AptarGroup Inc.
02/06/2026 | Press release | Distributed by Public on 02/06/2026 10:58
Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts or as otherwise indicated)
The objective of the following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is to help the reader understand the financial condition and results of operations of AptarGroup, Inc. from management's perspective. MD&A is presented in seven sections: Overview, Results of Operations, Liquidity and Capital Resources, Recently Issued Accounting Standards, Critical Accounting Estimates, Operations Outlook and Forward-Looking Statements. MD&A should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K.
In MD&A, "we," "our," "us," "AptarGroup," "AptarGroup, Inc.", "Aptar" and the "Company" refer to AptarGroup, Inc. and its consolidated subsidiaries.
OVERVIEW
GENERAL
Aptar is a global leader in the design and manufacturing of a broad range of drug delivery, consumer product dispensing, active material science solutions and services for the pharmaceutical, F&F, personal care, home care, food and beverage markets. Using proprietary design, shared technology platforms, engineering, science and insights or understanding of the end-user to create dispensing, dosing and protective technologies for many of the world's leading brands, Aptar in turn makes a meaningful difference in the lives, health, well-being and homes of millions of patients and consumers around the world.
In addition to the information presented herein that conforms to accounting principles generally accepted in the United States of America ("U.S. GAAP"), we also present certain financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S.GAAP financial measures because they allow for a more meaningful period over period comparison of operating results by removing the impact of items that, in management's view, do not reflect Aptar's core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the audited Consolidated Statements of Income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measure to arrive at these non-U.S. GAAP financial measures. See the reconciliation under "Non-U.S. GAAP Measures" below. A reconciliation of core sales growth to reported net sales growth, the most directly comparable U.S. GAAP measure, can be found under "Net Sales" below.
2025 HIGHLIGHTS
•Reported sales increased 5% and core sales increased 2%.
•Reported net income increased 5% to $392.8 million and reported earnings per share increased 7% to $5.89.
•Returned $485.8 million to shareholders through share repurchases and dividends
•Capital expenditures decreased year over year, ending the year at about 7% of sales
•2025 was our 32nd consecutive year of paying an annually increasing dividend
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21/ATR
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2025 Form 10-K
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RESULTS OF OPERATIONS
The following table sets forth the Consolidated Statements of Income and the related percentages of net sales for the periods indicated. Refer to Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for additional information regarding Results of Operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
| Year Ended December 31, | 2025 | 2024 | ||||||||||||||||||
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Amount in Thousands $ |
% of Net Sales |
Amount in Thousands $ |
% of Net Sales |
|||||||||||||||||
| Net sales | $ | 3,777,181 | 100.0 | % | $ | 3,582,890 | 100.0 | % | ||||||||||||
| Cost of sales (exclusive of depreciation and amortization shown below) | 2,372,446 | 62.8 | 2,227,381 | 62.2 | ||||||||||||||||
| Selling, research & development and administrative | 606,497 | 16.1 | 582,226 | 16.3 | ||||||||||||||||
| Depreciation and amortization | 287,363 | 7.6 | 263,784 | 7.3 | ||||||||||||||||
| Restructuring initiatives | 9,837 | 0.2 | 13,002 | 0.4 | ||||||||||||||||
| Operating income | 501,038 | 13.3 | 496,497 | 13.8 | ||||||||||||||||
| Interest expense | (52,737) | (1.4) | (43,898) | (1.2) | ||||||||||||||||
| Other (expense) income | 43,077 | 1.1 | 17,166 | 0.5 | ||||||||||||||||
| Income before income taxes | 491,378 | 13.0 | 469,765 | 13.1 | ||||||||||||||||
| Net Income | $ | 392,497 | 10.4 | % | $ | 374,178 | 10.4 | % | ||||||||||||
| Effective tax rate | 20.1 | % | 20.3 | % | ||||||||||||||||
| Adjusted EBITDA margin (1) | 21.6 | % | 21.6 | % | ||||||||||||||||
(1)Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
NET SALES
For the year ended December 31, 2025, reported net sales increased 5% to $3.78 billion from $3.58 billion a year ago. The average U.S. dollar exchange rate weakened compared to the euro and most other major European currencies in which we operate, resulting in a 2% positive currency translation impact during 2025. Our current year acquisitions also positively impacted consolidated sales by 1%. Therefore, core sales, which exclude acquisitions and changes in foreign currency rates, increased by 2% in 2025 compared to 2024. Strong product volume growth in our Pharma and Closures segments along with increased tooling sales, mainly in our Beauty segment, more than compensated for the pass through of lower resin costs to our customers.
| Year Ended December 31, 2025 | Pharma | Beauty | Closures | Total | |||||||||||||||||||
| Reported Net Sales Growth | 6 | % | 7 | % | 2 | % | 5 | % | |||||||||||||||
| Currency Effects (1) | (3) | % | (2) | % | (1) | % | (2) | % | |||||||||||||||
| Acquisitions | - | % | (3) | % | - | % | (1) | % | |||||||||||||||
| Core Sales Growth | 3 | % | 2 | % | 1 | % | 2 | % | |||||||||||||||
(1)Currency effects are calculated by translating last year's amounts at this year's foreign exchange rates.
For further discussion on net sales by reporting segment, please refer to the segment analysis of net sales and operating income on the following pages.
