Ladies and gentlemen, thank you for standing by, and Welcome to Aptar's 2021 second quarter conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. Introducing today's conference call is Mr. Matthew DellaMaria, Senior Vice President, Investor Relations and Communications. Please go ahead, sir. Thank you. Hello, everyone. Thanks for being with us today. Joining me on today's call are Stephan Tanda, President and CEO, and Robert Kuhn, Executive Vice President and CFO. Our press release and accompanying slide deck have been posted on our website. If you are following along on the website, you can advance the slides by hovering over the presentation screen and clicking on the arrows on the right and the left. As always, we will post a replay of this call on the website. Today's call includes some forward-looking statements. Please refer to our SEC filings to review factors that could cause actual results to differ materially from what we are discussing today. I would now like to turn the conference call over to Stephan. Thanks, Matt. Good morning, everyone. I hope that you are doing well. As you saw in our press release from yesterday, we announced strong top-line growth in the quarter with reported sales up 16% and core sales up 10%, with EBITDA improvement over the prior year. I would like to discuss a few highlights, as mentioned on slide 3. In summary, sales increased in each of our reporting segments, with currency-related tailwinds adding to the core growth. The wide breadth of our portfolio of solutions and services continues to be a key strength of Aptar as we generated growth in each segment and double-digit growth overall for the company. Bob will speak in more detail on sales by market when he gives his update. Similar to the first quarter, growth of our pharma segment was driven by strong demand for elastomeric components for injectable drugs and Active Material Solutions, which offset declines in sales to the prescription and consumer healthcare markets, which continue to be impacted by customers drawing down inventory levels in key categories. Our Beauty and Home segment reported solid growth in the Beauty and Home care markets, the former being mostly on easier comparisons to the depressed second quarter of 2020, although with some initial signs of recovery. Sales to the personal care market were slightly below the prior year's strong performance as hand sanitizer demand is normalizing. Approximately 75% of the growth came from increased volumes. In our Food and Beverage segment, top-line growth was strong across each market segment, with about 60% of the growth coming from price adjustments related to the passing through of higher resin costs. It continued to be a very challenging input cost environment, and we are in the process of passing through higher input costs to our customers. I would like to remind you that the passing through of increased input costs has the effect of compressing margin%. Our overall margin was also affected by the mix of sales within our Pharma segment, favoring some of our lower-margin businesses in Pharma. We also remain active on the M&A front, making several strategic investments. During the quarter, we announced that we were in the process to acquire the outstanding shares of Voluntis, a pioneer in digital therapeutics. This is a significant step in building our foundation in the fast-growing digital healthcare space. If we have learned anything from the pandemic, it is that advancements in healthcare are rapidly accelerating, and things like remote patient engagement and patient monitoring, whether for clinical trials or real-world treatments, will be a big part of each of our futures. Just this week, we announced another pharma transaction. We have entered into an agreement to acquire 80% of Weihai Hengyu Medical Products Co., a leading manufacturer of elastomer components for injection devices in China. This investment gives us immediate local and regional supply capabilities in the critical and growing injectable space. Also, subsequent to the quarter, we announced a collaboration with a Chinese skincare company called YAT to bring new skincare solutions to the market. We look forward to leveraging YAT's expansive market insight database focused on specific consumer skincare needs and skincare profiles, and we will use YAT's in-depth experience in customized turnkey solutions as well as online product distribution and promotion. On the sustainability front, we have been active in forming strategic partnerships to further our progress towards a more circular economy where plastic can be recycled and reused. To that end, we have formed a partnership and are serving as a strategic advisor to a company called REBO to offer reusable water bottles that uses technology to help people stay hydrated while helping to collect tossed away plastic bottles. Now, on slide four, I would like to speak to a few environment, social, and governance or ESG updates. As previously announced, 3BL Media evaluated the 1,000 largest public U.S. companies on ESG performance. Aptar is honored to be named among the top 50 companies who are leading in corporate citizenship. We also announced the launch of our 2020 sustainability report, which highlights again our extensive sustainability initiatives that have been implemented across our global operations. We invite you to read the report on our website. Our first comprehensive sustainability report was for the year 2014. Our experience and engagement is built on deep expertise and a long track record. Finally, we are delighted to welcome Candace Matthews to our board of directors. Candace is a highly accomplished business leader with over 30 years of experience developing and marketing products for the healthcare, cosmetics, food, and beverage industries. She has held leadership positions with Amway, L'Oréal, Coca-Cola, and Procter & Gamble, amongst others. Our directors provide valuable guidance and keen oversight based on their firsthand operating experience in the end markets and geographic regions in which we operate, as well as functional expertise and multicultural insights. Candace is a valuable addition to Aptar's board with deep contemporary knowledge of our markets, including having spent a significant time in China. Turning now to slide five, in new product and technology launches, I would like to briefly comment on several product introductions that will highlight the breadth of our offerings. In pharma, our elastomer stoppers used with injection systems continue to play an important role in the COVID-19 vaccine distributions worldwide, including a vaccine approved in Latin America. We're