Matt DellaMaria - VP, IR Steve Hagge - President and CEO Bob Kuhn - EVP, CFO, Secretary.

George Staphos - Bank of America Merrill Lynch Adam Josephson - KeyBanc Capital Markets Chris Manuel - Wells Fargo Securities Ghansham Panjabi - Robert W. Baird & Company Chip Dillon - Vertical Research Partners Debbie Jones - Deutsche Bank Brian Rafn - Morgan Dempsey Capital Management Mark Wilde - BMO Capital Markets Alex Cooper - DSC Capital.

Ladies and gentlemen, thank you for standing by. Welcome to Aptar Group 2015 Second Quarter Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Introducing today's conference call is Mr. Matt DellaMaria, Vice President Investor Relations. Please go ahead, sir..

Thank you, Nova, and welcome, everyone. Participating on the call today are Steve Hagge, President and Chief Executive Officer, and Bob Kuhn, Executive Vice President, Chief Financial Officer and Secretary. Steve will begin our call with an overview of our quarterly performance.

Bob will then discuss a few details regarding our financial results, after which we'll open it up for questions. Actual results or outcomes could differ from those projected or contained in the forward-looking statements.

Please refer to AptarGroup's SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements. We will post a replay of this conference call on our website. AptarGroup undertakes no obligation to update the forward-looking information contained therein.

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

Thanks, Matt and good morning, everyone. I'm pleased that yesterday we reported record quarterly earnings per share, driven by improved operating margins from each business segment.

We also reported strong top line core growth in two of our three segments, which is encouraging, given the fact we're facing certain macro challenges, including the economic deceleration in both China and Brazil, and generally sluggish consumers spending in the U.S. and Europe. Our diverse business model continues to be strength of Aptar.

Our recent performance reflects the success of a long-term strategy to develop a broad portfolio of innovative solutions that we offer to a wide variety of customers in multiple end markets. Before I briefly comment on the results of our business segments, I'd like to speak about a couple of upcoming personnel changes within our organization.

Pat Doherty, President of our Beauty and Home segment, has announced that he will be retiring at the end of this year, after a long and successful career at Aptar that has spanned nearly three decades.

Pat has been a member of our senior leadership team and played a key role in the development of our strategy and our global expansion over these years. I'm excited to announce that Eldon Schaffer, President of Aptar Food and Beverage, will be taking over the leadership role in our Beauty and Home segment when Pat retires.

Eldon has been with Aptar for over 25 years. In addition to living abroad while with Aptar, he sold numerous marketing and operating positions, including within our Beauty and Home segment, before assuming the leadership role in our Food and Beverage segment over three years ago.

I'm also pleased to announce that Gale Toya, currently head of our Food and Beverage operations in Europe will succeed Eldon as President of Aptar Food at the beginning of 2016. Gale has been with Aptar for 20 years and has had extensive international sales and operating experience, including a five-year assignment in China.

I'm confident that these individuals possess the right skills necessary to lead these two segments to new heights. Their broad experiences and successful careers with Aptar will allow for a smooth transition into their new roles. I look forward to their leadership of these important businesses and their contributions toward our future growth.

Now, turning to our recent results, our Beauty and Home segment did a terrific job of improving their operating margin percentage despite a decrease in sales due to weak market conditions.

The improvement in profitability, as was the result of lowering costs through better leveraging of our global structure, reducing headcount, and some raw material savings.

This segment continues to face challenging consumer spending patterns, particularly in the fragrance category and also in the sun care category, which has been unusually soft, in part due to weather patterns and consumers wanting to reduce existing inventory levels. Also the slowdown in Brazil is impacting this segment.

As you may know, the Brazilian fragrance and cosmetic market is one of the world's largest. On the positive side, Asia continues to be an area of growth for this segment and globally we're participating in a wide variety of promising dispensing applications in categories such as facial skin care, cosmetics, and home care.

Our pharma segment had another outstanding quarter, with strong core sales growth and improved operating margins. The top-line growth is being driven by increased demand for our metered dose inhaler valves for asthma and COPD treatments, and demand for our nasal delivery systems for generic prescription and over-the-counter allergy treatments.