The following table sets forth, for the periods indicated, net sales by geographic location based on shipped to locations:
| Years Ended December 31, | 2025 | % of Total | 2024 | % of Total | ||||||||||
| Domestic | $ | 1,174,302 | 31 | % | $ | 1,145,490 | 32 | % | ||||||
| Europe | 1,862,559 | 49 | % | 1,769,868 | 49 | % | ||||||||
| Other Foreign | 740,320 | 20 | % | 667,532 | 19 | % | ||||||||
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22/ATR
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2025 Form 10-K
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COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW)
Our cost of sales ("COS") as a percentage of net sales increased to 62.8% in 2025 compared to 62.2% in 2024. While all three segments showed revenue growth during 2025, sales within the Pharma and Beauty segments were negatively impacted by a mix of lower margin applications compared to the same period in 2024. We were also negatively impacted by operational inefficiencies and an increase in certain input costs.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE
Our SG&A increased approximately 4% or $24.3 million to $606.5 million in 2025 compared to $582.2 million in 2024. Excluding changes in foreign currency rates, SG&A increased by approximately $11.8 million compared to the prior year. Of this increase, $4.9 million relates to incremental SG&A costs in 2025 due to our acquisitions including BTY and Sommaplast. The remaining increase is related to higher legal fees in our Pharma segment and higher compensation costs. SG&A as a percentage of net sales decreased to 16.1% in 2025 compared to 16.3% in the prior year.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased approximately 9% or $23.6 million to $287.4 million in 2025 compared to $263.8 million in 2024. Excluding changes in foreign currency rates, depreciation and amortization expense increased by approximately $17.4 million compared to the prior year. Approximately $5.4 million of this increase is due to our acquisitions during 2025. The majority of the remaining increase relates to higher capital investments made to support our growth strategy. Depreciation and amortization as a percentage of net sales increased to 7.6% in 2025 compared to 7.3% in the prior year.
RESTRUCTURING INITIATIVES
For the years ended December 31, 2025 and 2024, we recognized $9.8 million and $13.0 million, respectively, of restructuring costs related to our initiative to better leverage our fixed cost base through growth and cost reduction measures. The cumulative expense incurred as of December 31, 2025 was $74.5 million.
Restructuring costs for the years ended December 31, 2025 and 2024 are as follows:
| Year Ended December 31, | 2025 | 2024 | |||||||||
| Restructuring Initiatives by Plan: | |||||||||||
| Optimization initiative | $ | 9,837 | $ | 13,019 | |||||||
| Prior year initiatives | - | (17) | |||||||||
| Total Restructuring Initiatives | $ | 9,837 | $ | 13,002 | |||||||
| Restructuring Initiatives by Segment | |||||||||||
| Pharma | $ | 1,080 | $ | 589 | |||||||
| Beauty | 4,469 | 8,041 | |||||||||
| Closures | 3,566 | 3,835 | |||||||||
| Corporate & Other | 722 | 537 | |||||||||
| Total Restructuring Initiatives | $ | 9,837 | $ | 13,002 | |||||||
OPERATING INCOME
Operating income increased approximately $4.5 million or 1% to $501.0 million in 2025 compared to $496.5 million in 2024. Excluding changes in foreign currency rates, operating income decreased by approximately $10.0 million in 2025 compared to 2024. Sales growth across all three of our segments could not compensate for the shift in mix of our product sales along with some operational inefficiencies and higher depreciation costs as discussed above. Operating income as a percentage of net sales decreased to 13.3% in 2025 compared to 13.8% for the prior year.
INTEREST EXPENSE
Interest expense increased by $8.8 million in 2025 to $52.7 million compared to $43.9 million in 2024. During 2025, we repaid $125.0 million of private placement debt having an interest rate of 3.6% and issued a total of $600.0 million in new notes with a fixed interest rate of 4.75%, thus increasing both the amount and the average interest rate of our debt during 2025 compared to 2024.
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23/ATR
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2025 Form 10-K
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NET OTHER INCOME
Net other income increased $25.9 million to $43.1 million in 2025 compared to $17.2 million in 2024. On July 28, 2025, we executed our call option to purchase an additional 31% equity interest in BTY. As a result of this additional investment, we remeasured our previously held minority equity interest in BTY at fair value resulting in a gain of $26.5 million. We also realized approximately $7.3 million in higher equity results from affiliates, which was partially offset by a $2.2 million lower remeasurement gain on our investment in PureCycle.
Also included in net other income is miscellaneous income, which predominately consists of changes in foreign currency and pension expenses. During 2025, we realized a $1.0 million negative impact from foreign currency and a $1.8 million negative impact from changes in pension expense when compared to 2024. The unfavorable impact on pension expense primarily consists of a $1.9 million gain on pension curtailment for a 2024 facility closure in France. We also wrote off $2.1 million of software development costs during 2025.
PROVISION FOR INCOME TAXES
The reported effective tax rate for 2025 and 2024 was 20.1% and 20.3%, respectively. The tax rate for 2025 reflects a more favorable mix of earnings including a benefit related to the gain resulting from the remeasurement of equity investments to fair value upon becoming the majority equityholder.
At December 31, 2025, with the exceptions identified below, we continued to assert indefinite reinvestment of foreign earnings from Aptar's foreign operations. We do not have a balance of foreign earnings that will be subject to U.S. tax upon repatriation under the currently enacted U.S. tax laws. We continually analyze our global working capital requirements as well as local country operation needs in developing our repatriation plans.
During the current year, we removed the indefinite reinvestment assertion with respect to approximately $160.0 million of 2025 earnings in France. We have provided a $2.1 million deferred tax liability with respect to this action. We have previously removed our indefinite reinvestment assertion with respect to the pre-2020 earnings in Italy, Switzerland and Colombia, as well as undistributed earnings in Germany. We continue to assert indefinite reinvestment with respect to foreign earnings from other countries. We estimate that if the non-U.S. subsidiaries were to make a distribution of their cash or distributable reserves to the U.S., we would incur local country withholding tax and income taxes in the range of $15.0 million to $20.0 million. We would recognize such tax expense in our Consolidated Statements of Income and Consolidated Balance Sheets should we change the current indefinite reinvestment assertion on foreign earnings.
NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.
We reported net income of $392.8 million in 2025 compared to $374.5 million reported in 2024.
PHARMA SEGMENT
Operations that sell proprietary dispensing systems, drug delivery systems, sealing solutions and services to the prescription drug, consumer health care, injectables, active material science solutions and digital health markets form our Pharma segment.
| Year Ended December 31, | 2025 | 2024 | % Change 2025 vs. 2024 | ||||||||
| Net Sales | $ | 1,737,481 | $ | 1,643,152 | 5.7 | % | |||||
| Adjusted EBITDA (1) | 607,646 | 568,371 | 6.9 | ||||||||
| Adjusted EBITDA margin (1) | 35.0 | % | 34.6 | % | |||||||
(1)Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures."