also supplying stoppers for several animal vaccines in Mexico. In the prescription drug market, the central nervous system pipeline is active, and we have several customers making progress with nasal delivery of a variety of medicines in the area of opioid overdose antidotes, epinephrine, and medicines to treat suicidal tendencies. In consumer healthcare, our preservative-free Ophthalmic Squeeze is the delivery device for a new over-the-counter eye lubricant by Bausch + Lomb Biotrue brand in the U.S. In Beauty and Home, we recently announced a strategic sustainable dispensing system, our first fully recyclable mono-material dispenser pump for the beauty and personal care products called Future. Because the Future pump is made only from polyethylene, it also aligns with the most common materials used to make the bottles, polyethylene and polyester or PET. Therefore, the complete packaging, including pump and bottle, are more easily recycled. We also supplied our prestige fragrance pump for a new Tom Ford fragrance and our dispensing closure for Dollar Shave Club's new shampoo and conditioner line, both recently launched in the U.S. Also in the U.S., our airless pump is the dispensing solution for Coty's CoverGirl and Olay brand color cosmetics product called Eye Rehab. Finally, in the home care market, our closure with SimpliSqueeze valve is featured on the NUK dish care product in Europe. In food and beverage, we received critical guidance recognition from the Association of Plastic Recyclers for our SimpliCycle recyclable valve technology. This recognition acknowledges technologies or packaging components that solve longstanding problems in sustainable packaging design. Our SimpliCycle valve is made from a low-density material that allows the valve to float so it is easily separated from the polyester stream and then ultimately recycled with the polypropylene or polyethylene olefin stream. In the food market, our custom closures are featured on a limited edition line of mashup sauces, including hot sauce coupled with ranch and tartar sauce combined with ketchup by Kraft Heinz in Canada. Nestlé has also launched a new range of condiments with flavors from the Middle East called MEZEAST, which feature our food closures. Turning to the beverage market, our closure with SimpliSqueeze valve is the dispensing solution for a new concentrate product in Germany called Creme de la Creme Concentrates by Aldi. With that, I will now turn it over to Bob, who will provide additional comment on our second quarter results. Bob? Thank you, Stephan, good morning, everyone. Starting with slide 6, as Stephan mentioned, we had a strong top-line performance in the quarter, and I will walk through some of the market growth in a few minutes. Turning to slide seven, second quarter adjusted earnings per share increased 7% to $0.91 per share on a comparable basis with the prior year and when neutralizing currency effects. Aptar's adjusted EBITDA increased 8% to $148 million compared to the prior year, and this included the negative impact of the shift in business across our markets, as well as a net negative inflation impact of approximately $9 million. Our consolidated adjusted EBITDA margin would have been approximately 180 basis points higher without the net negative inflation effect and the margin compression impact from passing on the higher costs. Slides eight and nine cover our year-to-date performance and show the 5% core sales growth and our adjusted earnings per share, which were $2.01, up 10% compared to $1.83 a year ago, including comparable exchange rates. Briefly summarizing our segment results, our Pharma business performance was mixed across the different divisions, with total segment core sales growth of 2%. Pharma had an adjusted EBITDA margin of approximately 33%, which was reflective of the mix of business across the different markets compared with the previous year. Additionally, Pharma's margin was negatively impacted by approximately 100 basis points due to net negative inflation cost in the quarter of approximately $2 million. Looking at sales growth by market compared to the prior year, core sales to the prescription market decreased 7%, and core sales to the consumer healthcare market decreased 1%, as certain pharma customers in these markets continue to draw down inventory levels as treatment for allergic rhinitis and cough and cold are impacted by low levels of patient consumption and fewer overall non-critical doctor appointments. It was another strong quarter for components used for injectable medicines and our Active Material Science solutions. Core sales to the injectables market increased 14%, and half of the growth was related to vaccine administration, of which the majority was for COVID-19 vaccines. Core sales of our Active Material Science solutions increased 20%, primarily due to increased sales of our protective packaging solutions for probiotic products and COVID-19 diagnostic test solutions. Turning to our Beauty and Home segment, core sales increased 13% over the prior year second quarter, which was the most difficult period during the COVID-19 pandemic. Approximately 75% of the growth came from increased volumes. This segment's adjusted EBITDA margin was 11% in the quarter and was negatively impacted by the timing of passing through increased resin and other raw material costs, as well as other inflationary costs, which had negatively affected adjusted EBITDA by roughly $5 million. Had we not had this net negative inflation impact and we did not have the margin compression effect of passing through the higher costs, EBITDA margins would have been approximately 180 basis points higher. Looking at sales growth by market on a core basis, core sales to the beauty market increased 28% due to higher consumer demand for fragrances and facial skincare products. Core sales to the personal care market decreased 1% as higher sales to the haircare and sun care markets were offset by declines in personal cleansing as hand sanitizer demand normalizes. Core sales to the home care market increased 26% on strong demand for a variety of applications and increased custom tooling sales. Turning to our food and beverage segment, which had another solid performance, core sales increased 23%. Approximately 60% of the core sales increase is due to passing through higher resin and other input costs. The segment had an adjusted EBITDA margin of 16% and was negatively impacted by net inflationary cost increases of approximately $2 million. Had we not had this net negative inflation impact and we did not have the margin compression effect of passing through higher