Sales of our components in the injectable markets also increased while sales declined somewhat in our consumer healthcare market due in part to softer eastern European market conditions, lower custom tooling sales, as well as the fact we're up against a very difficult comparison in the second quarter of last year.

The improved profitability in the quarter reflected our company-wide focus on cost containment that I mentioned earlier as well as the impact coming from the increased volumes in prescription and injectable market.

Now, turning to our Food and Beverage segment, they also had a very good quarter with excellent sales growth and very strong operating margins. Sales increased on broad-based demand across each market and region.

We continue to see increased demand for our innovative dispensing closures with sauces and condiments, granular and powdered foods and water and functional beverages. Our cost containment efforts, along with a high level of productivity and raw material savings in the quarter, helped drive excellent operating margins for this segment.

Now, as we look ahead, we're looking forward to building upon the progress we've made thus far this year. We're committed to investing in research and development and in capital projects necessary to support our long-term growth.

Certain macroeconomic conditions could remain challenging in the near term, including stagnation affecting certain countries in Latin America and the global foreign currency exchange market environment.

We will stay focused, however, and execute our strategy, and in doing so, continuing to help our customers grow their businesses with our innovative dispensing solutions. At this time, I'll turn it over to Bob says who will cover a few of our financial details..

Thank you, Steve and good morning, everyone, I'll briefly cover a few data points and then we will turn it over for questions. Before talking about our business segments, I'd like to comment on the change in accounting related to inventory valuation. We made this change for the following reasons.

First, we wanted to harmonize the inventory valuation methods at all of our facilities worldwide. Secondly, due to the recent decline in input costs. The tax advantages to maintaining LIFO method for the facilities that were using this method were diminishing.

This change positively impacted our second quarter pretax results by approximately $7.4 million. This impact is included at the consolidated level in the cost of goods sold on our income statement. On our segment income schedule, it is included in corporate and other line. This is a one-time impact and will not impact future quarters.

In looking at how our business segments performed in the quarter I'll start with our Beauty and Home segment. Operating margin improved to 8.5% unfocused cost containment efforts despite a challenging quarter. Weak market conditions resulted in lower sales volumes compared to a year ago and core sales declined 4%.

Sales to the Beauty market decreased 7% primarily due to soft global fragrance demand. Sales to the personal care market were equal to the prior year and this is reflective of a decline in demand for dispensing systems used with sunscreen products being offset by gains in other categories such as personal cleansing.

And sales to the home care market decreased 8%, but most of that is related to a decrease in custom tooling sales compared to the prior year. Our pharma segment had another excellent quarter achieving an operating margin of 30.3% and core sales growth of 9%.

Sales to the prescription market increased 17% primarily driven by increases in demand for metered dose inhalers and nasal delivery systems. In the asthma COPD treatment category we are seeing market share gains by our customers along with overall growth in the category as the reason behind the strong demand.

Regarding the nasal delivery system strength this is coming from very robust demand from the generic as well as the over-the-counter markets. Sales to the consumer healthcare market decreased 5% and this is mostly due to a strong second quarter in the last year. And sales to the injection market increased 7% due to broad-based global demand.

Looking at our Food and Beverage, this segment also had a very good quarter and reported an improved operating margin of 16.3% and core sales growth of 9%. Sales to the food market increased 11%, primarily due to strong demand for our dispensing closures in the condiment and infant food categories.

Sales to the beverage market increased 7% driven by increased demand for our innovative sports drink closures used on bottled water and functional beverages. Taking a look at core sales on a regional basis Europe was up 3%, the US was down 2%, Latin America was up 1% and Asia was up 9% over the prior year.

Looking at cash flow our cash flow generation was strong in the quarter. Cash flow from operations this quarter totaled $101 million compared to $78 million a year ago. Capital expenditures this quarter were approximately $33 million compared to approximately $44 million in the prior year.

Therefore free cash flow was $68 million in the quarter or an improvement of $34 million over the prior year. Looking at our balance sheet capitalization at the end of the quarter on a gross basis debt to capital was approximately 43% while on a net basis it was approximately 25%. I'd like to give you a few comments regarding 2015.

We currently anticipate that our capital expenditures will be near our expected depreciation and amortization level for 2015 which is $150 million. We believe our effective tax rate for 2015 will be in the range of 32.5% to 33.5%. At this time, Steve and I will be glad to answer any of your questions..