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24/ATR
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2025 Form 10-K
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Reported net sales increased approximately 6% in 2025 to $1.74 billion compared to $1.64 billion in 2024. While there was no significant impact from our acquisition during 2025, changes in currency rates positively impacted net sales by 3%. Therefore, core sales increased 3% in 2025 when compared to 2024. Strong volume growth and royalty increases more than compensated for lower tooling sales and pricing adjustments to secure longer-term contracts. Core sales of our proprietary drug delivery systems to the prescription drug market increased 5% on increased demand for our emergency medicine and central nervous system solutions along with higher revenues received from customer royalties. Core sales to the consumer health care market declined 8% as higher demand for our eye care solutions was offset by lower sales of nasal decongestant, nasal saline and cough and cold products. Injectables core sales increased 11% driven by robust GLP-1 component sales despite a challenging comparison to the first half of 2024 which experienced a 14% increase in revenues related to a catch-up period following an enterprise resource planning system implementation. Core sales of our active material science solutions increased 3% as higher demand for our active film and diabetes treatment technologies more than compensated for lower tooling sales due to a large tooling sale in the previous yearperiod.
| Year Ended December 31, 2025 | Prescription Drug (2) | Consumer Health Care | Injectables | Active Material Science Solutions | Total | ||||||||||||||||||||||||
| Reported Net Sales Growth | 8 | % | (5) | % | 14 | % | 4 | % | 6 | % | |||||||||||||||||||
| Currency Effects (1) | (3) | % | (3) | % | (3) | % | (1) | % | (3) | % | |||||||||||||||||||
| Acquisitions | - | % | - | % | - | % | - | % | - | % | |||||||||||||||||||
| Core Sales Growth | 5 | % | (8) | % | 11 | % | 3 | % | 3 | % | |||||||||||||||||||
(1)Currency effects are calculated by translating last year's amounts at this year's foreign exchange rates.
(2)Prescription drug includes prescription drug and digital health solutions.
Adjusted EBITDA for 2025 increased approximately 6.9% to $607.6 million compared to $568.4 million in 2024. This increase was mainly due to the strong core sales growth in prescription drug, injectables and active material solutions along with higher royalty income discussed above. Overall, our Adjusted EBITDA margin improved to 35.0% in 2025 compared to 34.6% in 2024.
BEAUTY SEGMENT
Operations that sell dispensing systems and sealing solutions to the beauty, personal care and home care markets form our Beauty segment.
| Year Ended December 31, | 2025 | 2024 | % Change 2025 vs. 2024 | ||||||||
| Net Sales | $ | 1,309,437 | $ | 1,225,730 | 6.8 | % | |||||
| Adjusted EBITDA (1) | 158,771 | 159,909 | (0.7) | ||||||||
| Adjusted EBITDA margin (1) | 12.1 | % | 13.0 | % | |||||||
(1)Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures."
Reported net sales increased approximately 7% in 2025 to $1.31 billion compared to $1.23 billion in 2024. Changes in currency rates and acquisitions positively impacted net sales by 2% and 3%, respectively. Therefore, core sales increased 2% compared to the prior year, mainly on stronger tooling sales in 2025. All regions showed sales growth during 2025 except North America due to weaker indie brand skincare demand. Core sales of our products to the F&F market decreased 4% during 2025 mainly due to softer demand for our prestige fragrance technologies and facial skincare products. However, personal care core sales increased 13% over the prior year on higher sales of our hair care and body and skin care products. Core sales to the home care markets increased 1% over 2024 on higher demand from our customers selling air care and industrial products.
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25/ATR
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2025 Form 10-K
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| Year Ended December 31, 2025 | F&F (2) | Personal Care | Home Care | Total | |||||||||||||||||||
| Reported Net Sales Growth | 2 | % | 14 | % | 15 | % | 7 | % | |||||||||||||||
| Currency Effects (1) | (2) | % | (2) | % | (1) | % | (2) | % | |||||||||||||||
| Acquisitions | (4) | % | 1 | % | (13) | % | (3) | % | |||||||||||||||
| Core Sales Growth | (4) | % | 13 | % | 1 | % | 2 | % | |||||||||||||||
(1)Currency effects are calculated by translating last year's amounts at this year's foreign exchange rates.
(2)F&F includes fragrance, facial skincare and color cosmetics.
Adjusted EBITDA for 2025 decreased approximately 1% to $158.8 million from $159.9 million in 2024. This decrease was mainly due to the less favorable mix of product sales, including the impact of lower tooling margins, along with some supplier disruptions and manufacturing inefficiencies. These factors, along with the pass through of higher tariff costs, led to our Adjusted EBITDA margin declining to 12.1% in 2025 compared to 13.0% in 2024.
CLOSURES SEGMENT
Operations that sell dispensing closures, sealing solutions and food service trays to the food, beverage, personal care, home care, beauty and other markets form our Closures segment. Our food protection business and elastomeric flow-control technology business report through the Closures segment.
| Year Ended December 31, | 2025 | 2024 | % Change 2025 vs. 2024 | ||||||||
| Net Sales | $ | 730,263 | $ | 714,008 | 2.3 | % | |||||
| Adjusted EBITDA (1) | 116,477 | 114,142 | 2.0 | ||||||||
| Adjusted EBITDA margin (1) | 16.0 | % | 16.0 | % | |||||||
(1)Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures".