costs, EBITDA margins would have been approximately 360 basis points higher. Looking at each market, core sales to the food market increased 21% as volumes rose on increased demand for specialty food dispensing closures as consumers continued to cook at home. Core sales to the beverage market increased 26% as we realized some recovery over a very low prior year second quarter. Moving now to slide 10, which summarizes our outlook for the third quarter, I'd like to take a minute to remind everyone that in the prior year third quarter, we had a significant amount of custom tooling sales that caused an atypical jump in our sales last year in our Active Material Science group, where we were up over 50% in year-over-year top line growth. As Stephan mentioned, while we expect the second half to continue to show signs of recovery, our expectation is now for a stronger recovery toward the end of the year. There is still a lot of uncertainty regarding the pace of economic recovery, and many of our customers remain cautious. We don't yet see a significant change in the prescription drug market in the third quarter, but are anticipating an improvement in the fourth. We expect our third quarter adjusted earnings per share, excluding any restructuring expenses, acquisition costs, and changes in the fair value of equity investments, to be in the range of $0.90-$0.98 per share. The estimated tax rate range for the third quarter is 28%-30%. While we don't give guidance beyond the coming quarter EPS range, we have mentioned our optimism around the fourth quarter, and that would imply that our fourth quarter adjusted EPS range should be above the third quarter, nearer to the current published consensus of equity research analysts. In closing, we continue to have a strong balance sheet with a leverage ratio of approximately 1.5. On a growth basis, debt to capital was approximately 36%, while on a net basis, it was approximately 29%. In addition, we continue to invest in innovative growth projects, and we are confirming our forecasted range of capital expenditures for the year at a range of $300 million-$330 million. At this time, Stephan will provide a few closing comments before we move to Q&A. Thank you, Bob. In closing, on slide 11, I am very proud of our people and the work we have accomplished through the first half of the year amidst these unprecedented times. As certain economies begin to reopen, we expect the recovery in our beauty, beverage, and prescription pharma business to gradually progress. However, this recovery is likely to occur at a measured pace given the uncertainties around the COVID-19 variants and very limited intercontinental and inter-Asian travel. We anticipate a stronger performance towards the end of the year. As Bob pointed out, our fourth quarter should be stronger than our third, despite the fact that certain inflationary costs will remain as headwinds, especially labor and likely transportation. To mitigate those effects, we aim to implement further price adjustments where necessary to pass on these costs. As we look out further, vaccine distributions will eventually be more widespread and successful, and life will eventually return to more normal experiences with more robust social activities and international travel. Our business is built for the long haul. As I mentioned earlier, because of our breadth across attractive markets, we are able to generate growth even when conditions are not always ordinary in each market. We will continue to focus on sustainable growth and returns across all areas of our business and anticipate that our consolidated margins will improve as we transition to a more balanced and steady growth pattern. The long-term outlook for our company has not changed. It remains quite promising, and we are making strategic investments today that will further strengthen our competitive position, including expanding capacity in key high-growth regions and markets. With that, I would like to open the call up for your questions. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypads. Again, to ask a question, please press star one on your telephone keypads. In the interest of time and fairness to all participants, please limit yourself to two questions and one follow-on question. You may come back into queue if you have more questions as time permits. Your first question comes from the line of George Staphos from Bank of America Securities. Hi, everyone. Good morning. Hope you're doing well. Thanks for the details. I just wanted to start maybe with one line item that we didn't, I don't think, talk too much about in the opening remarks, which was corporate expenses. Up a little bit more than we would have expected. What was driving that? Was that related to some of the strategic moves you've been working on, Stephan or Robert? If not, what was driving that, and what should we expect going forward? I had a couple of follow-ons on pharma. Sure. Yeah, I can take that. That's all. Yeah, I can take that one, George, and Stephan. Yeah, George, about half of the increase is from some of our strategic activities and some projects that are expected to continue in the near term. The other half is really more, I would say, variable. The increase versus the first quarter was really an increase in accounting for some short-term compensation accruals, as we look to the outlook and where we think the end of the year is going to finish. Looking forward, I don't think the run rate should be at the $16 million that we saw this quarter. It'll be probably closer, somewhere between the $14 million and $15 million range. Okay. Understood. On pharma, you mentioned that RX was down about 7% in the quarter. You've talked about destocking for a while, we understand. It was notable to us just because I think last year, prescription was down about 6%. A weak number off of what I recall, if I'm remembering the numbers correctly, kind of an easy comparison. Was there anything else going on that we should be mindful of relative to your standing in pharma relative to longer-term outlook? Why? Why not? No. Not really. Obviously, we have gone back with a fine-tooth comb in the last seven years and looked at all the different movements and scanning data that is available to us. Hindsight is always 2020. Clearly, there was already more inventory in the chain than usual by a bit before we hit COVID. During 2020, orders were slightly reduced but not in line with reduced consumer consumption. That actually exacerbated the inventory build still in 2020, despite the lower sales that you referred to. Finally in January, everybody hit the emergency brake, seeing that we had a year