Thank you. [Operator Instructions] In the interest of time and fairness to all participants, please limit yourselves to two questions and one follow-up. Then you can come back into the queue if we have more questions as time allows. And our first question comes from the line of George Staphos of Bank of America Merrill Lynch. Your line is open..

Two questions for you and I'll turn it over.

First of all, relative to your guidance for the quarter, what surprised you the most to the up side and how sustainable is that factor or whatever those one or two factors? And then separately, can you comment at all -- you mentioned, Brazil is maybe giving you a little bit of -- concern wasn't the word you used but certainly gives us some reasons to be careful.

What are the trends in Brazil that you're seeing as you're entering the third quarter and how do you feel about Asia in light of what's been happening in China? Thanks, guys..

A couple things on the guidance side, George, I think there were a couple things that were more positive than we'd anticipated going into the quarter.

Certainly the core sales growth both at pharma and Food and Beverage was a bit stronger in the quarter than we had initially anticipated so I think that was positive and that generated, as you've seen, very good operating margins in that side.

And secondly, frankly, some of the cost savings that we've implemented in our Beauty and Home segment, particularly here in North America, continued to improve, and while we've expected those quarter-to-quarter improvement, they were a bit higher than that we'd anticipated going into the quarter.

So those would be, in general, the first three, at least that I would characterize to the guidance..

And those sound pretty sustainable, Steve, right? I mean it didn't seem like there's any kind of pipeline and so on in any of the Food and Beverage or pharma sales.

Would that be fair?.

No, I don't know. I don't think that we'd call it necessarily pipeline. I do think you'll get a little bounciness within quarters depending on what we're selling. For example, allergies were right now in the northern hemisphere going through the allergy season. That benefited us.

How sustainable that will be as we get to the end of the year in terms of the percentage growth it's difficult to see. So we do get some variance quarter to quarter, George, but generally you're correct that we see it as a sustainable growth side..

Okay. Thanks for that..

Your second question was related to Brazil and somewhat of the trend. Certainly when you look at Latin America with Brazil, Argentina, Columbia and Mexico for us, we are seeing a bit of slowdown. Brazil most recently implemented a pretty significant tax on personal care products. That's having an impact on consumption and in that market.

So I would anticipate at least as we go into the third and probably the fourth quarter, that we're going to see those softness continue. And that's reflective of our customers. Now, two are just report their earnings and they were down 3% to 4% on a core basis on their actual sales. So we would expect that to continue. The offset to that has been Asia.

We've been strong in Asia, particularly across our Food and Beverage and our Beauty and Home business, and right now, given the niches we're in, we're actually think that should continue to hold as we go through the third and potentially even into the fourth quarter..

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

Steve, one question on Beauty and Home, you talked about the better leveraging your global infrastructure in that business, which is one of the reasons for the improvement in margins along with the personnel reductions and the lower raw material costs.

Can you speak to the better leveraging of the global infrastructure issue? What exactly is that and what's improved along those lines recently? And [relatedly] how much of the segments margin expansion year on year was that better infrastructure, leveraging, versus lower lows and the headcount reductions?.

You know, I think it's -- on the better leveraging, we continue to do that across all -- that's across all the corporate services that we provide across all three of the segments, so it benefited Beauty and Home but it also benefited, frankly, pharma, and it benefited our -- pharma and Food and Beverage.

Now, again, one of the things that benefited it is, last year compared to this year, is we implemented FAP last year in one of our operations in Beauty and Home and we didn't have that this year so that had a positive impact on the quarter.

When I look in terms of the numbers in terms of raw material and cost savings, it's really hard, Adam, to come back and give you specific numbers to that. We are seeing trends in reduction in personnel and we're doing that, frankly, not through mass layoffs but more through the attrition that we've had. So I think that's also been a plus for us.

So I think those will continue but I don't have exact numbers to be able to give you as to what each of those contributed..

Sure. No, I understand, Steven and related to that, a broader margin question. So in the first half of the year, adjust is for the inventory issue, you're doing about 35% gross margins, and about 14% EBIT margins. And I look back to 2000, your EBIT margins have never been this high in the last -- it looks like, 15 years.

