 14.9%, a 200 basis point decline over the prior year. These results were temporarily impacted by the ramp-up of new production lines and by a previously suggested reported maintenance initiative that continues to make sequential progress.

Selling, research on developments and administrative costs or SGNA increased in absolute dollars largely due to currency effects and the impact of acquisitions.

Exploding currency effects and acquisitions, SGNA dollars were flat year over year. SGNA as a percentage of sales decreased from 15.6% in Q2 2025 to 15.4% in Q2 2026, a 20 basis point reduction year over year. These amounts include approximately $4 million in legal expenses for non-ordinary course litigation which did not exist in the prior year period. As I noted earlier, adjusted earnings per share of $1.42 were down 15% year over year at comparable exchange rates.

This was due to lower sales of emergency medicine products in pharma, operational issues in beauty enclosures, as well as higher depreciation and amortization expenses associated with our capital investments and acquisitions.

Interest expense also increased from higher interest rates and a higher average debt balance. Our adjusted effective tax rate for the quarter was 23.7% compared to the prior year's 20%. In the prior year period, the tax rate benefited from the realization of a deferred tax benefit as well as greater excess tax benefits from share-based compensation.

Moving to our year-to-date performance, reported sales increased 8% and core sales increased 1%. Strong growth in consumer health care and injectables offset the emergency medicine de-stocking while beauty enclosures also saw growth on a year-to-date basis.

Adjusted EBITDA remained consistent at 401 million while adjusted EBITDA margin decreased by 170 basis points to 20%. Adjusted earnings per share decreased 12% to $2.61 compared to the prior year period, including comparable exchange rates.

Free cash flow year-to-date increased by 8 million to 99 million, comprising cash from operations of 222 million, less capital expenditures, net of government grants of 123 million.

Over the last six months, the company has returned 212 million to shareholders through share repurchases and dividends. So far this year, we have repurchased 1.1 million shares for $150 million.

Finally, we ended the quarter with a cash balance of $190 million, net debt of $1.2 billion and a leverage ratio of $1.49, reflecting a very strong balance sheet. Now on to our outlook for Q3.

We anticipate third quarter adjusted earnings per share to be in the range of $1.45 to $1.53. This assumes an effective tax rate range of 22.5 to 24.5% and a euro to US dollar exchange rate of 1.14. For full year 2026, we continue to expect capital investments to be in the range of 260 to 280 million and depreciation and amortization expense to be between 310 and 320 million.

Before I hand the call over to Gail, I want to take a moment to address Stefan. Stefan, it has been a pleasure to partner with you during an important chapter in Aptra's history. I joined Aptra because of its unique strengths. A rich history, a strong foundation that you have helped to build, its culture and values, and importantly, the robust opportunities that lie ahead.

I've enjoyed working with you and appreciate your partnership. Stefan, thank you for your leadership, your contributions to Aptra and the solid foundation you leave for the future.

We wish you and your family all the best in retirement and don't be a stranger. With that, I will turn it over to Gail to provide a few closing comments before we move to Q&A.

Thank you, Vanessa. As I prepare to assume the role of CO on September 1st, I do so with great confidence in Aptra's future. We expect growth across all three segments, supported by strong broad-based demand in pharma, across injectables, and consumer healthcare and prescription applications, excluding emergency medicine, as well as continued momentum and closures and improving trends in beauty.

Before we open the call for questions, I'd like to take a moment to recognize Stefan on his final earnings call as CEO of Aptra. Over the past nine years, Stefan has led Aptra through a period of significant transformation, strengthening our position in pharma, expanding our global footprint, advancing our innovation capabilities, and reinforcing our leadership in sustainability.

He leaves Aptra a stronger company with the robust pipeline of opportunities, leading market position, and an exceptional team that is well positioned for the future. On behalf of our employees, customers, shareholders, and board of directors, I want to thank Stefan for his leadership, partnership, and dedication to Aptra. It has been a privilege to work alongside him, and I'm grateful for the strong foundation he leaves behind.

And now I'd like to open up the call for Q&A.

We can hear you. All right. Sorry about that. I'm sure there will be an after-action report. George, I need to hear your very nice comments. Thank you for that.

Much appreciated. On your questions, yes, we've experienced also wheat sales in Brazil. This is often a famine, feast, famine cycle and really two main customers that trade shares. So we experienced quite some weakness in Brazil.

On your larger questions, yeah, if I zoom out, certainly there's always more to do. And certainly the beauty bottom line performance in particular is something that's left to do for Gail.

As you remember, it's a story of two halves or three hemispheres. On the one hand, we're very proud with the turnaround we've achieved in Europe. And I won't repeat all the things we did with shutting down plans, improving cost phase and Europe is firmly in the target range. Asia has done very well and is well above that.

But we have fallen short in the Americas for different reasons. We've fallen short in North America. I'm still wrestling with operational issues. And now came this Brazil situation. So with respect to the future, the time certain, I certainly made the mistake of give the time certain. But I'll leave it to you, Naka Al.

