ATR - NYSE

Ladies and gentlemen, thank you for standing by, and welcome to Aptar's 2026 First Quarter Results Conference Call. [Operator Instructions] Introducing today's conference call is Ms. Mary Skafidas, 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 Stephan Tanda, our President and CEO; Vanessa Kanu, Executive Vice President and CFO, and Gael Touya, 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-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP 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-GAAP measures to the most comparable GAAP 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 Stephan.

Thank you, Mary, and good morning, everyone. We appreciate you joining us on the call today. As previously announced, I will be retiring later this year and we will welcome Gael Touya as Aptar's next CEO on September 1. I will still lead the Q2 earnings call on July 31. So please hold any roasting remarks for that call. Gael and I are collaborating closely during the transition period. Gael is joining us today and would like to say a few words to kick off the call. Gael?

Thank you, Stephan, and good morning, everyone. I'm pleased to join the call today and so grateful to the warm welcome I have received as CEO of Designate. I'm very much looking forward to connecting more closely with our investors and stakeholders over the coming months, and happy to be here with you today.

Thank you, Gael. Everyone. Again, please save your roast comments until the second quarter and the tougher questions you can keep for the third quarter when Gael officially takes over as CEO. Now I'll begin my remarks by highlighting our first quarter results. And later in the call, our CFO, Vanessa Kanu, will provide additional details on the key drivers for the quarter. Overall, the quarter unfolded largely as we expected. Reported growth benefited from favorable currency movements. However, underlying performance reflected a mixed operating environment, driven primarily by the anticipated emergency medicine destocking following exceptional growth in quarter 1, 2024 and quarter 1 2025. Across the broader portfolio, demand trends remain healthy, and several of our core growth platforms have continued to perform well. Our Pharma segment continued to see growing demand in key areas, including GLP-1 biologics, systemic nasal drug delivery, nasal decongestions and ophthalmic dispensing, reinforcing our confidence in the long-term growth profile of the business. Consumer dispensing also contributed positively with volume and mix improvements across both beauty and closures. In beauty, demand was supported by strength in prestige fragrance and select personal care applications. Closures benefited from high product volumes which was offset by the passing on of lower resin pricing. Across both segments, our teams remain focused on disciplined execution, portfolio optimization and overall operational resilience. Before I turn the call over to Vanessa, let me turn to our pharma pipeline, where our core business has continued to deliver. Systemic nasal drug delivery is accelerating and injectables now accounts for a greater portion of our opportunity set. The decline in emergency medicine dispensing systems negatively impacted core sales by 3% in the first quarter. Over the past several months, multiple programs have advanced through key clinical and regulatory milestones, many of them leveraging Aptar's market-leading nasal and drug delivery technologies. Across intranasal delivery, our platforms are supporting a range of Phase II programs, including ENA, respiratory -- virus agnostic respiratory therapy. These programs rely on the precision, reliability and scalability of our delivery systems supported by Aptar's integrated formulation and regulatory capabilities in reinforcing our role as a trusted development partner. I also wanted to share a few approval updates regarding Neve, the emergency treatment of type 1 allergic reactions, including anaphylaxis. Recently, the