Has something structurally changed at the company in what -- in a seemingly very short period of time? Or, if not, I know pharma is growing and that helps a lot, but pharma has been growing for a while now and the company's EBIT margins have not been nearly this high for a very long time.

So I'm just trying to understand what if anything has structurally changed in the first half of this year compared to previous years..

You know, it's a good question Adam and I don't know that I would tell you anything structurally has changed.

First of all I think as we've talked about in the past our goal has been to get to a 14% operating margin and over time and so we're getting closer to that level but I think the Company you've got three things that I think are really having a positive impact on us. One is we're seeing an improvement in Beauty and Home's margin percentage.

That has a fundamental impact when you're going from levels of 5% to 6%, 7% up to a little over 8% this quarter. And then certainly with the growth we've had in pharma as you point out that has a higher margin percentage so as that gets bigger that helps us.

And then the other side is Food and Beverage had a very good quarter and is generating our target is to have about a 12% operating margin and they're generating over 16%, so I wouldn't tell you all of those will be each quarter the same but we're very positive on the overall trend where those are going..

Our next question comes from the line of Chris Manuel of Wells Fargo. Your line is open..

A couple questions, a couple easy ones first.

Can you tell us what the tooling sales were this quarter versus last year?.

Sure. So I'll give it to you on a reported basis. Overall, they were slightly up less than $1 million compared to last year in the second quarter. You know you had some positives in pharma that were offset by declines in both Beauty and Home and Food and Beverage..

Okay, so up about $1 million a year.

What was the total number? Do you have that?.

Total number for the quarter was about $19 million..

And then I think you guys had talked to us in the past that stalemate was set to be done here in summer.

We're kind of in summer if you have an update as to-- do you have the capacity and everything in place and are you in the process of starting qualification etc and you know still on track to probably start commercial shipments in early sentence maybe some update there?.

Again it's been positive. The construction process has gone as we expected and I think that's both from the timing and from a cost perspective. Right now we're just getting in and starting to install the new mixing capacity that we've ordered and that process is actually starting this month going into August.

As we get done out of the vacation period we'll start going through ramping up getting qualifications both internal and then taking through the rest of the year doing external qualifications. So at this point we would anticipate starting shipments as we get into 2016.

It's probably a little early yet to come back and see where we're going to be exactly when we're going to be able to make commercial shipments but it's more of a 2016 issue than certainly a 2015 issue..

And kind of dovetailing in with that I mean from an utilization standpoint I think you're pretty close to full as you sit today so this will help utilization there.

Do you have a maybe a rough sense as you look across the rest of your platform whether it's by products or whether it's by the different end markets where your utilization rates are? Are you getting somewhat close to being full capacity or-- I know you still have some room down in Lincolnton but some of the other pieces in particular?.

You know it's a good-- but it's a very difficult question because it's almost product or product line-specific. So if you looked at our pharma business given the strength we've had we're running at excellent utilization. We're running that very well.

Our Beauty and Home on the other side we've actually got some capacity available in certainly some different products lines. So I'm hesitant to kind of give you a number because it's blending extremes of maybe 50% and 90% and so I'm not sure how the average goes.

I don't anticipate you know to go to the other side to this other than our normal capital expenditures. I don't anticipate a whole new influx of major capital unless we're growing in a specific region well like that to be China or some other areas.

So those areas we're looking at but in terms of our base business I don't anticipate having to build a new facility around that other than for that potential geographic expansion..

Thank you. Our next question comes from the line of Ghansham Panjabi of Baird. You line is open, sir..

First off on the sun care product issue in terms of Beauty and Home and your comments on customers reducing inventory levels, well first of all, why do you think that is? And is that specific to the US or are you seeing that elsewhere also?.

We're actually seeing it -- it's pretty broad-based where the US has been a very big and we have a significant portion of the dispensing solutions across closures pumps etc the whole market.

But when we've had discussion with our customers it's been a little bit of impact on the lateness of the summer pickup and then all of them have commented that they're taking some inventory out of the chain. So that's also impacted us. So it's a little bit both here in the US and in Europe.

Not as much certainly in the Latin America or Asia where we're actually much smaller..

Okay.

And then on Beauty and Home Steve, with it in line are expectations from a core sales standpoint and I guess is that the right run rate to think about for the back half of the year as well as based on your comments on Brazil and Asia also slowing?.