of very low consumer consumption and that inventory in the chain. Clearly, the inventory destocking is more extensive than we would have liked. What we see from customer conversations is that that should run its course during the third quarter. Certainly have more indications about Q4 recovering than we had about Q3 a quarter ago, that we were more owing off that historically, these adjustments were two quarters, but that has actually done a lot more research. There's nothing around share or other shifts that you might be concerned about. This will recover. Clearly, the allergic rhinitis category is a low single-digit growth category. The one variable that we will always look at is conversion. At what pace is the conversion continuing or not from oral solid dose to nasal spray? As we mentioned last time, Glenmark Pharmaceuticals Limited had a new combination nasal spray approved. These will continue to come, and that's always one variable. Beyond allergic rhinitis, which really drives most of this destocking in RX. Of course, we're very excited about the central nervous system category that continues to grow very well but off a much smaller base, of course. In consumer healthcare, where most of the flu treatments are, destocking is still going on, but it's less pronounced. Of course, flu season is, I think, much more visible now. Even summer flu is going around. Those two give us some confidence for quarter four returning to a more normal pattern. Stephan, thanks for that rundown. Last one from me. When we look at deals like Weihai Hengyu and Voluntis, the company obviously has said, not just today, but in the past, that you are built for the longer haul. Nonetheless, these are not large deals, but they are going to divert some of your attention and capital. They don't add to earnings. In fact, they're dilutive through 2022. Can you quantify what the benefit of having these two businesses will be to Aptar, say, 2023, 2024, 2025? How will your shareholders see this in your return, in your earnings, in your growth? Tell us why these are good businesses. Sure. Thanks very much. Let me give you a qualitative view, and then Bob, please answer on the quantitative side. Let me start with Weihai Hengyu. We've talked about the regionalization of pharma supply chains before. Governments have woken up to the fact that, especially in a category as critical as vaccine, they're dependent on substantial cross-regional flows. It is critical for us to have supply capability in the U.S., which we've built around Congers. In Europe, of course, we've had historically, and in China. Hengyu is very well set up in China, has all the regulatory approvals. It's not that big a business, but if we had to build it and get approvals five years later with substantially more money. I think this is a very important strategic acquisition that will pay dividends very soon in the very large and constantly growing Chinese market. When it comes to Voluntis, this is clearly more of a building of capability in digital therapies. We can't say too much, Voluntis is still a publicly traded company, so there are research reports available on it. Clearly, they're one of the very few who have gotten FDA approvals on digital therapies. What is that? That's basically a combination approval with the drug and the digital companion to manage a disease, whether it's oncology or others. We see that as the future. We've made, of course, digital investments before and built a group. Clearly, that is a future investment, and pharma timelines are, our average project is maybe seven years, and digital is probably while growing fast, it is no faster than other projects. We see that critical to supplement our device business and enable our device business with digital companions, and I think that builds an even deeper moat around it. Plus, as patients, we know the engagement with our healthcare providers is more and more digital. These digital companions will just become a way of managing both chronic diseases, but also acute diseases. Overall, we see that very important growth driver in the future. Maybe I turn it over to Bob with some numbers. Yeah, in terms of the actual numbers looking further out, George mentioned that it's slightly dilutive in 2022. Most of that is, again, coming from the purchase accounting adjustments that we see on most of the transactions. I think Stephan touched on really the strategic aspects of this. Certainly, I think the injectables growth, we're going to see the injectables division inside the pharma segment becoming much larger in the future as we've seen the growth over the last 18 months here in this segment and certainly based on what we're projecting going forward with our own capacity expansions in the U.S. and now the addition of Weihai Hengyu. It really gives us some nice injectable manufacturing capabilities in different regions. Okay. Thanks very much. I'll turn it over. Your next question comes from John Kreger from William Blair. Hey, thanks, guys. Maybe just a couple of follow-up questions on the elastomer business. I think I heard you say that vaccine work in the second quarter gave you about half the growth that you saw in elastomers. Can you just talk about what sort of visibility you have on that sort of contribution longer term? What sort of COVID vaccine of an order book do you have out through next year? Yeah, we don't really guide into that much detail, but our order portfolio and our project portfolio is very broad, both COVID vaccines as well as the traditional flu vaccine in different formats, in different geographies. As we discussed before, as a result of the pandemic and the vetting of suppliers, we also see much more activity around the biologics treatment in general. Overall, we feel confident of continued good growth in that business, and that's why we are accelerating the capital expenditure that Bob already referred to. That is well underway. Great, thanks. The Weihai Hengyu purchase, does that give you any new sort of product capabilities, or is that really just about, again, a localized supply chain with elastomers? I think that's the most important part, but that maybe sounds a bit too trivial. Getting regulatory approval for a new manufacturing in pharma in China is maybe half a decade process. For us, it really accelerates our presence in that market from local supply as opposed to importing from Europe by saving many, many years. Of course, they have some technologies that are more adjusted to local demands. Of course, we can also transfer in some technologies. A lot of that has long timelines with customer approvals. Boots on the ground in a large