U.S. Food and Drug Administration approved an update the prescribing information for Neve, remove the age criteria. In addition, Health Canada granted approval for [indiscernible] along with the Emirates drug establishment in UAE. In the prescription market, Cipla recently announced that they received the U.S. FDA approval for the first AB-rated generic therapeutic equivalent of Ventolin using our metered dose inhaler valve. This medication is used to treat or prevent bronchospasms in people who have reversible obstructive airway disease and is another example of our technologies being used on the original drug and then playing a key role in the approval process for the generic version. I also want to highlight a few more products that launched in the quarter. Our [indiscernible] components for injectables are featured on a blood derivative medication in the U.S. Our ophthalmic dispensing technology is being used for an eye care product in Latin America. And in Europe, our [indiscernible] on well spread technology is featured on a nasal saline for infants. Finally, our recent partnership with Enable Injections integrates Aptar, digital health, connected life cycle ready digital solutions with the Enfuse on-body delivery system, supporting patient engagement, patient adherence and data insights from clinical development through commercialization. In Beauty, one of our newest prestige fragrance pumps is featured on Dior Addict by Christian Dior. Also, as brands move toward more alcohol-free water-based formulas, they need pump specifically engineered to dispense higher viscosity or by face liquids, while delivering the fine mist consumers expect from a perfume. There's also a growing trend for skin care infused fragrances those at hydrate, sued or even protect, along with microencapsulated fragrances where molecules are suspended in the formula to offer controlled fragrance release. Several of our pumps are engineered to address these growing consumer demands and the associated dispensing challenges, including our spray technology for the European launch of [indiscernible], alcohol-free hybrid and microencapsulated line. In skin care and makeup following the success of [indiscernible] double serum, [indiscernible] has launched Double Serum Foundation featuring our patented dual dispensing technology with progressive dosage. Lastly, [indiscernible] is using our custom actuator on its daily air spray in North America highlighting the value of early customer engagement where rapid prototyping and application-specific engineering can accelerate product launches. Turning to Closures. Our dispensing closure that's often used for Asian sauces is now featured on [indiscernible] own barbecue sauces. Lastly, I want to highlight our technology that's turning beauty and personal care products upside down similar to what we did with ketchup and other condiments. We've launched our inverted [indiscernible] closures for single-handed dispensing that can be used with shampoos and conditioners, body washes, baby soaps, motions, pet shampoos and more. This technology is already being featured on a pet care shampoo line and additional versions have been successful in the home care and hair care markets. It features our patented simply squeeze flow control valves and reflects our commitment to converting categories and making daily routines easier for consumers around the world. I also want to provide a brief update on our ongoing litigation with ARS Pharmaceuticals. The case continues to progress, and we are pleased that the court denied ARS motion to dismiss. We are now well into the discovery phase, and we have also filed the motion to dismiss the Southern District antitrust case or alternatively to have a transfer to New York where the underlying trade secret case is pending. As these matters remain ongoing, there is nothing further that I can share at this time. Now I would like to turn the call over to Vanessa to share more details on the quarterly results. Vanessa?