You know, I think, first of all, the back half for us is a bit easier on the comparative side so I think we'll get a little bit of a plus to that. I would say it was a bit softer in the fragrance -- or in the Beauty part of the business than we thought.

On the fragrance we were down, we saw our customers being soft, and then more positive, frankly, on the skin care side for us. So we've seen kind of a balance to that. But I think if you look at comments from Unilever, Proctor, L'Oreal, they're also seeing softness.

So I mean we're moving -- since we're a major part of that, we're moving with our customers. So I don't anticipate a major pickup in the second half. I think we'll get some easier comparisons, wished help us a little bit as we go into the back half of 2015..

Our next question comes from the line of Chip Dillon of vertical research. Your line is open..

Just a question just to make sure I understand the change in the inventory to LIFO. I notice you mentioned two plants in the US and it looks like all but two of your 10 plants here work in multiple segments.

And could you tell us either which plants they were or what businesses were really impacted by that?.

Chip, we've never actually recorded LIFO or the adjustment to LIFO in any of our segments. That LIFO reserve, inventory valuation reserve, was always booked at the corporate level. So neither the negatives in the past or the positives today have any impact at all on any of the segment operating results..

Okay.

And as you look at the third quarter, does the move -- the change, does that actually have any impact on the third quarter results or -- said differently, if you had not made the change in your inventory accounting, would your guidance in the third quarter be the same as it is?.

Yes, I mean, we really don't think it's going to have any impact on the third quarter in looking out, so it did not impact at all our guidance in putting together Q3, Q3 guidance..

And I don't know if you specifically mentioned this, I was on a few minutes late. I know you're non-currency related sales grew by 2% overall. It would seem like with some of the declines in resins and other costs, that probably your volume was more than that? I'm just assuming that.

Or maybe said differently, maybe that was your volume and that you kind of kept almost all of those benefits.

Could you give us a little color on that?.

You know, it's good question, Chip, and actually it's probably one -- remember our -- what we do is, we pass through resin both up and down, particularly for our dispensing closures. So in the quarter with resins going down in the first quarter which we had a reasonable benefit from, we passed those resins down.

Beauty and Home would have negatively affected their growth by 1%. So their growth would have been actually stronger by 1% if we wouldn't have fastened down. Food and Beverage, it was by 3% so it was pretty significant. So that 9% would have been 12% growth into beverage without the resin decrease.

On the other side, when we see declining resin prices, historically that's actually led to somewhat improved operating margins because we pass through on a dollar-for-dollar basis. So that would have a -- a little bit of positive impact on both Beauty and Home and food and beverage on the operating margin..

Percentage, got you. And then last quick question, you mentioned one area, pharma, was up 17%, I believe that was in the prescription area.

Was that right?.

Correct..

Correct..

Thank you. Our next question comes in the line of Debbie Jones of Deutsche Bank. Your line is open..

So I'm not going to go discount Beauty and Home which showed a lot of improvement, I just want to talk about your long-term margin and growth target and just see if you thought there was any reason that we should kind of rethink what you guys have laid out for us and then also along the same lines in [indiscernible] that you actually seem to be coming ahead, at least in terms of your margin, volume just think are pretty in line.

How we should think about that going forward?.

You know, we're still -- we're staying consistent with what we had on our long-term both sales and operating margins, so in Beauty and Home we're still looking at 4% to 7%, again, some of the macro impacts are having a bigger impact on that market, but we still see 4% to 7% and operating margins at 10%- plus.

In our Food and Beverage, we're looking at 10%-plus volume growth and then 12%-plus on the operating margin. So we'd be still staying consistent. Again, if you looked at our first quarter and then compared to second, even between the first and second, we had significant in Food and Beverage margin increase.

That's probably not going to be sustainable as we go through. We'd anticipate that coming much, much more back to the mean..

And then also my last question on your -- in your release you talked about continuing to invest in new customer projects, and I was just wondering what the pipeline looks like for you going forward..

Across all three segments, I think it's really encouraging. I think that's one of the things, as we look out, that gives us quite a bit of confidence, despite some of the macro events going on.

Our customers, in trying to generate their revenue, there's a lot of projects we're working across, Beauty and Home, Food and Beverage, and pharma, so today I'd say the portfolio of things we're working on are as big or bigger than they have been in the past..