Reported net sales increased approximately 2% in 2025 to $730.3 million compared to $714.0 million in 2024. Changes in currency rates positively impacted net sales by 1%. Therefore, core sales increased 1% in 2025 compared to the prior year. Product sales volumes increased 4%, partially offset by lower resin prices and lower tooling which negatively impacted core sales by 2% and 1%, respectively. During 2025, liquid coffee creamer product sales were reclassified from our food market to the beverage market to better align with how those products are currently managed. All prior period amounts have been reclassified to conform to the current year presentation in the tables below. Core sales of products to the food market increased 2% compared to prior year on strong product sales of our closures for salad dressing, spreads and food protection products. Core sales of our products to the beverage market increased 6% during 2025 mainly on improving functional drink and dairy application sales. Personal care core sales decreased 9% on lower sales of our hair care and deodorant solutions, while other core sales improved 5% over the prior year due to strong sales of our products for laundry and dish care applications.
| Year Ended December 31, 2025 | Food | Beverage | Personal Care | Other (2) | Total | ||||||||||||||||||||||||
| Reported Net Sales Growth | 3 | % | 7 | % | (8) | % | 8 | % | 2 | % | |||||||||||||||||||
| Currency Effects (1) | (1) | % | (1) | % | (1) | % | (3) | % | (1) | % | |||||||||||||||||||
| Acquisitions | - | % | - | % | - | % | - | % | - | % | |||||||||||||||||||
| Core Sales Growth | 2 | % | 6 | % | (9) | % | 5 | % | 1 | % | |||||||||||||||||||
(1)Currency effects are calculated by translating last year's amounts at this year's foreign exchange rates.
(2)Other includes beauty, home care and other markets.
Adjusted EBITDA for 2025 increased approximately 2% to $116.5 million compared to $114.1 million in 2024. Our profitability was positively impacted by the higher product sales discussed above along with our cost improvement initiatives which more than compensated for a lower tooling contribution and lower productivity. Our Adjusted EBITDA margin remained at 16.0% during 2025 consistent with 2024.
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26/ATR
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2025 Form 10-K
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CORPORATE & OTHER
In addition to our three reporting segments, Aptar assigns certain costs to "Corporate & Other," which is presented separately in Note 18 - Segment Information of the Notes to the Consolidated Financial Statements. For Corporate & Other, Adjusted EBITDA (which excludes net interest, taxes, depreciation, amortization, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items) primarily includes certain professional fees, compensation and information system costs which are not allocated directly to our reporting segments.
Corporate & Other expenses in 2025 increased slightly to $67.8 million compared to $67.5 million of expense in 2024. Higher compensation costs in 2025 were mostly offset by the improved performance of certain equity method investments and lower costs to evaluate acquisition targets when compared to 2024.
NON-U.S. GAAP MEASURES
In addition to the information presented herein that conforms to U.S. GAAP, we also present financial information that does not conform to U.S. GAAP, which are referred to as non-U.S. GAAP financial measures. Management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. We believe it is useful to present these non-U.S. GAAP financial measures because they allow for a better period-over-period comparison of operating results by removing the impact of items that, in management's view, do not reflect our core operating performance. These non-U.S. GAAP financial measures should not be considered in isolation or as a substitute for U.S. GAAP financial results, but should be read in conjunction with the audited Consolidated Statements of Income and other information presented herein. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures. Further, investors are urged to review and consider carefully the adjustments made by management to the most directly comparable U.S. GAAP financial measures to arrive at these non-U.S. GAAP financial measures.
In our Management's Discussion and Analysis, we exclude the impact of foreign currency translation when presenting net sales and other information, which we define as "constant currency." Changes in net sales excluding the impact of foreign currency translation is a non-U.S. GAAP financial measure. Core sales growth is calculated as current period core sales less prior period core sales divided by prior period core sales multiplied by a hundred. As a worldwide business, it is important that we take into account the effects of foreign currency translation when we view our results and plan our strategies. Consequently, when our management looks at our financial results to measure the core performance of our business, we may exclude the impact of foreign currency translation by translating our prior period results at current period foreign currency exchange rates. As a result, our management believes that these presentations are useful internally and may be useful to investors. We also exclude the impact of material acquisitions when comparing results to prior periods. Changes in operating results excluding the impact of acquisitions are non-U.S. GAAP financial measures. We believe it is important to exclude the impact of acquisitions on period over period results in order to evaluate performance on a more comparable basis.
We present earnings before net interest and taxes ("EBIT"), earnings before net interest, taxes, depreciation and amortization ("EBITDA") and adjusted earnings per share. We also present our adjusted earnings before net interest and taxes ("Adjusted EBIT"), adjusted earnings before net interest, taxes, depreciation and amortization ("Adjusted EBITDA") and adjusted earnings per share, all of which exclude restructuring initiatives, acquisition-related costs, purchase accounting adjustments related to acquisitions and investments, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items. For the year ended December 31, 2025, "other special items" include costs incurred related to non-ordinary-course litigation, specifically: lawsuits between Aptar and ARS Pharmaceuticals, Inc. involving Aptar's claims of trade-secret misappropriation and contractual breaches and ARS's counterclaims under U.S. antitrust laws; and patent infringement actions filed by Nemera La Verpillière SAS in Germany and France relating to certain of Aptar's ophthalmic products. These costs are excluded because they do not reflect our core operating performance. Please refer to "Legal Proceedings" within Note 13 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information. Our Operations Outlook is also provided on a non-U.S. GAAP basis because certain reconciling items are dependent on future events that either cannot be controlled, such as exchange rates and changes in the fair value of equity investments, or reliably predicted because they are not part of our routine activities, such as restructuring initiatives and acquisition-related costs.
We provide a reconciliation of Net Debt to Net Capital as a non-U.S. GAAP measure. "Net Debt" is calculated as interest bearing debt less cash and equivalents and short-term investments while "Net Capital" is calculated as stockholders' equity plus Net Debt. Net Debt to Net Capital measures a company's financial leverage, which gives users an idea of a company's financial structure, or how it is financing its operations, along with insight into its financial strength. We believe that it is meaningful to take into consideration the balance of our cash, cash equivalents and short-term investments when evaluating our leverage. If needed, such assets could be used to reduce our gross debt position.
Finally, we provide a reconciliation of free cash flow as a non-U.S. GAAP measure. Free cash flow is calculated as cash provided by operating activities less capital expenditures plus proceeds from government grants related to capital expenditures. We use free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. We believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives.
