ATR
#<UNK> I can take that one.
When we put together the CapEx guidance at the beginning of the year, we are working off of a budgeted number.
At that time we had out there the projects for the Congers facility even though we had not started.
So the $10 million for our original guidance was already baked in there.
The pullback from $165 million to $155 million was a couple things, one a little fine-tuning once we've gotten further into the Mega integration process.
We were not quite sure until recently how much that was ---+ how much spend there was going to be before the end of the year.
Secondly, it really reflects our cautious guidance in Q3.
As we have done in the past we have been pretty good stewards of capital.
When we see business slowing down we look for areas where we can pullback.
Not only on general operating cost but also in the capital area.
It reflects both of those things.
This was a facility that does annodizing that is basically coatings or transformation of color to metals.
The facility is in France.
There were three, in the site, there were three production units.
One is where the fire significantly destroyed.
I am very positive that no one got hurt in the facility.
We had no environmental issues around that.
We've done an outstanding job, and I really congratulate the people that have been involved in this on our side, is making sure we have supply.
Because these are subcomponents that go into our products.
To be able to continue to supply customers.
Right now we do not think one of a material impact on our customers as a result of this.
The fire itself got started as a short in an electrical component.
You're right, we've had one of the several years ago, but we are again going back and reinforcing all of our fire safety protections systems on all our facilities worldwide.
Overall we do not think the impact is going to be, when you consider insurance side et cetera, going to be material to Aptar, but as we saw anytime you get into this you can get cost in one period and reimbursement in another.
And right now it's hard for us to estimate what that split could be.
Right now, I'm going to go from second quarter to third quarter; we are seeing a slight drop both in Europe and in the US.
Again, you've got to take this in other parts of the world it may be slightly different, but that is our biggest user.
So it's a couple 2% to 3% down right now.
There's still quite a bit of volatility in those.
That was in the injection side.
We were up 8% in the quarter on our injectable business.
Maybe I misspoke on this, <UNK>, what I'm saying is as you've said our margins for pharma have been outside of our normal range for the last several quarters.
Due in part to very strong Rx sales that have been double digits for the last several quarters.
What we do is, and I think this is a strength of our pharma business, being in both prescription, consumer care, healthcare, as well as injectables.
While was still seeing growth we're now seeing that growth among both in consumer healthcare and injectables, which carry a bit of a lower margin profile.
I think we will be coming down from being over our estimates to be more on the high end of our long-term targets.
I think it would be too early of a reaction.
I want to reiterate we're still very positive about the Asia area growth platform for us.
I can tell you <UNK>, one of the things we've been looking at is the need to potentially expand in Asia.
Today we are in one large, several different facilities and one in Suzhou, China, we're looking at whether should we be expanding in Guangzhou.
So I'd say it's more a of growth look for us than a contraction.
But certainly we will end up monitoring where we're going to be on the food and beverage side over the next 6 to 12 month.
No.
We're just now <UNK> starting to get into that process.
It's really going to be very much project dependent.
At this point I do not foresee any major bricks and mortar or any thing other than potential expansions that <UNK> just eluded to there.
I would say we probably would be in the ballpark of where we are today, $165 million, but I would really have to see some of the details, which we won't be getting now for a couple months yet.
Thank you very much.
I think what I'm going to be doing, I've told the Board this, I will be flexible in terms of making sure that there is a smooth transition.
I think the Board is diligently working to try to find the successor, again, either from an internal or external candidate side.
So I will have some flexibility, it's not a hard stop at year end.
From my perspective that is not something that makes a lot of sense for the Company or for me.
Let me come back and take two parts.
First of all you're right, we have ended up coming back, our new operations have been expanded in France.
The mixing machine is in and we're going through the qualifications.
We actually are expecting to ship commercial product out of that starting in the third quarter, ramping up to the fourth.
What will be doing in North America will effectively adding about 10% to 15% to potential capacity.
I think it's our most important side it's really going to improve the service, the quality, et cetera for what is a potentially significant ---+ what is a significant US market.
For us it's a growth platform, so will probably be able to get another 10% to 15% in terms of potential sales out of the addition.
We should be done with the construction of that in Congers towards the end of this year and then qualifying customers as we go into next year.
On the CapEx as we get into the year we are better to fine-tune what are the immediate CapEx needs.
I mean I think <UNK>'s comments are much more medium to longer term focused.
And the CapEx is ---+ I was focusing on the next six months.
What we're putting in CapEx in the next six months is not necessarily where ---+ the growth that <UNK> is alluding to is really investments that we have made in the past and current project activity.
Again I would reiterate to that, <UNK>, we continue to, we've never not invested when we see good growth projects.
And that will continue to be the Company's profile going forward.
Let me come back and do it the second.
Certainly what we are seeing in Asia is completely disconnected from the Brexit side.
That is more of a local market issue.