Thank you. [Operator Instructions] And our next question comes from the line of Brian Rafn of Morgan Dempsey Capital. Your line is open..

You talked a little bit about -- it sounds like your pipeline's fairly robust.

What are you seeing in unit volume launches national or international versus maybe regionalized and how much of your new pipeline projects might be enhanced with some of the new technologies over the last few years bag on valve or blister packs or some of the things that you guys have kind of acquired -- or developed?.

Well, again I think it depends -- look it's very dependent Brian going back to the segment in terms of new product launches on where they're looked at. Our Beauty and Home particularly on the fragrance side tends to be some international launches. Our Food and Beverage tend to be regional launches.

And pharma again will be rolled out based on the regulatory. So again that's somewhat dependent. But I think in terms of where we see like bag on valve or new technologies what's been very encouraging us we've been able to take those technologies across all three segments.

I think that's one of the key impacts that Aptar has had says the synergies of the products that Aptar has in its portfolio we keep adapting to each of the markets and it's something that we've been able to do over time. And I think that value we're actually exploiting that more and more as we go forward..

Okay. I've asked you guys in the past relative to any packaging developments on the dairy side and we've talked about hot fill and on homogenization and that for milk. I'm just curious Coca-Cola came out with a new product they're kind of backing into the dairy area with Fairlife.

And I'm wondering have you ever had a segue into maybe a product market where you directly perhaps haven't been able to break in but you can kind of end run it when one of your major customers global customers breaks into something that's more of a nontraditional market for them?.

Yes, in fact, I can tell you, we're working on some significant projects today that are somewhat out of our traditional scope doing exactly that. We have got a couple customers looking at some other markets that they want to get into, and are looking at products for that, so I can't comment on those until they come out.

When you look at the dairy market and it's kind of we're dealing milk enhancers these flavoring products we continue to do but the other one again we talked about it I think on our last call our sour cream which is kind of an accessory to the dairy in terms of inverted in terms of pouches is doing very well with brand name Daisy, which is I think the largest sour cream producer in the states.

So again I think we're seeing customers across all of our markets taking a look at new technologists and adapting those to their product..

Okay.

And then Steve, the $150 million in the property plant equipment how is that spread all over the world? I think you talked about not really opening major plants but where is that being allocated?.

I mean, our property and plant in general comes very close to mimicking our breakdown of sales. I mean we primarily produce where we sell locally.

So, I mean, rough numbers I don't have the exact splits for you, Brian but I mean if you take our breakout as a percentage of sales, so I mean, if you look at Europe being about 55% maybe we've got slightly more CapEx in Europe.

27% in the US and, you know 9% and 9% for Asia LatAm will be slightly less than those but that's probably the best metric I can give you for allocating capital..

Thank you. Our next question comes from the line of Mark Wilde of BMO Capital markets..

Just following on the CapEx question Bob, it sounds like you're continuing to do well out in Asia.

I just wondered whether you foresee more CapEx maybe more facilities going in out in the Asian market?.

Mark, we're continuing to look at that. I mean that has been a good growth market for us across all three of our segments frankly. And as we grow what we're looking to do is you may be aware today we're in the-- we're in a City called Suzhou, which is just outside of Shanghai.

So we're taking a look at other regions within China in terms of us being able to expand. So that's a very active ongoing project that we're looking at..

Okay. And then Bob, you mentioned that personal care tax that had gone in down in Brazil and most of the news that we get out of Brazil right now is pretty gloomy.

Is your business down there still decelerate go?.

No actually, we're flat to up. I think we're up 1% in the quarter. But I mean on the personal care side and that's a blended number. And on the personal care side we were down in personal care by 3%, so Beauty was also down in the quarter as well 8%, so we are seeing a deceleration in those.

But those are being made up for by our growth in Food and Beverage and our continued growth in the pharma. So, again it kind of speaks to the diversity of the Aptar business model..

OK. And then Bob, just one housekeeping, there's a $67 million investment in short-term investments on the balance sheet.

Can you tell us what that is?.

Sure.

That was just taking some of our excess cash and putting it into a short-term investment which really for accounting purposes needs to get pulled out of our cash and cash equivalents because there's like a 90-day window or trigger to be able to liquidate that investment, so it's more of just an accounting presentation but it follows very similarly to where invested our excess cash in Europe..