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27/ATR
|
2025 Form 10-K
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| Year Ended December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Consolidated | Pharma | Beauty | Closures | Corporate & Other | Net Interest | ||||||||||||||||||||||||||||||
| Net Sales | $ | 3,777,181 | $ | 1,737,481 | $ | 1,309,437 | $ | 730,263 | $ | - | $ | - | |||||||||||||||||||||||
| Reported net income | $ | 392,497 | |||||||||||||||||||||||||||||||||
| Reported income taxes | 98,881 | ||||||||||||||||||||||||||||||||||
| Reported income before income taxes | 491,378 | 461,073 | 87,523 | 56,310 | (72,467) | (41,061) | |||||||||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||
| Restructuring initiatives | 9,837 | 1,080 | 4,469 | 3,566 | 722 | ||||||||||||||||||||||||||||||
| Curtailment gain related to restructuring initiatives | (115) | - | - | (115) | - | ||||||||||||||||||||||||||||||
| Net investment loss (1) | 483 | 483 | |||||||||||||||||||||||||||||||||
| Gain from remeasurement of equity method investment | (26,518) | - | (26,518) | - | - | ||||||||||||||||||||||||||||||
| Transaction costs related to acquisitions | 1,460 | 952 | 508 | - | - | ||||||||||||||||||||||||||||||
| Purchase accounting adjustments related to acquisitions and investments | 1,793 | 70 | 1,723 | - | - | ||||||||||||||||||||||||||||||
| Other special items | 8,360 | 8,360 | - | - | - | ||||||||||||||||||||||||||||||
| Adjusted earnings before income taxes | 486,678 | 471,535 | 67,705 | 59,761 | (71,262) | (41,061) | |||||||||||||||||||||||||||||
| Interest expense | 52,737 | 52,737 | |||||||||||||||||||||||||||||||||
| Interest income | (11,676) | (11,676) | |||||||||||||||||||||||||||||||||
| Adjusted earnings before net interest and taxes (Adjusted EBIT) | 527,739 | 471,535 | 67,705 | 59,761 | (71,262) | - | |||||||||||||||||||||||||||||
| Depreciation and amortization | 287,363 | 136,111 | 91,066 | 56,716 | 3,470 | - | |||||||||||||||||||||||||||||
| Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) | $ | 815,102 | $ | 607,646 | $ | 158,771 | $ | 116,477 | $ | (67,792) | $ | - | |||||||||||||||||||||||
| Reported net income margin (Reported net income / Reported Net Sales) | 10.4 | % | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) | 21.6 | % | 35.0 | % | 12.1 | % | 16.0 | % | |||||||||||||||||||||||||||
(1)Net investment gain represents the change in fair value of our investment in PCT (see Note 20 - Investment in Equity Securities for further details).
|
28/ATR
|
2025 Form 10-K
|
||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Consolidated | Pharma | Beauty | Closures | Corporate & Other | Net Interest | ||||||||||||||||||||||||||||||
| Net Sales | $ | 3,582,890 | $ | 1,643,152 | $ | 1,225,730 | $ | 714,008 | $ | - | $ | - | |||||||||||||||||||||||
| Reported net income | $ | 374,178 | |||||||||||||||||||||||||||||||||
| Reported income taxes | 95,587 | ||||||||||||||||||||||||||||||||||
| Reported income before income taxes | 469,765 | 447,353 | 68,797 | 54,832 | (69,420) | (31,797) | |||||||||||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||||
| Restructuring initiatives | 13,002 | 589 | 8,041 | 3,835 | 537 | ||||||||||||||||||||||||||||||
| Curtailment gain related to restructuring initiatives | (1,851) | - | - | (1,851) | - | ||||||||||||||||||||||||||||||
| Net investment gain (1) | (1,713) | (1,713) | |||||||||||||||||||||||||||||||||
| Transaction costs related to acquisitions | 140 | - | 140 | - | - | ||||||||||||||||||||||||||||||
| Adjusted earnings before income taxes | 479,343 | 447,942 | 76,978 | 56,816 | (70,596) | (31,797) | |||||||||||||||||||||||||||||
| Interest expense | 43,898 | 43,898 | |||||||||||||||||||||||||||||||||
| Interest income | (12,101) | (12,101) | |||||||||||||||||||||||||||||||||
| Adjusted earnings before net interest and taxes (Adjusted EBIT) | 511,140 | 447,942 | 76,978 | 56,816 | (70,596) | - | |||||||||||||||||||||||||||||
| Depreciation and amortization | 263,784 | 120,429 | 82,931 | 57,326 | 3,098 | - | |||||||||||||||||||||||||||||
| Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) | $ | 774,924 | $ | 568,371 | $ | 159,909 | $ | 114,142 | $ | (67,498) | $ | - | |||||||||||||||||||||||
| Reported net income margin (Reported net income / Reported Net Sales) | 10.4 | % | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) | 21.6 | % | 34.6 | % | 13.0 | % | 16.0 | % | |||||||||||||||||||||||||||
(1)Net investment loss represents the change in fair value of our investment in PCT (see Note 20 - Investment in Equity Securities for further details).