Yeah, the work coming I will make, John. Last time I worked in Europe, sometimes ago, you know, more than eight years with pharma. What I'm doing right now is really focusing on making sure I have the fresh, human perspective as we look ahead. So I've been re-engaging Martin Smith with the business, visiting factories, outside and around the world.

And more importantly, I'm going to engage with customers on what can tell you is that we've got all the ingredients. We've got the customer relationship. And they are really looking at that. It's not just being part of their supply chain, but being part of their success. So looking ahead, that's going to be what I'm going to be looking at. And just, of course, correct what needs to be a corrective, protect what makes a task facial and to really focusing on delivering on our commitment and preparing the company for future growth.

Maybe I jump in first. We, of course, have, we are not taking the situation as is. And we have clear ideas on how to also address the short role in the Americas, but it's too early to commit to that.

I mean, dear to you, it's an open-minded approach. I'm looking at best interest for our customers and our shareholders.

And I will come back to you on the new course. All right. I'll be back in queue with pharma. Thanks.

Thanks for the question. We actually quite happy when you think about the emergency medicine pullback. What's the largest in Q2 compared to the prior year? And pharma was still within the long-term guidance range. So we certainly asked the emergency medicine situation normalizes. We expect the company margin to get back in within its guidance range and not just the, which in its long-term targets and not just the pharma business.

We didn't quite fully understand the rest of your question. Maybe you can repeat and then Vanessa will address.

Yeah. As we had said earlier on previous calls, okay, thank you, Paul. Now we understand the question. So a lot of what you're seeing on the gross margin line is the emergency medicine dynamic that we had previously discussed. And that dynamic was strongest in the first half. So two-thirds of that year over your headwind was incurred already in the first half, which will have the greatest amount of pressure on the gross margin. And so as that starts to ease in the back half, I do absolutely expect gross margins to achieve improved. From where we've been in the first half.

And future was the biggest quarter of that EM headwind as we had previously communicated. So that's the compression that you're seeing. Also we see progressive improvement both in beauty and in closures. Closures are already progressive improvement improvement, but will continue as the maintenance issues abate. And we also expect progressive improvement in beauty.

And then lastly on pharma, a really solid 8% quarter of growth. Is that mid-momentum continuing here in rest of the year?

Yeah, I can't tell you that question. So, you know, we stated we are confident with our long-term targets. And at 20, 26, this is the story of the emergency medicine as we explained to you. We've got it from pipeline.

Pipeline build, pipeline conversion is robust. The underlying market is strong. And customers really are looking at us to be the partner of trust, to support them from an early stage to a market launch. So, confidence to be in the long-term targets.

Thank you.

It's been a pleasure working with you, Stefan. Thank you.

Thank you, Gail. And for my second question, you know, first off, can you confirm if there's any benefit from, you know, any sort of tariff refunds and so on and so forth?

Yeah. So, you know that I'm not guiding, we are not guiding for the year. So, the long-term target in the 7, I mean, is coming from the underlying robustness of our pipeline and the market positions we've got with our customers. So, confidence is there. Yes, some years we're going to be up, some years we're going to be down. If you look at the past performance for the last eight years, I mean, I would say we have pretty much the area on our long-term targets. So, the team will remain focused on what, delivering on our commitment, continuing to sharpen our to strengthen our capabilities in order to become, or to stay, the leading company in our respective market.

So, this is with confidence there. And, Gancham, I can absolutely confirm to you that there is no P&L benefit in a quarter from Territory Funds. The beat to our guide was purely operational, coming from the strength of pharma, as we discussed earlier. So, in fact, if you recall, our guidance was at 118 and actual exchanges came at 116. So, we in fact had a headwind of a couple of cents that we had to absorb. So, the beat was all operational. None of it was tariff refunds or anything else of that nature, for one time nature.

So first Matt, let me express my excited, I mean, to step in the role and to stand on the shoulders of my predecessors. I know the company in and I would for the last 30 years and I'm very confident on the company. So, as I've said earlier, I'm really focusing to reconnect and refresh my approach with the different businesses. I've been a beauty guy for years, I've been a closure on guys for years, but that was almost a decade ago. So, I need to update my perspective as we look ahead.

As I step in the role, commitment to deliver on our number, that's going to be number one priority, number two, to be very disciplined on execution and search whatever segment for the company. And last, to be extremely thoughtful in our resource allocation. So, I'm going to keep on working, protecting what is making up our spatial and focusing where we can create more value for customers and our shareholders.

Thank you for taking the questions. So, Matt, I think the most I can say of the emergency medicine is the two thirds, one third. We didn't guide it by quarter, but I will say that the quarter was really in line with where we expected. And of course, as I mentioned in my career remarks, the full year is also tracking as expected, and this should fully be a big right to four. So, everything is tracking there. In terms of the rest and pass throughs, indeed, we did pass or resin and other inflationary pass throughs. We did pass that through, as we had said last quarter, and we did that successfully in every segment.