Thank you, Stephan, and good morning, everyone. Let me begin by summarizing the highlights for the quarter. Our reported sales increased 11% and core sales, which adjust for currency effects and acquisitions, were flat compared to the prior year. We achieved adjusted EBITDA of $189 million, an increase of 3% from the prior year. And adjusted EBITDA margin of 19.2% compared to 20.7% in the prior year primarily due to less favorable product mix and operational challenges in beauty and closures. Adjusted earnings per share were $1.19 compared to the prior year's adjusted earnings per share of $1.30 at comparable exchange rates. With those high-level comments, let's take a closer look at segment performance. Our Pharma segment's core sales decreased 1%, primarily due to less favorable product mix. Going into the year, we expect a challenging year-over-year comparisons due to an anticipated decline in emergency medicine. On that note, our previously communicated estimate that emergency medicine sales would decline by approximately $65 million in full year 2026 and continues to track. In Q1, the decline in emergency medicine dispensing systems negatively impacted pharma core sales by 3%. Let me break that down by market. starting with our proprietary drug delivery systems. Prescription core sales decreased 10%. The decline in emergency medicine dispensing systems negatively impacted prescription core sales by 5%. Additionally, as previously noted by Stephan, Q1 2025 was a strong quarter for this division across a number of application fields, which created a challenging comparison. Looking ahead, we expect continued growth in key end markets as we progress through the year. Consumer Healthcare core sales increased 4%, primarily due to an increase in sales for eye care and nasal decongestant products. Injectables core sales increased 20%, with strong demand primarily for elastomeric components used for GLP-1 Biologics and antithrombotics. Services also contributed positively in the quarter, and we continue to see strong pipeline build for NX1 and Biologics projects. And for Active Materials Science Solutions, core sales decreased 1% in the quarter. Growth in oral solid dose sales was not sufficient to fully offset lower sales in probiotics and diabetes test trips. Pharma's adjusted EBITDA margin for the quarter was 33.3%, a 150 basis point decline from the prior year. The margin decline was anticipated and driven by product mix and volume, due primarily to a decline in high-margin emergency medicine sales, while royalties continue to positively impact margins. Moving to our Beauty segment. Core sales increased 3% with improving volumes in the quarter. Looking at the 2 largest end markets for beauty, fragrance, facial skin care and color cosmetics core sales increased 3%, primarily due to double-digit sales growth for prestige fragrance pumps as well as color cosmetics. Sales from masstige fragrance technologies also grew in the quarter, offsetting a decline in skin care. Personal Care core sales increased 6% with broad-based growth across all regions. Applications for both body care and hair care continued to show strong demand. Beauty's adjusted EBITDA margin for the quarter was 11.1%, and a decline of 100 basis points primarily due to less favorable product mix in North America, and we are still feeling the impacts from the fire at a supplier that we reported last quarter, although we did see the margins improve sequentially from Q4, 2025. Moving to the closure segment. Core sales were flat compared to the prior year. While volumes were up, core sales were impacted by the pass-through of lower resin pricing. Looking at the 2 largest end markets for closures, Food core sales decreased 3%, primarily due to the resin impacts I just mentioned, partially offset by continued demand for our sauces and condiments dispensing closures. Beverage core sales increased 10% primarily driven by increased sales for dairy drinks and liquid coffee creamers. This segment's adjusted EBITDA margin was 13.1%, a 270 basis point decline over the prior year, primarily due to previously reported maintenance issues, which our closures team continues to work through and temporary plant closures as a result of extreme weather conditions in North America during the quarter. Additionally, we wrote off a minority investment in the quarter. At the total company level, consolidated gross margins declined by 210 basis points in Q1 year-over-year primarily as a result of the aforementioned factors. Selling, research and development and administrative costs, which we abbreviate as SG&A increased in absolute dollars, largely due to currency effects and the impact of acquisitions. Excluding currency effects and acquisitions, SG&A dollars were flat year-over-year. SG&A as a percentage of sales decreased from 17.5% in Q1 2025 to 17.1%, a 40 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. Adjusted earnings per share of $1.19 were down 8% year-over-year at comparable exchange rates due to higher depreciation and amortization expenses associated with our capital investments and acquisitions and interest expense of $17 million, a $6 million increase from the prior year due to higher rates on current year borrowings. Our adjusted effective tax rate for the quarter was 22.6% compared to the prior year's 25.8% due to a more favorable mix of earnings and greater excess tax benefits from share-based compensation. Moving over to cash flow. Free cash flow more than doubled year-over-year to $53 million for the quarter, comprising of cash from operations of $119 million, net of capital expenditures of $65 million. We repurchased $100 million worth of shares in the quarter and paid $31 million in dividends, returning a total of $131 million of capital to shareholders. Finally, we ended the quarter with a strong balance sheet, once again, reflecting a cash balance of $223 million as of March 31, net debt of $1.1 billion and a leverage ratio of 1.43. Before we move to outlook, I'd like to touch briefly on the impact of the Middle East conflict. For Q1, the impacts on our results was minimal. As we look ahead to Q2, along with others, we are seeing significantly increased input costs. most notably raw materials, transportation and energy. We are largely passing these higher costs through to customers, supported in some cases by index contract clauses for resin. While we have not experienced any material supply chain disruptions to date, we are monitoring the situation very closely. As a reminder, as costs are passed through, margin percentage will experience some compression. Our focus is on neutralizing the impact to our overall earnings. Now on to outlook for Q2. We anticipate second quarter adjusted earnings per share to be in the range of $1.32 to $1.40 per share and an effective tax rate range of 22.5% to 24.5% and the euro to U.S. dollar exchange rate of 1.18. For full year 2026, capital investments are expected to be in the range of $260 million to $280 million and depreciation and amortization expense is now expected to be between $310 million and $320 million. With that, I will turn it over to Stephan to provide a few closing comments before we move to Q&A.