In general for us with Brexit, and I think this is true for most of the companies that I have had a chance to talk to, if you look at our profile while we have manufacturing in the UK it tends to be relatively small.
So the devaluation of the pound on the immediate side didn't have a material impact for us.
What I think Brexit is doing in the short term is probably not causing much disruption.
But what it is doing is putting a certain amount of uncertainty in the marketplace.
I wouldn't tell you it is necessarily helpful, but in the short term we do not see any major material negative.
It will be interesting to see as we get into the Olympics if you start to see travel downturn.
Certainly as <UNK> alluded to when he talked about market, we're actually seeing pretty strong growth throughout Latin America.
We don't think that the Zika virus per se has a lot of negatives.
What I do think you're going to get is that there wasn't much insecticide used in Latin America in prior years.
We think that's probably going to be a trend that's going to continue now that they are using it, and they are going to need to continue that.
I look back to this like the hand sanitizer issues when we had the Avian flu.
All the sudden you have a base that moves up from a level of 100 to 115 that stays there.
So I do think insecticide, insecticide sprays will continue to be, maybe not have the same growth we had this year, but won't go back to where they were in the past.
That's a good question, <UNK>.
It's one that we're going to continue to follow-up.
We will talk a little bit more about it at analyst day.
One of the things you bring up is a real strength of Aptar's and that's the diversity of the business.
You've not seen just one market being up or down, we've seen volatility and using that in a positive term between the various markets.
We are going to be taking a look at it across where our growth targets are.
But I think again the diversity of our business is the strength to be able to help drive not only growth, but also the margin profile that we have seen improve across all three of the business segments over the last year to year and half.
It will depend on, it's a good question <UNK>, but it will depend on the segment that it is in.
As we've seen some destocking in pharma, we saw a little bit in beauty and home a couple years ago.
Typically for us they tend to be one to two quarters, that'd be the impact.
But again everything is going to be dependent on the region and the particular customer.
One explanation if you look at it is just pure mathematics.
If you look at the size and beauty and home segment, which is where we have fallen short of the sales target, that is our lowest margin.
The slowness that we have experienced in the last 18 months in beauty and home also has a positive influence on the mix of the margin as pharma and food and beverage have grown.
The converse is true as well, that is one of the positives coming out of Q2 is we're starting to see beauty and home come back to within the range of their long-term sales growth.
I think part of that is just pure math.
I think the other thing and going back, I will take a little bit on top of what <UNK> has said, I think we've done an excellent job as a Company taking a look at our cost controls over the last and this is across all three segments.
We have done a very good job of doing that.
That's helped.
Certainly the other thing I wouldn't underestimate has been resin and let's call it raw materials on a broad base.
Raw materials you saw margin improvement last year.
Certainly you don't have the year on year improvements because raw materials have not been a material part this year.
But that has also helped us.
Going forward, we are not expecting a major deterioration in the margin and while we are at some of those target for couple segments.
At least in beauty and home we've still got a ways to be able to get there.
I'm still pretty optimistic that we're going to be able to get to that.
Let me go back and see if I can try to do with each of those.
On the 10% to 15%, I think it is more 10% to 15% of overall Stelmi, because this is one piece of the whole manufacturing process.
It is bigger than just the US side.
It adds capability.
And frankly what we're up and running in the states, while we will be dedicating most of that capacity to the US, there is nothing that would say we couldn't ship that to other parts of the world.
Secondly in terms of the new production going on in France for Congers, this would be an additional piece of dedicating that new growth.
That is the key side, we're seeing 8% to 9% growth in our injectable market.
Looking back this is a way to help facilitate that growth.
Again, some of that will end up using for Congers, some will be used for the rest of the world.
Lastly I actually think what were doing in Congers in terms of in terms of breaking down some of our business actually makes entry into other areas of the world much more economically feasible, rather than building a whole new production facility.
I think this is an excellent strategic move in terms of our overall growth and really helps us as we go for the next 5 plus years.
Again what I am going to do is we have up couple on the personal care side.
One I touched upon in my remarks.
We're seeing on the dermal side because we talk pharma as a growth area for us.
We have two new projects, one for acne, and one for a red skin condition that has come back, and both of those are using Mega products.
Both of those end up coming out of the prescription side.
Certainly Mega was working on those, but our regulatory knowledge really helped them get across the finish line.
We're also seeing some really interesting opportunities in Asia and also going into Latin America on future projects using the Airless technology.
<UNK> we have about $37.5 million from memory sake left on the existing authorization.
We will look at that with the Board at future Board meetings as we do each time on whether we're going to go for another extended authorization.
After that we will evaluate the situation where we're at.
Certainly the share price where it is today, we'll have to take that into consideration whether we look at in ASR or Dutch auction or whether we just do open market transactions.
We're committed to the consistent capital application approach.
It's something we evaluate on a regular basis.
Great Andrew, thank you.
This concludes our call today and I'd like to thank everyone for joining us.