The impact, I'm not going to break down the impact by segment, the one that... And you will know that the pass throughs density figure in closures because of the resin percentage that's used in closures. That being said, without the rest and pass throughs, closures had strong revenue and volume growth, as I mentioned in my prepare remarks. So, that is not the driver of growth.

And then the other piece I'll mention is in the context of beauty margins, we did have, and I mentioned this in my remarks as well, we did have a delayed leg in the beauty segment. So, every segment passed through including beauty, but we had a bit of a leg, which was a bit of a detriment, probably about, you know, 80, 90 basis points of margin on beauty impact. Of that delayed pass through the quarter, we expect that to be resolved in Q3.

Thank you, Vanessa.

And based on those two dynamics, how does that kind of factor into the Q3 outlook? Yeah, I will hand to Gail here, but obviously, this talking has run it towards, I think, we've already confirmed that in the previous quarter, and it's been a strong quarter, as we said, especially in decongestions, but maybe, Gail, I don't know, but you can give more color on consumer healthcare.

Yeah, consumer healthcare, I mean, we've seen the demo being nicely. The authentic play, you know, that we are converting some of the market, the blow-finance in the market to a multi-dose, preservative-free formulation, continue to be solid, and solid across the regions.

And then all the economy is positive for us, so that the kind of color I can share with you for moving into Q3. Yeah, and then please go out and get some air flu, great new gesture.

Well, at school starting again, I imagine I will be a customer realtor.

Okay, so, I mean, if you can help by planning injectable, JLP1 is an old performance, JLP1, by definition, is part of the growth for the division. But not only we've got the biology being strong and robust, not only in the performance, but also in the pipeline. You know, that biologics are now more than 50% of the farmer world research and development.

The annex one, also, you know, the regulatory compliance being raising the bar. I mean, they are really looking for players having the ability to be fully compliant with the annex one. So this is some of the drivers driving the growth for injectable. As far as congers, I mean, we are done with the, what we call the big bucks investment.

We are satisfied to be positioned from an injectable perspective, not only in Europe, but in the U. S. and in Asia, with China, specifically for congers. I mean, we've got validation of our implementations. So, customers, OD, inspection, a panel ready and helping us to deliver the growth that we are facing.

Okay, very good.

Yeah, so let me take the first question, John. The job for us is to make validation and qualifications by our customers way easier. So instead of getting our customers qualifying, I mean, components on each component, we are working with the different players. Let's say the different PFS players in the market in order to come with a fully integrated validation. So they know the performance, not only the plunger, but the plunger with the PFS and the arenas on the complete divide that a customer is going to acquire. So they've got, they've got, they want all the validations, all the key elements for entering into their process on a better shape.

So we are making their process and their validation way easier, and it's giving us also some color regarding the kind of very close relationship we've got with the other players in that space.

And then, George, I think you were asking what's our Q3, what is our Q3 guide for effects? We're assuming 114 and Q2 average 116, so that's a headwind. A quarter-over-quarter headwind, and these days we're trending about four cent annual lines for every penny that we're off from the US into your exchange rate. So that's a two cent quarter-over quarter headwind.

Hey, George, before you leave, I also just want to recognize it, just wrote down in front of me. I think you're the only one who now follows five of the six CEOs of after I was a public company starting with Carl Theater, Steve, myself, and Knockout. So you can be relied on the keepers and our toes, so thank you for that.

Well, we'll be here. Bye. Congratulations. We'll be here for the next one.

I will now turn the call back to Gail for closing remarks. Before we conclude, let me leave you with a few thoughts on the quarter and the past ahead. For the second quarter, we deliver solid performance, driven by better tough line performance performance across all three segments, strong productivity improvements and discipline cost management. And we deliver adjusted earnings per share above our guidance range.

Across the broader pharma portfolio, we continue to see encouraging demand trends in areas such as the biology, the GMP1, the systemic nasal drug delivery, but also consumer healthcare and other attractive markets. Beauty benefited from continued strength in prestige, fragrance, while closures deliver strong beverage growth and continuing momentum in food. After the Great Foundation built on differentiated technologies, but also deep customer relationship, leading market positions and very talented people.

We are what I call an indispensable partner to our customers, helping them to innovate, grow, succeed across attractive and market. And everything we do is ultimately focused on improving patient and consumer outcomes. Whether it's expanding access to therapies, improving adherence, enhancing safety and reliability, creating a simply better and user experience, our solutions bring meaningful value to the people who use our products on a daily basis.

That combination of a strong foundation, trusted customer partnerships, and a clear focus on and user outcomes gives me tremendous confidence in the ability to create sustainable growth and long-term value for our shoulders. And I step into the zero role, September 1st, I'm excited about this tremendous opportunity, and I believe my priorities are clear, drive profitable growth, execute consistently, and I will get capital fully.

Based on the demand trends we see today and the momentum exiting the second quarter, we are confident in our outlook for the third quarter and our long-term prospects. Thank you for your continued interest in Aptar, and I will see you on the road in the coming months.

That concludes our call. Thank you everyone.