Thanks, Vanessa. Regarding our outlook, looking ahead to Q2 and excluding the impact of destocking in emergency medicine within pharma, we anticipate a solid quarter with growth across each of our segments. As a reminder, the first half of the year is challenged due to the emergency medicine comparison, which should ease in the second half. Within pharma, outside of the emergency medicine end market, we expect our prescription division to return to healthy growth. We also anticipate continued growth across a number of pharma end markets driven primarily by strength in our injectables and consumer health care businesses. Beyond Pharma, we are expecting a strong quarter in closures, supported by solid demand and continued growth in beauty with particular strength in fragrance. As we head into the quarter, we remain mindful of potential supply chain uncertainties and cost volatility as we continue to operate in a dynamic environment. While we are managing these conditions actively, we're staying disciplined and focused on what we can control as we execute through Q2. The demand we are seeing across a number of end markets is very positive. Our pipeline continues to build in pharma and in beauty and closures, we see a healthy order book activity. And with that, I would like to open the call up for your questions.

[Operator Instructions] Your first question comes from Paul Knight at KeyBanc.

Thanks, Stephen. Well, I'll save the remarks until July, as you suggested. The comments you made at the beginning around Nepi being approved for any age group U.S. and also in Canada, along with some other highlights are those events and approvals enough to say, my visibility for 2026 is higher.

All right. Let's try again. Does this work?

Can you hear me now?

Operator, can you hear me?

Loud and clear.

All right. Sorry about that. We have a new system. So a reminder, no single product really moves the needle substantially. I guess the exception is NARCAN in any quarter. And these incremental approvals are more proof points that over time, we expect this to be a successful product, clearly being able to expand the market to children over 30 kilos, I think it is. and additional geographic approvals obviously bode well. But I would not translate that to significant impact on a quarter or even the balance of the year. And having said that, we feel very good about prescription growth for the balance of the year. Clearly, quarter 1 had a very tough comparable but we are already in Q2, expect strong growth in prescription excluding emergency medicine.

And then last, are you adding GLP-1 capacity in the elastomer business?

We made substantial investments. And right now, we've got plenty of capacity, and we do have the ability to creep additional capacity by just putting in additional equipment in the existing large building.

Your next question comes from the line of Ghansham Panjabi.

Congrats to you, Stephan, first off, on a great run, and to you as well, Gael. Our team wishes you the very best in your new role. I guess first off, on the Rx component, I think you said down 5%, excluding the naloxone destock, if you will, you called out tough comps from a year ago in the first quarter of '25, but the comp for 2Q is also pretty tough from what I remember. I think it was up 10% in 1Q '25 and plus 8% in 2Q. What is the expectation for Rx naloxone in 2Q? Is it -- I know you don't give specific guidance, but do you expect it to grow year-over-year based on the tough comp as well?

So thanks for the congrats. And the short answer is yes. So yes, the comps are also demand, if you want in Q2, but we expect very solid growth for Rx in Q2 and excluding emerging medicine, of course.

Okay. And then consumer, you said plus 4% in 1Q '26. But from what I remember last year, you had a pretty easy comparison, just given the destock that was occurring in certain whatever was cough and cold, et cetera. So was that in line with your plan in terms of consumer? And then if I could just ask a broader question as it relates to some of the comments about supply chain uncertainty. And was there any benefit in any parts of your businesses across the portfolio as it relates to any sort of prebuy just given customer uncertainty as it relates to supply chain, et cetera?

Yes. Let me take the second one, and then Gael, maybe you can comment on consumer health care growth. We really don't see a lot of prebuying. And to be perfectly honest with the bounce back of demand there several product lines that we couldn't even fulfill the demand of prebuying. So it's rather limited. But I understand the question. Consumer Health care, Gael?