We have a follow-up question by the line -- by the name of George Staphos, Bank of America, Merrill Lynch. Your line is open..

My on follow-on, just -- we were talking earlier -- actually I want to ask about your long-term margin targets and growth targets for Food and Beverage and Beauty and Home, and I was hoping you could update us on your outlook for pharma, which continues to do better than your longer term target.

You know, why wouldn't it be time to -- maybe that will happen in September -- but why wouldn't it be time to raise your longer term margin targets in pharma? And then was there anything -- to the extent that you could call out and feel comfortable doing so, that might have led to a slightly better than normal margin within pharma in the quarter, recognizing that foreign exchange was a negative, was there any specific transaction benefit maybe you got within the segment in the quarter? Thanks and good luck in the quarter, guys..

A couple of things on the margin, so certainly we had a very strong RX market, and that was up, I think, 17% in the quarter, so that helped the margin profile.

We haven't changed our long-term of 23% to 28% and we're going to start to see some expenses even coming in the second quarter as our new Aptar Stelmi equipment and plant that I talked about a little earlier in the call comes online and the depreciation and start-up expenses that are going to be related to that are going to start hitting the P&L.

We still -- in that part of our business, the elastomer part, that's a bit lower than our average margin, and I think we're still seeing maybe outside growth in that over the next couple of years.

So we still think 23% to 28% is excellent, excellent margins, and I guess we'll continue to evaluate if we want to upgrade that but right now we're going to be staying with that margin profile..

Thank you. We have a follow-up question from Brian Rafn of Morgan Dempsey Capital. Your line is open..

Yes, Steve, can you give us any color? I may have missed it, on kind of the perfume and cosmetic market, maybe any trends that you're seeing between kind of the high end premium and a little more of some of the economy brands?.

I think you have to come back in the -- in that -- you have to split the market a little bit. What we're seeing on the fragrance market -- some challenges on the overall fragrance market. Brazil is impacting that.

Some of the upscale brands, LVMH, Dior, as you look at some of those, their eastern European sales have been impacted by the strong Euro compared to some of the Russian currency, for example. Offsetting that, we've been doing very well in promotional -- things we sell for promotional activities as well as stuff we're selling in terms of skin care.

We have several new products, and that seems to be accelerating. So we're seeing kind of -- the good news, I think, and it goes back to what Bob talked about, because we're so well diversified, we actually have, even if one particular area is down, we're seeing ups in other areas..

Okay.

And then how early in the season do you guys start to get a sense of how some of the Christmas orders are going to start building out?.

We're starting to see that now in terms of some of the order patterns, some of the customers are starting to get ready for Christmas, but it's a little bit too early. I haven't got any specific discussion with our customers. So we'll probably have a better color for that when we get into the third quarter..

And I'd now like to turn the call back to Mr. Hagge for closing remarks. Pardon me, sir. Someone did queue up. Another person queued up..

Okay..

From the line of Alex Cooper of DSC Capital, your line is open..

Just a quick question for you guys. I was wondering if you -- you talked -- I maybe have missed it but you had talked about Food and Beverage having a great quarter across all markets.

Domestically did you guys get a read in the US on kind of what Food and Beverage and looked like? Was that kind of consistent with some of the international business? You talked about how Brazil has helped -- Food and Beverage and Brazil had helped offset some of the other declines there..

I can comment on that a little bit. So our Food -- if I say take out tooling impacts in the US market for Food and Beverage, our food sales were actually up 9% in the quarter. And beverage was up slightly, but there, that was -- it was slightly impacted positively by some tooling. So overall, our Food and Beverage business was up in the US.

Again, it's more of the conversion story, taking advantage of moving things from non-dispensing platforms to dispensing platforms and in Latin America, clearly we were up huge but it's off of a very small base.

So I mean as we've talked about in the past, we've been investing resources in that region and I think we're now starting to see those come to fruition..

And I'm showing no further questions in the queue at this time and I'll turn the call back to Mr. Hagge for closing remarks..

Thanks, Nova. This concludes our call today and I'd like to thank everyone for joining us and we look forward to talking to you in the third quarter..

Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone have a wonderful day..