|
29/ATR
|
2025 Form 10-K
|
||||
| Reconciliation of Adjusted Earnings Per Diluted Share For The Year Ended | December 31, 2025 | December 31, 2024 | |||||||||
| Income before Income Taxes | $ | 491,378 | $ | 469,765 | |||||||
| Adjustments: | |||||||||||
| Restructuring initiatives | 9,837 | 13,002 | |||||||||
| Curtailment gain related to restructuring initiatives | (115) | (1,851) | |||||||||
| Net investment loss (gain) | 483 | (1,713) | |||||||||
| Gain from remeasurement of equity method investment | (26,518) | - | |||||||||
| Transaction costs related to acquisitions | 1,460 | 140 | |||||||||
| Purchase accounting adjustments related to acquisitions and investments | 1,793 | - | |||||||||
| Other special items | 8,360 | - | |||||||||
| Foreign currency effects (1) | 14,523 | ||||||||||
| Adjusted Earnings before Income Taxes | $ | 486,678 | $ | 493,866 | |||||||
| Provision for Income Taxes | $ | 98,881 | $ | 95,587 | |||||||
| Adjustments: | |||||||||||
| Restructuring initiatives | 2,503 | 3,397 | |||||||||
| Curtailment gain related to restructuring initiatives | (30) | (478) | |||||||||
| Net investment loss (gain) | 118 | (420) | |||||||||
| Gain from remeasurement of equity method investment | - | - | |||||||||
| Transaction costs related to acquisitions | 393 | 35 | |||||||||
| Purchase accounting adjustments related to acquisitions and investments | 282 | - | |||||||||
| Other special items | 2,048 | - | |||||||||
| Foreign currency effects (1) | 2,955 | ||||||||||
| Adjusted Provision for Income Taxes | $ | 104,195 | $ | 101,076 | |||||||
| Net Loss Attributable to Noncontrolling Interests | $ | 206 | $ | 363 | |||||||
| Net Loss Attributable to Redeemable Noncontrolling Interests | $ | 86 | $ | - | |||||||
| Net Income Attributable to AptarGroup, Inc. | $ | 392,789 | $ | 374,541 | |||||||
| Adjustments: | |||||||||||
| Restructuring initiatives | 7,334 | 9,605 | |||||||||
| Curtailment gain related to restructuring initiatives | (85) | (1,373) | |||||||||
| Net investment loss (gain) | 365 | (1,293) | |||||||||
| Gain from remeasurement of equity method investment | (26,518) | - | |||||||||
| Transaction costs related to acquisitions | 1,067 | 105 | |||||||||
| Purchase accounting adjustments related to acquisitions and investments | 1,511 | - | |||||||||
| Other special items | 6,312 | - | |||||||||
| Foreign currency effects (1) | 11,568 | ||||||||||
| Adjusted Net Income Attributable to AptarGroup, Inc. | $ | 382,775 | $ | 393,153 | |||||||
| Average Number of Diluted Shares Outstanding | 66,725 | 67,691 | |||||||||
| Net Income Attributable to AptarGroup, Inc. Per Diluted Share | $ | 5.89 | $ | 5.53 | |||||||
| Adjustments: | |||||||||||
| Restructuring initiatives | 0.11 | 0.15 | |||||||||
| Curtailment gain related to restructuring initiatives | - | (0.02) | |||||||||
| Net investment loss (gain) | 0.01 | (0.02) | |||||||||
| Gain from remeasurement of equity method investment | (0.40) | - | |||||||||
| Transaction costs related to acquisitions | 0.02 | - | |||||||||
| Purchase accounting adjustments related to acquisitions and investments | 0.02 | - | |||||||||
| Other special items | 0.09 | - | |||||||||
| Foreign currency effects (1) | - | 0.17 | |||||||||
| Adjusted Net Income Attributable to AptarGroup, Inc. Per Diluted Share | $ | 5.74 | $ | 5.81 | |||||||
|
30/ATR
|
2025 Form 10-K
|
||||
|
Net Debt to Net Capital Reconciliation For the Year Ended
|
December 31, 2025 | December 31, 2024 | |||||||||
| Revolving credit facility and overdrafts | $ | 183,947 | $ | 176,035 | |||||||
| Current maturities of long-term obligations, net of unamortized debt issuance costs | 159,584 | 162,250 | |||||||||
| Long-Term Obligations, net of unamortized debt issuance costs | 1,139,433 | 688,066 | |||||||||
| Total Debt | $ | 1,482,964 | $ | 1,026,351 | |||||||
| Less: | |||||||||||
| Cash and equivalents | $ | 402,424 | $ | 223,844 | |||||||
| Short-term investments | 7,109 | 2,337 | |||||||||
| Net Debt | $ | 1,073,431 | $ | 800,170 | |||||||
| Total Stockholders' Equity | $ | 2,685,981 | $ | 2,485,924 | |||||||
| Net Debt | 1,073,431 | 800,170 | |||||||||
| Net Capital | $ | 3,759,412 | $ | 3,286,094 | |||||||
| Net Debt to Net Capital | 28.6 | % | 24.4 | % | |||||||
|
Free Cash Flow Reconciliation For the Year Ended
|
December 31, 2025 | December 31, 2024 | |||||||||
| Net Cash Provided by Operations | $ | 569,999 | $ | 643,413 | |||||||
| Capital Expenditures | (270,419) | (276,481) | |||||||||
| Proceeds from Government Grants | 3,308 | - | |||||||||
| Free Cash Flow | $ | 302,888 | $ | 366,932 | |||||||
LIQUIDITY AND CAPITAL RESOURCES
Given our current level of leverage and our ability to generate cash flow from operations, we believe we are in a strong financial position to meet our operational commitments in the foreseeable future. We have historically used cash flow from operations, our revolving and other credit facilities, as needed, as our primary sources of liquidity. Our primary uses of cash are to invest in equipment, capacity expansions and working capital for the continued growth of our business to achieve our strategic objectives, as well as paying quarterly dividends to stockholders, investing in new businesses and repurchasing shares of our common stock. Due to uncertain macroeconomic conditions, including rising interest rates and inflation, if there was a prolonged decrease in customer demand that would adversely impact our cash flows from operations, we would have the ability to restrict and significantly reduce capital expenditure levels and share repurchases, as well as reevaluate our acquisition strategy. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.
Cash and equivalents increased to $402.4 million at December 31, 2025 from $223.8 million at December 31, 2024 while total short and long-term interest bearing debt of $1.48 billion at December 31, 2025increased from $1.03 billion at December 31, 2024. The ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholders' equity plus Net Debt) increased to 28.6% at December 31, 2025 compared to 24.4% at December 31, 2024. See the reconciliation under "Non-U.S. GAAP Measures."
In 2025, our operations provided approximately $570.0 million in net cash flow compared to $643.4 million in 2024. Cash flow from operations is primarily derived from net income generation year over year. The lower operating cash flow during 2025 was primarily a result of timing of payments on income taxes primarily in Germany, France and the US. Based on our current business plan, we believe that our 2026 operating cash flow will be more than sufficient to fund our working capital needs, capital investments in our business and outstanding purchase commitments as discussed in Note 20 - Investment in Equity Securities and Note 13 - Commitments and Contingencies as well as lease arrangements as discussed in Note 8 - Lease Commitments.