Yes. Consumer has care, I mean, we are back on a positive trend for second quarters in a row after a good Q4. So it's in line with expectations. We continue to get a very strong of talc business with a good pipeline conversion, Deal trucks is doing well. And from a cough and cold, I mean we are -- we've seen the inventory adjustments. And we know that in certain countries, something that was a low cold-and-flu season, especially in the U.S.

Your next question comes from the line of George Staphos at Bank of America Securities.

Congrats to Gael and to Stephan. Again, we'll say the roast for July. Congrats on the quarter 2. A point of clarification to Ghansham's question, I'm sorry, because I'm doing dual calls here. Did you say pharma will grow even with the impact from emergency medicines or just Rx will grow ex the [indiscernible] impact? How should we think about that?

And Yes, it's the latter one. It's the latter one. So we just wanted to highlight, and I know you all took a lot of comfort that Pharma x emergency medicine grew 10% in quarter 4 and it's a little bit less this quarter, but we expect, again, good growth in quarter 2. So don't read too much into a single quarter here.

Okay. Growth in pharma ex e-med.

Correct.

My question is just one on pharma and one on closures. Stephan, Gael, is there any though in terms of what you're seeing with GLP-1s recognizing it's not a huge driver of your business that nonetheless, maybe there's some pipeline filling occurring somewhere. How do you work against or peer into that if that's a risk. And then on closures, when do you expect that we'll be back to normal margins in this segment? And are you seeing any kind of uptake because of maybe a little bit stronger-than-expected barbecue season because of America 250? Are any of your customers talking about that? Or is that at this juncture, it'd be nice, but we're not baking it in.

All right. I haven't heard the America 250, although it's worthy cost to celebrate. That's for sure. So let's all have some barbecues on that. Coming back on GLP-1. I mean demand is very strong. I still hear anecdotally that consumers have to wait not for weeks, but maybe a few days to get the prescription filled. You also release very strong result, with Stephan, I think, being up 80% or so. So clearly, as people see other people losing weight, they want to get in on the fund, and there is strong demand for the product. Gael, do you hear anything about pipeline build?

There is a very healthy pipeline, I mean, as we speak because obviously it's attracting a lot of players.

No. I mean inventory build.

No, no, no. There is no intent to that. I mean this is -- No, that's all what we are hearing from our customers.

On closures, let me start and maybe Vanessa can also jump in. Clearly, let me not beat around the bush disappointed with some of the maintenance issues that we had and the two dozen tornado warnings that break out on our phones in the Midwest haven't helped as we had to shut down plants and people take shelter adding up to 11 days. So my expectation would be for the second half to closer to return to normal margins. But I look to you, Vanessa.

Absolutely, Stephan. You're absolutely right. I don't think I have much more to add to that. We did have some challenges, which I did call out in my prepared remarks. And we do expect to see sequential margin improvement in closures, and that's baked into our guidance.

Your next line comes from Matt Roberts at Raymond James.

Emergency, just going back to the 3-point headwind in 1Q even on a dollar amount as well or maybe I'm afraid my calculator is broken so just a sanity check, it seems a bit lower. But then how did emergency growth specifically compare in 2Q '25 to 1Q '25. And any other considerations within the pharma category that decelerated in 1Q worth mentioning? I noticed asthma, COPD wasn't in the prepared remarks, but just seeing if anything else was going on there?

Yes. I think on your specific question, I would ask you to follow up with Mary. I think it's a very specific question that we probably don't have at our fingertips. In general, let's just reconfirm that the 65 million is still the right number. About 2/3 of the impact we expect in the first half of this year and the balance in the second half, so by the time Q4 comes around, this should be almost washed out. And certainly, with Q1 '27, we'll have a clean comparison. So in the first half, the bulk of the 65 million will have been done, and we feel now reasonably confident that this is the new level. If you deduct the 65 million is the new level from which we expect to grow from [indiscernible] low to mid-single digits according to our customers. Other movements, I don't think we want to get into those specifics.