market that's rapidly growing with full regulatory approvals is very important. Great, thanks. Bob, a quick follow-up. You gave us lots of detail on the inflationary pressures in the second quarter. Can you talk about what sort of assumptions you're making for the second half? Sure. I mentioned it was roughly a net -$9 million in the first quarter. Based on the pass-throughs we've already implemented and where we see the inflationary costs landing in Q3, we expect to be better than we were in Q1, but certainly we'll still be a net negative in the quarter. Right now, again, it's tough to truly estimate where it lands, and particularly in the raw material side, which is the biggest component of it. But if I had to guess right now, I would say we'd probably be somewhere in the $7 million-$7.5 million negative in Q3. Great. Thank you. Thanks, John. Ladies and gentlemen, in the interest of time and fairness to all participants, please limit yourself to two questions and one follow-on question, then come back into queue for more questions as time allows. Your next question comes from the line of Mark Wilde from BMO Capital Markets. Good morning, Stephan. Good morning, Bob. Hey, Mark. You previously talked about a second half pick-up that seems like has become more of a fourth quarter pick-up. Some of that, as Bob mentioned, is inflation. I wondered if you could just put a little more color around the other factors that are in play for you. Sure. The biggest factor clearly is that the pharma destocking being extended basically by a quarter. I was speaking earlier to increased granular understanding we have of that and therefore the call we're making on the fourth quarter. When you look to the other segments, Beauty and Home is starting to recover. We have good customer conversations and start to see order pattern that is quite encouraging. Unfortunately, we also see some supply chain dislocations as we all start to realize that you just don't restart the economy by pushing a button. Just one example, as government support for some of the smaller companies in Europe dries up, some of our suppliers go bankrupt, and we have to go to other suppliers, which puts strains on supply chains, expands lead times. The demand is clearly there and visible, and customers are excited about the Christmas season and all the different events in China, 11/11, and so on. Now, the uncertainty that we all have is the variants and what it will or will not do to the opening up of international travel. Clearly, we are behind to where I personally thought we were a quarter ago in terms of international travel. Americans can travel to Europe, but the Europeans cannot travel to the U.S., and you would think that's the basics. Let alone Asians travel outside of the region or even within the region. Clearly the Chinese consumer is going to be bottled up in China for at least another year. That means a lot of that spending is being redirected to domestic spending. While we do as much as we can to grow our footprint in China, our share of a consumer basket for the domestic purchase on Hainan Island, for example, where Chinese travelers go now, is lower than our share of a basket that they'd spend downtown London or New York or Paris. The pace of reopening of international travel is a big uncertainty for us, and that's why we are optimistic, but with some caution on the pace of opening up of intercontinental travel, and especially where the Chinese consumer spends their discretionary spending. That would kind of temper my comments. Food and beverage, we continue to see, obviously, good growth as people continue to cook at home. Beverage, which is more of a domestic purchase, of course, there's some travel aspect to on-the-go beverage. We see decent recovery, and that recovery is further along, I would say, than the beauty recovery. Clearly, we are making progress, and we expect sequential progress, but we're not back at 2019 level yet. Okay. Just for my follow-on, just real quickly, you've done so many kind of small acquisitions and joint ventures. I just wondered if you could talk generally about how you're kind of managing and tracking performance on all of those investments? There are really three aspects there. First, just stepping back as a reminder, we really look at acquisitions as a complement to our ability to grow organically with bolt-on acquisitions like Hengyu, and as a complement to our innovation activities with venturing investments, which YAT, for example, is an. We only do venturing investments if there is a strong business rationale with the business leaders wanting to spend time on that, wanting to sit on the board, engaging in a licensing agreement or some other hook that makes sure that there's an ongoing good relationship. In almost all of these, in fact, in all of them, we have one of our business leaders or innovation leaders spend time with that company, make sure that developments progress, so we have future value to be derived. That's kind of the business following side of it. Of course, Bob's group is very diligent in making sure their books are correct, and we properly account for them. Thirdly, as an executive committee, we follow a venturing review of these assets to make sure that overall the portfolio continues to make sense, and if a sale makes sense, we will also do that. You've seen Propeller Health, the sale of that. You've seen the evolution of the PureCycle investment. So far, batting average has been certainly pretty good, and we derive a lot of innovation, pipeline filling, and future value from those investments. It certainly is a muscle that we had to build in terms of making sure we're following these, and we get good value from them. Excellent. That's what I was looking for. I'll turn it over. Thanks, Stephan. Your next question comes from Ghansham Panjabi from Robert W. Baird & Co. Thanks. Good morning. I guess on Beauty and Home, can you just give us a sense as to how 2Q volumes compared to the pre-COVID-19 level baseline? Also the same for the major subcategories, so we can get a better chance as to where we are on the recovery for that segment. Sure. I can take that one, Ghansham. If we look at Q2, and we look at the segment as a whole, Beauty and Home, we're about 95% of the 2019 levels for the segment. If I look at it on a year-to-date basis, we're probably closer to 90% for the year. If I break it down into where we are specifically from a beauty category, we're about 85% for Q2 where we were pre-pandemic in Q2 2019. If I were to look year to date 2019 versus year to date 2021 for beauty, we're about 80% of the way there. We're getting closer on the beauty