We used $331.4 million in cash for investing activities during 2025 compared to $396.7 million during 2024. We spent $270.4 million on capital expenditures, $60.2 million on acquisitions, net of cash acquired and $6.3 million, net for investments in equity securities during 2025. In 2026, we expect our capital investments to be in the range of $260.0 million to $280.0 million.
|
31/ATR
|
2025 Form 10-K
|
||||
Financing activities utilized $77.5 million of cash during 2025, compared to $225.3 million during 2024. During 2025, we paid $120.8 million of dividends, purchased $365.0 million of our common stock that was placed into treasury stock, received $600.2 million in proceeds from long-term debt obligations, primarily from our note issuance, repaid $166.6 million of long-term debt primarily related to private placement notes and received proceeds of $18.9 million on stock option exercises. In 2026, we expect to have financing cash outlays of approximately $156.5 million to fund short and long term debt obligations as discussed in Note 7 - Debt, which are expected to be covered by cash on hand or additional borrowings on our revolving credit facility.
Refer to Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for additional information regarding cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
We have a revolving credit facility (the "revolving credit facility") with a syndicate of banks that provides us with unsecured financing of up to $600.0 million, which may be increased by up to $300.0 million more, subject to the satisfaction of certain conditions. The revolving credit facility is available in the U.S. and to our wholly-owned UK subsidiary and can be drawn in various currencies including USD, EUR, GBP, and CHF. On July 2, 2024, we entered into a new amended and restated revolving agreement (the "amended revolving credit facility") that extended the maturity date to July 2029, subject to a maximum of two one-year extensions in certain circumstances. As of December 31, 2025, €130.0 million ($152.6 million) was utilized under the amended revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary. As of December 31, 2024, we utilized €170.0 million ($176.0 million) under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary.
On November 20, 2025, we issued $600.0 million in aggregate principal amount of 4.75% Senior Notes due March 2031 in an underwritten public offering. The form and terms of the notes were established pursuant to an Indenture, dated as of March 7, 2022, as amended and supplemented by a Second Supplemental Indenture, dated as of November 20, 2025, each between the Company and U.S. Bank Trust Company, National Association, as trustee. Interest is payable semi-annually in arrears. The notes are unsecured obligations and rank equally in right of payment with our other existing senior, unsecured indebtedness.
On December 16, 2025, we repaid in full the $125.0 million 3.6% Senior Notes that were due in December 2025.
There are no compensating balance requirements associated with our revolving credit facility. Each borrowing under the revolving credit facility will bear interest at rates based on SOFR (in the case of USD), EURIBOR (in the case of EUR), SONIA (in the case of GBP), SARON (in the case of CHF), prime rates or other similar rates, in each case plus an applicable margin. The amended revolving credit facility also provides mechanics relating to a transition away from designated benchmark rates for other available currencies and the replacement of any such applicable benchmark by a replacement alternative benchmark rate or mechanism for loans made in the applicable currency. A facility fee on the total amount of the amended revolving credit facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the amended revolving credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. Credit facility balances are included in revolving credit facility and overdrafts on the Consolidated Balance Sheets.
Our amended revolving credit facility and certain long-term obligations require us to satisfy certain financial and other covenants including:
| Requirement | Level at December 31, 2025 | |||||||
| Consolidated Leverage Ratio (1) | Maximum of 3.50 to 1.00 | 1.38 to 1.00 | ||||||
| Consolidated Interest Coverage Ratio (1) | Minimum of 3.00 to 1.00 | 15.07 to 1.00 | ||||||
(1)Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.
Based upon the above consolidated leverage ratio covenant, we would have the ability to borrow an additional $1.70 billion before the 3.50 to 1.00 maximum ratio requirement would be exceeded.
On July 2, 2024, we entered into a term loan with a syndicate of banks (the "Term Loan") that matures in July 2027. As of December 31, 2025, $141.1 million was utilized under the Term Loan. On July 6, 2022, we entered into an agreement to swap approximately $200.0 million of our fixed USD debt to fixed EUR debt which should generate interest savings of approximately $0.5 million per quarter based upon exchange rates as of the transaction date.
Our foreign operations have historically met cash requirements with the use of internally generated cash or uncommitted short-term borrowings. We also have committed financing arrangements in both the U.S. and the UK as detailed above. We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances.
RECENTLY ISSUED ACCOUNTING STANDARDS
For a discussion of recently issued accounting standards, including their impacts, if any, of the adoption of these standards, see Note 1 - Summary of Significant Accounting Policies.
|
32/ATR
|
2025 Form 10-K
|
||||
CRITICAL ACCOUNTING ESTIMATES
The preparation of the financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, pensions and contingencies. We base our estimates on historical experience and on a variety of other assumptions believed to be reasonable in order to make judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation of our Consolidated Financial Statements. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee and the Audit Committee has reviewed our disclosure relating to it in this MD&A.
GOODWILL
In accordance with current accounting standards, goodwill has an indefinite life and is not amortized. We evaluate our goodwill for impairment at the reporting unit level on an annual basis, or whenever indicators of impairment exist. We have determined that our Beauty and Closures business segments each represent a reporting unit. In addition to the Pharma business reporting unit, the injectables and active material science solutions divisions of the Pharma segment qualify as separate reporting units for goodwill impairment testing apart from the remaining Pharma business. As of December 31, 2025, we have $1.08 billion of goodwill, which is allocated as follows:
|
In Thousands
|
|||||
| Reporting Unit | Balance at December 31, 2025 | ||||
| Pharma | $ | 194,773 | |||
| Injectables | 177,911 | ||||
| Active Material Science Solutions | 166,020 | ||||
| Beauty | 370,847 | ||||
| Closures | 168,347 | ||||
| Total | $ | 1,077,898 | |||
We believe that the accounting estimates related to determining the fair value of our reporting units, for which a quantitative impairment test is performed, is a critical accounting estimate because: (1) it is highly susceptible to change from period to period as it requires management to make assumptions about the future cash flows for each reporting unit over several years, and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet as well as our results of operations could be material. Management's determination of the fair value of our reporting units, based on future cash flows for the reporting units, requires significant judgment and the use of estimates and assumptions related to projected revenue growth rates, projected EBITDA margins, as well as the discount rate. Actual cash flows in the future may differ significantly from those forecasted today. The estimates and assumptions for future cash flows and their impact on the impairment testing of goodwill are a critical accounting estimate.