I appreciate that's, Stephan. And we were on pharma, on the margin at least down, it was still within the range despite the mix impact, I think down 1.5 points versus the 3 points you saw last quarter that had an emergency in there. So given what you saw in 4Q and 1Q is the long-term range still achievable in '26? Or how do you think about the progression through the year? And in 1Q specifically, like I said, despite the mix was still within the rain. So any other drivers of that, whether it was cost performance? Was there any change in royalty revenues in the quarter or injectable margins have improved that much? Just any color there on what you're seeing on the margin?

I mean pharma is a great business. And of course, emerging medicine is very profitable hands, a somewhat lower margin, but still within the range. So to answer your first question, yes, we do expect pharma to be with this a long-term EBITDA margin target for the year. And as the year progresses to return with the top line growth. I think we said also last time that we expect the company to be with its long-term EBITDA margin target for the year, which is -- usually, we don't give guidance for the year, but that is obviously a consequence of pharma being there. So beyond that, Vanessa, any else?

Yes. I think the only update I would add to that is as we look at sort of full year and this really relates to the pass-through of higher costs that we're seeing. And I did mention this in my prepared remarks that as we pass on these costs, it does have compression as a margin percentage. But clearly, our focus is to neutralize the dollars impact on our bottom line. And so you might see at the segment level of some compression based on the pass-through of these costs.

Your next question comes from the line of Matthew Larew at William Blair.

Maybe just following up on the margin point. The 6 prior quarters before sort of the [indiscernible] destock occurred. Corporate gross margins averaged around 38%. And then obviously, the last couple of quarters below that because of the destock you've also had, as you referenced the operational issues in beauty and closures. But all of those things as we get into the back half are improving. So just -- is it fair to think that you can get back to that range for gross -- corporate gross margins by Q3 or Q4.

Yes. I mean, Matt, we're guiding for Q2. We're not guiding for Q3, Q4. But I think directionally, that all aligns to what Stephan just shared and what we shared in the last call as well. We do -- and really, it's a gross margin story that the overall EBITDA margin impact is a gross margin story because you would have seen in Q1, we're pretty tight from an SG&A perspective. And so no issues there. And so the -- it's really gross margins, right, which is coming from the mix impact, which is coming from the operational issues that we've had to deal with in duty and closures and all of those will start to sequentially improve starting in Q2. So directionally, you're absolutely right.

Okay. And then maybe just following up on the the kind of operational issues, the maintenance, which is something sort of you can control and the fire at other suppliers, which is that you can't control as much. But just would be curious how those progressed in the quarter? And I guess, what your expectation is to when you'll be closing the loop on those things.

Yes, I think we -- I can only repeat what we said earlier, certainly expected in the second half for these issues, both in beauty and closures to have passed with sequential improvements.

Your next question comes from the line of Daniel Rizzo at Jefferies.

Just on the Narcan, I was wondering if after we get through this initial kind of destock or this issue, if over the long term, we're going to see this again where emergency services or buyers of this product kind of re low, so to speak, you see a huge surge and then it kind of flattened identity declines. Is it going to be lumpy like that? Or was it just I don't know, just over ordering the first go round. How should we think about it?

Yes. Dan, I certainly would expect the first one. I mean, this is such a unique set of circumstances where you have the originator more than a handful of generics, over-the-counter approval and all this money from the settlements converging on this inhalation or everybody getting ready to do battle to win contracts. Now it's a much more -- not organized, but it's a competitive market. People win once they lose another state I don't see the same kind of dynamics repeating. Now will you have lumpiness. I'm sure there is no business where you don't have that. And this 1 has less visibility than most because we can't track inventory levels at the end user. But since we have 50 states being in this game that there should be some evening out and you have more than a dozen competitors. So this should even out. I don't expect this kind of magnitude. I shouldn't say ever again, but in the foreseeable future.