side. Got it. In terms of incremental margins on an as reported basis, it looks like it's about 21% for that segment. If I adjust for the, I think you called out $5 million of price cost impact on Beauty and Home, it's closer to 30%. Is that the right baseline to think about going forward in context of all the productivity initiatives you've had for that segment? That's really hard for me to generalize. In the Beauty and Home segment, we've got so many different product lines and so many different SKUs and across multiple regions. On an average basis, probably not too far from that, but it's really hard for me, it's going to truly depend on what categories are growing. Remember, if you've got one particular area that is down, impacting a particular factory, that has a significant downward pull or headwind on the overall average. It's hard to really say that that's going to hold true for every category. Got it. Maybe just one final one for Stephan Tanda on pharma. I think you're sharing some optimism in terms of the destock kind of cycling through 3Q. Can you just give us what is that based on? I think you mentioned conversations with customers. Is there anything more concrete that you can share in terms of inventory to sales or some version of that that gives you confidence that 4Q will see that improvement that you sort of implied? Yeah, look, I referred to forward-looking statement language, but within that context. As I said, we look at scanning data. We look at proprietary database data, subscription data that we have for the U.S. and Europe. As you know, these data do not cover club stores nor online, which gives them some caveats. We went back with a fine-tooth comb and kind of, okay, what are those inventory levels? Where are they? What probably is in homes, in CMO locations, in finished form. We know there's a two-year shelf life on finished forms. Triangulate backwards where we were at the beginning of the pandemic and what the evolution of consumer demand is, given that, at least in the U.S. and Europe, people are out and about. Allergies are in full bloom. Then correlate that with customer conversations, order forecasts, which they are giving us. I would say it's a more informed call than we had three months ago, but it's not a perfect call by any stretch. The one thing we know, if everybody goes outside and puts on masks while outside, the incidents will be less. That, I think the likelihood of that in the U.S. and Europe is not high. I think that's probably as much as I can give you. Perfect. Thanks so much. Your next question comes from Kyle White from Deutsche Bank. Hey, good morning. Thanks for taking my question. I wanted to go back to Mark's question regarding the acceleration that you expect towards the end of the year. I know you're not guiding towards 4Q earnings, but you kind of pointed to what it could be, and I'm just curious what the outlook for some of your costs, like resin, are embedded in that kind of outlook that you provided. Do you have any benefits from resin falling there? Yeah, I don't know if we've actually embedded any positives. Certainly, I think we're seeing some signs of abatement on the raw material side. There is a certain amount of expectations that we're going to be catching up on some of the delays. Again, hate to be very concrete on that. We are just now getting into hurricane season, as we know, anything can happen. Certainly there's an expectation that we're getting closer to catching up on some of the raw material pass-throughs. Yeah, makes sense. On Beauty, you talked about the travel restrictions kind of impacting some of your Asian customers. I'm curious if you're seeing anything from your customers in terms of potential product launches being delayed or paused, just given the variants and some of the travel restrictions that you mentioned. No. Specifically to that question, we don't see that. Customers remain confident, probably excited, bullish about the Christmas season. We haven't seen product launches. Frankly, right now, a lot of our challenge is to make sure that our lead times meet what the customers need towards the end of the year, given supply chain dislocations. Certainly, we see the demand strengthening. Having said that, of course, consumer confidence plays a big role in what people actually spend. I'm probably less concerned about the demand being there. Probably more concerned about if there's something coming with COVID and that the sell-through doesn't happen, what does it mean for next year? Your guess on that is as good as anybody's. Got it. Appreciate the details and good luck on the conference here. Thank you. Your next question comes from Adam Josephson from KeyBanc Capital Markets. Thanks. Good morning, everyone. Hope you're well. Bob, just one question on, I think Kyle asked you about this as well, but the kind of implied 4Q guidance. You prefaced your comments with, "We don't normally talk about quarters beyond the current quarter, but I'll nonetheless say that we expect to be close to the analyst consensus," which I believe is $1.5. I guess, what prompted that comment? What prompted you to talk about quarters beyond the current one, which is obviously not typical for the company? I would say more of our visibility and more of our confidence looking out further. We're getting some good signals from our customers, as Stephan alluded to. Stephan also talked very much about some of the research data, external data that we collaborate with and take a look at and triangulate our numbers with. It was more of a, I would say more of a direct correlation to our confidence in we see this improving in Q4 rather than leaving you with a Q3 quarter that is lower than what the consensus is today and people kind of wondering what's going to happen in Q4. The other thing I would add, Adam, is a normal fourth quarter for us is lower than the third quarter. Yeah. Just because end of year, Europe, holidays, all that. Since this is a year where we think this pattern will not be a normal pattern, we just wanted you guys to know that we don't think it will be like other years where the fourth quarter is lower than the third quarter. Yeah. No, I appreciate that, Stephan. On pharma, there was some thought kind of close to the end of last year that the vaccines might be quite good for your pharma business, and therefore, the pandemic as a whole would be beneficial to your pharma business. Obviously the cold and flu season never happened, and there has been this significant customer de-stocking as a result. How would you characterize the overall impact that the pandemic has had on your pharma business? Given