No, that's helpful. And that's kind of what I assumed. And then also -- so you mentioned that there was no prebuying for amongst your customers. I was wondering if you guys have stocked your own inventories or planning to just to kind of, I don't know, smooth things out and make sure that you have security of supply, given the volatility with logistics, with input costs or just with everything.

Yes, Dan. Absolutely. So our purchasing teams, our supply chain teams are managing this very, very tightly, securing safety of supply, looking at -- obviously, how do we balance geographically and monitoring the health of some of our suppliers just to see what the impact of rising energy costs we have on those suppliers overall health. And so we will actually increase some of our safety stock. So I do expect that we'll move to a bit of a trend in rising inventory, but for all of the right reasons, and done intentionally to make sure that we're well managed through the Middle East crisis and it's longer-term [indiscernible].

Can you remind me, did you have to do that after COVID like the COVID logistical issues after COVID. Was this something similar to kind of unfold?

Not really that I can remember. Remember the main challenges in COVID were U.S. labor availability as we came out of COVID, and people still had government money in their pockets and weren't really coming back into manufacturing. Europe, companies kept running because the companies had the support from the government, not the individuals. So it returned pretty smoothly. So it's very different.

[Operator Instructions] The next question comes from the line of Gabe Hajde from Wells Fargo.

I wanted to ask about active this quarter. I know you guys talked about probiotics. And I think another headwind for test strips. On a go-forward basis, I know we're talking a lot about GLP-1 for injectables, but I think there's some solutions that you all have for oral solid dose of GLP-1. Anything that you can highlight in that arena for us.

Yes, I certainly would not put too much into active film, which is the kind of the film that goes into the blister of -- let's say, sensitive drugs in the GLP-1 drugs. I think it's too early. I know we have 1 in the pipeline here, but it's too early to kind of make any calculations on that. I think the active material business is a very exciting pipeline, for example, on nitrosamine reduction. That is a much bigger topic that the FDA is cracking down on and we're maybe the only solution where you can reduce nitrosamine and not change anything else. I think the other dynamic that played out this quarter is that the further transition from the finger prick with diabetes test strips where we make the vial for the test is to more glucose monitoring and continuous glucose monitoring. As you know, we are involved with Abbott Libre and LINGO. So it's more a matter of the decline of the first one was the growth of the second one, how it balances out in any given quarter. But overall, we continue to be bullish about active [indiscernible]. But I wouldn't hang into an oral GLP-1.

Understood. Vanessa, I don't think you called out a specific headwind and generally speaking, historically, you all have been able to catch up pretty quick on price/cost headwinds. But -- is there something specifically baked into Q2 on resin lags or anything else from transport, et cetera, that you're behind on that you would expect to get back in the second half?

Not anything material to call out, Gabe. This is something that -- so yes, so I'll go back and just start with, yes, of course, we are going to see the impact of rising resin prices. We've already been feeling that in our business. Our closures business is actually where we see the biggest impact from a segment perspective. But of course, it does impact all segments. Closures, we are generally protected by indexation and beauty and Pharma, a little bit less so. But even there, we pass it on to customers. We've done that in other periods of rising costs. So this is something that we have a good muscle for. And then in terms of impact to Q2, we've already started with those cost pass-throughs and we don't expect any net material impact to our overall Q2 results, and that's already baked into our guidance.

I guess good to see. The last 1 was, you did mention an answer to a prior question about maybe yourselves building a little bit of safety stock. Is that on the raw material side, finished goods side? And I'm just thinking about overhead absorption to the extent that things deescalate here and we're, I don't know, 9 months from now, that you may be underproducing in some product lines. So just curious if there's anything specific. I think, Stephan, that you may have mentioned where you're I guess that buildup a little bit the safety net.

Yes. No, that's on the raw material side. And just to make sure that we don't run out of any critical inputs.

Your next question comes from George Staphos at Bank of America Securities.