what's happening with the Delta variant, et cetera, what do you see the ongoing impact as? In other words, good, bad, indifferent, et cetera. Well, look, for people to be, it almost sounds terrible to say it, but for people to be exposed to dust and pollen, they need to be out and about and not wear a mask. Then we can help with allergic rhinitis as well as more COPD, although that has been less impacted. Of course, if people wear a mask all the time, their likelihood of contracting the flu and the sniffles is much lower. That is the negative side of it. It's good for people, but it's not so good for the treatment. Right. Now, on the vaccine, you already mentioned that. Now, as people get vaccinated and hopefully key countries or key markets get north of that magical threshold, whatever it is, 75, 85, where everybody moves about, then yeah, we benefit both from the vaccine and from the higher incidence of allergies and cold and cough and flu. The effect can only be positive in that scenario. Plus, if those booster shots materialize to any extent, I think that will be continuing boost to that business, not surprisingly. Now, if everybody's back to indoors, wearing masks, then of course we have a very different scenario, but that will also impact the beauty business, the beverage business. Yeah by now we've established a pattern. If we remain positive, and it certainly looks like the U.S. government is determined to get those vaccination rates up. I think Europe, while behind the U.S. initially, is catching up and is also pushing for high vaccination rates. At least those two markets seem like it will balance out very good for Aptar. China is a mixed bag. Vaccination rates are low, so they control the pandemic through harsh lockdowns when something happens and basically closing the country off for outbound tourists as well as inbound tourists and business travel. With the effect that it's more a Chinese domestic game, and we are well advised to continue to hurry up to increase our footprint to take advantage of the large domestic economy that China is. Clearly the lack of travel, and that will stay with us as long as Chinese vaccination rates don't go up, has a negative impact on our beauty business. Appreciate it, Stephan. Thanks a lot. Yeah. Maybe I just want to add a couple things on. Yep Particularly on Pharma. Moving away from the quantitative aspects of COVID-19. Qualitatively, I think it's been a net positive really for the Pharma business. When we talked about the full period, it got us exposure to many new customers, certainly in our Injectables division, that we weren't really selling to in the past. It put us on the map, so to speak, with the new customer set. It's obviously led to our bullish outlook in investing in additional capacity expansions there, certainly the acquisition that we just mentioned in China. I would also add on the Active Material Science division, it allowed us to push our material science technology into new areas, right? While we thought we had a credible, and we do have a credible solution to N95 decontamination, in the end, there wasn't a need for that. We're now starting to see our technology being used on test kits and things like that. I think that's only going to continue as that in-home testing category increases, not just for COVID-19, but God forbid, any future pandemics and even flu in the past. I would say that it's been a net qualitative positive in both pushing our innovation and technology, as well as giving us access to new customers and increasing our bullish outlook on injectables in total. Thanks a lot, Bob. Your next question comes from Neel Kumar from Morgan Stanley. Hi, good morning. Hey, Neel. In pharma, you mentioned a negative 100 basis points impact from inflation and an impact on mix as well on margins. Can you just talk about where specifically you're seeing inflation in the business and the impact mix had on margins as well during the quarter? Do you expect 3Q pharma margins to generally be in line with the second quarter levels? Yeah. The biggest piece, if I look at it for pharma, is really coming Some of the specific resins that we used in our Active Material Solutions category, and that's probably the biggest. Then there was another piece on the regular resin. A little bit also on the labor side in addition. I would say that the bigger needle mover on the margin is going to be the mix of where the business fell in Q2, with both consumer healthcare and prescription being down, and injectables and active packaging being up. Got it. That's helpful. My impression was that resins was actually more of an immediate pass-through in pharma versus having a lag in beauty, home, and food and beverage. Is the structure different in the Active Material Science? It is. We have some large contracts there in the active packaging side. Some of the larger contracts are based on annual reassessments of total cost. Some of those won't get fully passed on or at least be passed on until we get into 2022. There's a bit of a headwind there, and then we'll have to see where it looks like for 2022. Yeah, it looks a little slightly different on the contractual side and the Active Material Science side. Okay. That's helpful. Besides for allergies, can you just talk about how some of the other areas in prescription performed in the quarter? Were there any areas you would call out as coming in below expectations? I wouldn't say so. Central nervous system continues to do very well, growing double digits but off a small base. The COPD area is not as affected by the destocking as the allergic rhinitis, but still lower than normal. All right. Thank you. Your next question comes from Daniel Rizzo from Jefferies. Good morning. I'm sorry if I missed this, but our CapEx is up a bit this year. Can you just remind us what's spending on there and just provide some color on that? Sure. We've got three pretty significant projects that we had mentioned at the beginning of the year that led us to our total target range of 300-330. One of those is that injectable capacity expansion that is underway, and we've begun to make investments there. We have about $35 million expected there, in terms of cash outlays in 2021. We also have started our project in China on one facility for our existing operations, primarily focused around pharma. There again, we expect that there's going to be cash spend this year, about $14 million. Then we are optimizing our footprint in France also for our decorative capabilities. There hasn't been a lot that's come through yet, but there we expect about $22 million in cash outlays in 2021. All in all, you got about $71 million