Just a couple of quick ones. First of all, Vanessa, if you've mentioned it, I had missed it. Can you talk about what the minority investment write-off was, what the amount was and what was behind it? And then with the discussion on closures and obviously, you're managing through operating issues and you'll resolve them in the second half. Can you remind us how the [indiscernible] plant has been doing? I know that goes back over 10 years, but how has that performed after you put it up for food and beverage? And in general, how you view your operating network in closures now? And how is Lincoln been doing in particular.

Let me start with the [indiscernible] and Vanessa, maybe he can address the other question. [indiscernible] is doing fine, like any other plant, it has sometimes an issue here and there, but overall, it has grown up to be a good performing plant. It had also that some of the weather issues that we talked about. It wasn't just in the Midwest also in the South. I think we had some snow there. But other than that, actually, quite happy with Lincoln some of the maintenance issues we talked about actually more in the Wisconsin plant. And then Vanessa, maybe you talk about the venturing.

Yes. Yes, absolutely. And George, I didn't talk too much about it in my remarks. I did just -- I just -- I comment that there was additionally a write-off of a minority investment. It was not the most material item. Stephan just mentioned, the maintenance challenges, the weather issues. And this was yet another factor that impacted closures, unfortunately, negatively in the quarter. He was not a big amount. It was a minority investment. It was a venture investment that we made a few years ago. And as we do with all investments, we assess the recoverability of the investment and we chose to provide against it. it probably had about -- again, it was not the most material impact, but another thing that impacted closures margins in the quarter, but not material to act overall.

I mean, overall...

A few million bucks, $100,000, any way to size it bigger than ?..

About 50 or 60 basis points in margin impact year-over-year. So important to call out, so I wouldn't spend too much time on it.

I mean, overall, actually not to be [indiscernible] too much. We have a venturing program that has served us very well to complement our in-house innovation by taking positions in leading-edge companies that do innovation, and we trade a few million investments often against the Board seat and get some dips on the technology. And overall, the portfolio has been returning quite well. But as venturing goes, you don't win them all, and those that you don't win, you have to write off.

There are no further questions at this time. Mr. Tanda, I turn the call back over to you.

Great. Thanks. Let me sum out and summarize the call. Number one, thanks for holding off on the roasting. Appreciate it. On the quarter, the team performed solidly overcoming some of the unexpected challenges in delivering a good EPS number. As we move through the last 2 quarters, the visibility of the destocking trajectory of emergency medicine has improved, and we have confirmed our estimate of the 65 million and about 2/3 of that will impact the first half of this year with the balance of the second half. We talked about that Q1 was a tough comp for prescription in particular, but we expect prescription excluding emergency medicine to return to solid growth in quarter 2 adding to the growth of injectables in consumer health care. We didn't talk about it much, but we continue to be very excited about the growing pipeline in pharma on the back of ever-growing numbers of systemic nasal drug delivery projects and higher participation in injectable projects, including GLP-1s, biologics and NX1 driven projects. As a reminder, pulmonary biologics and systemic nasal drug delivery remain the top end markets in our pharma pipeline on a risk-adjusted basis. And as I mentioned in my remarks, more and more of our customers choose to disclose their collaboration with Aptar, also a credibility builder for them in their early development phases, which allows us then to give you progressively more color on the kinds of things that are in the pipeline. As we look to Q2 and the balance of '26 emergency medicine side, we are well positioned for broad-based growth across all 3 of our segments continued strong growth in pharma, of course, excluding EM, with solid momentum across injectables, systemic nasal drug delivery, consumer health care. Beauty has returned to growth and in closures, we expect continued innovation driving more category conversions, including in personal care applications. We are executing on our rigorous productivity road map not only to address the short-term headwinds, including now the impacts from the Middle East conflict but also to drive further efficiencies across our operations and supply chain networks as well as SG&A. Last not least, our strong balance sheet gives us strong optionality while investing in the business and returning capital to shareholders. And with that, we look forward to talking to you in the coming weeks.