on 2021 CapEx that's included in that $300 million-$330 million. For 2022, a portion of that will be the similar cost next year for the same projects, or will it end this year? Sure. Yeah, there'll be some bleed over into 2022 as these projects are getting closer to completion. We have not yet given 2022 guidance yet on cash capital expenditures. Right. No, just in general terms. Yeah. Okay. Thank you very much. Your next question comes from David Hadder from Wells Fargo. Good morning, gentlemen. Hope all is well. Kind of late in the call. Just 2 quick ones for you. 1, obviously inflation, I think, came a little bit hotter and quicker than what people were thinking coming into this year. Have you guys taken this opportunity, it sounds like most of it was centered on resins, but perhaps to kind of maybe revisit some contracts as they do come up, to shorten that lag, or is that something that you don't view as necessary? Yeah. Sorry, Bob, real quick, just other input costs to provide more openers. Yeah. Really the answer is yes on both. You've noticed that the pass-through in food and beverage is now much faster than it's been historically because we've changed some of these contracts in the past. On the way up, it's a little harder to do, we already benefited from having changed those contracts. On the other questions, we are absolutely putting through general inflationary increases that are not related to raw materials, all three businesses are looking at implementing those, have gone out with them. You've even seen us publicly announce increases in June that were not raw material-related, general inflationary increase. In pharma, it's more of, as you do renewals of long-term contracts where you bake that in up. Other than in the Active Material Science business, there are no automatic pass-through clauses for the most part. On the other hand, there's more pricing power that we price as contracts get renewed, and often they have price maintenance built in. Clearly, there are more tools in the toolkit than just the raw material pass-through, and we're using all of those tools. Thank you, Stephan. Then obviously you guys had three transactions to announce to us. We've heard some chatter that private equity has backed out a little bit from the M&A market. Curious if there's anything still in the pipeline. I appreciate you guys are probably always active to some degree, but anything that you feel like you're getting close on? I guess an update there. Yeah, look, our M&A activity is active, as active as it has always been. You work on 12 deals and you do 1. In the end, you lose some and you win some, and there's no change to that. Our leverage is at 1.5, so we certainly have the firepower, and we continue to look at M&A to complement our organic growth and geographic growth as well as our innovation activity. There's no change to that, and it remains an active environment. It's not done until it's done, and the press release goes out, so you can't really speculate beyond that. Understood. Thank you. Your final question comes from Salvatore Tiano of Seaport Global Holdings. Yes. Hi. Thanks for taking my questions. The first one, especially since now you've provided some color on Q4, I want to understand by each of the businesses, you can provide us a little bit color on the lead times you have and on the order book, when do customers provide you with their initial indications, and when do they have to firm their orders for the quarter, for example? Yeah. Don't want to really go in that detail except we did tell you, and happy to reiterate that our lead times in Beauty and Home are higher than we want them to be. Last year we were even written up in The Wall Street Journal that we can't get enough hand sanitizer pumps out there, and pumps are still a little bit backed up. As we see rebound and some of these supply chain disruptions or dislocations that I mentioned, lead times are higher than we would like them to be in the Beauty and Home area. I think I would leave it at that. Okay. With regard to the other segments, especially on pharma, I guess what I am trying to understand is when you are talking about the visibility, the clarity you have in Q4, I am trying to understand how strong confidence you have here. We are not supply constrained to any extent in the prescription drug business or the consumer healthcare business, as you can imagine from the volume levels. Certainly, supply chain's getting a little tight in the injectable space, but we have the capacity to service the demand. The only area where this is really a topic is in beauty. Yeah. Okay. Just switching gears a little bit to sustainability. You published, I think, your report was in May. I want to understand a little bit, what actions have you taken and what line of sight do you have for procurement to get, I think, to your PCR consumption to around 10%, I think is your 2025 target. I think your recyclability of products went up from 35% last year to 64% this year. Really big move. What have you done to increase the recyclability of your products that much? Yeah. A lot has to do with making products more mono-material, like we talked about it with the Future P ump. Also changing the makeup of our special SimpliSqueeze valve to be recyclable. Those are just two examples. In terms of the longer-term picture, of course, one aspect is what we offer. The other aspect is what clients actually buy. This is probably our one commitment that is highly contingent on our client actually buying solutions that have higher PCR content, and/or are fully recyclable. We've had certain PCR offerings available a long time, clients didn't buy it as much as we thought. Certainly, we expect that to continue to rise. You're quite right that availability of the right grade of PCR is a topic. That's why we invested in PureCycle, to help them accelerate food-grade approved polypropylene production. To be honest, we've co-invested with some of our customers there. That is an important stream. The other one that we look to very closely is the acceleration of availability, acceptability of chemical recycling. Taking mixed-use plastic stream back to their monomers and then repolymerizing. There's a lot of activity here going on, that ultimately will allow our customers hopefully to fulfill the commitments they've made publicly. In the end, they need to also make their orders in line with their public commitments. Great. Thank you very much. Thank you. I think this concludes our call. Thanks for your interest, and look forward to meeting you on the road virtually. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now all disconnect.