For our goodwill impairment assessment, we first consider qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50 percent chance) that the fair value of a reporting unit is less than its carrying amount (the "step zero" approach). Such qualitative factors may include the following: macroeconomic conditions; industry and market considerations; cost factors; overall financial performance, and other relevant entity-specific events. In the event we determine a quantitative test is necessary, we estimate the fair value of the reporting unit using a discounted cash flow approach as described below. If it is determined that the fair value of a reporting unit is below its carrying amount, goodwill will be impaired at that time.
We evaluate our goodwill for impairment annually as of October 1 or more frequently if events or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below it's carrying value, in accordance with Accounting Standards Codification ("ASC") Topic 350, "Intangibles - Goodwill and Other." As we performed our annual goodwill impairment assessment, due to events or circumstances that were unfavorable for the Beauty reporting unit, management determined it appropriate to calculate the fair value of the reporting unit and compare with its associated carrying amounts as of October 1, 2025.
|
33/ATR
|
2025 Form 10-K
|
||||
We estimated the fair value of the reporting unit based upon the present value of its estimated future cash flows. Our determination of fair value involved judgment and the use of estimates and significant assumptions, including assumptions regarding the projected revenue growth rates, projected EBITDA margins, as well as the discount rate to calculate estimated future cash flows. We believe that our assumptions used in discounting future cash flows are appropriate. At October 1, 2025, our goodwill for the Beauty reporting unit was $370.8 million, which exceeded its carrying value. A 10% decrease in the estimated fair value of the Beauty reporting unit would not have resulted in a different conclusion. Based on our qualitative and quantitative analysis performed over the remaining reporting units, we determined it was more likely than not that the fair value of the reporting units was greater than their carrying amounts and therefore no impairment of goodwill was recognized during the year ended December 31, 2025.
INCOME TAXES
We recognize tax benefits from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater-than-50% likelihood of being realized upon ultimate settlement. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of U.S. GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management's expectations could have a material impact on our financial condition and operating results.
At December 31, 2025 and 2024, we had $162.5 million and $138.8 million, respectively, of deferred tax assets net of valuation allowance on our balance sheet, a significant portion of which is related to net operating losses and other tax attribute carryforwards. The ultimate realization of these deferred tax assets is dependent upon the amount, source, and timing of future taxable income. In cases where we believe it is more likely than not that we may not realize the future potential tax benefits, we establish a valuation allowance against the deferred tax assets. We have $123.1 million of previously unrecorded tax losses in Luxembourg for which a deferred tax asset was recorded in 2024 due to a change in our expectation of future realization. A corresponding valuation allowance was recorded to reflect the amount of the deferred tax asset that we currently do not expect to be realized. Refer to Note 6 - Income Taxes for further details.
Given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that $1.0 million to $5.0 million of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.
ACQUISITIONS
We account for business combinations using the acquisition method. Under this method, the identifiable assets acquired, liabilities assumed, and any non-controlling interest are recorded at their estimated fair values. We engage third-party valuation specialists to assist in determining fair values. Our valuation process utilizes various forms of the income approach, depending on the assets being valued. Goodwill is measured as the excess of consideration transferred over the fair value of the assets acquired and the liabilities assumed. The allocation of the purchase price utilizes estimates and significant assumptions in determining the fair values of identifiable assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on all available information at the acquisition date and may involve assumptions about the timing and amount of future revenues and expenses associated with an asset.
Management applied judgment in determining the fair value of the acquired assets with respect to the acquisitions of Sommaplast and BTY. The judgments made in determining the estimated fair value assigned to the assets acquired, as well as the estimated life of the assets, can materially impact net income in the periods subsequent to the acquisition through depreciation and amortization. In particular, judgment was applied with respect to determining the fair value of acquired technology, trademarks and customer relationships intangible assets, which involved the use of estimates and significant assumptions with respect to the timing and amounts of cash flow projections, the revenue growth rates, the customer attrition rates, the EBITDA margins and the discount rate. Unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions or estimates.
VALUATION OF PENSION BENEFITS
The benefit obligations and net periodic pension cost associated with our domestic and foreign noncontributory pension plans are determined using actuarial assumptions. Such assumptions include discount rates to reflect the time value of money, rate of employee compensation increases, demographic assumptions to determine the probability and timing of benefit payments, and the long-term rate of return on plan assets. The actuarial assumptions are based upon management's best estimates, after consulting with outside investment advisors and actuaries. Because assumptions and estimates are used, actual results could differ from expected results.
|
34/ATR
|
2025 Form 10-K
|
||||
The discount rate is utilized principally in calculating our pension obligations, which are represented by the Accumulated Benefit Obligation ("ABO") and the Projected Benefit Obligation ("PBO"), and in calculating net periodic benefit cost. In establishing the discount rate for our foreign plans, we review a number of relevant interest rates including AA corporate bond yields. In establishing the discount rate for our domestic plans, we match the hypothetical duration of our plans, using a weighted average duration that is based upon projected cash payments, to a simulated bond portfolio (FTSE Pension Index Curve). At December 31, 2025, the discount rates for our domestic and foreign plans were 5.63% and 3.90%, respectively.
We believe that the accounting estimates related to determining the valuation of pension benefits are critical accounting estimates because: (1) changes in them can materially affect net income and (2) we are required to establish the discount rate and the expected return on fund assets, which are highly uncertain and require judgment. The estimates for the valuation of pension benefits are critical accounting estimates for all of our segments.
To the extent the discount rates increase (or decrease), our PBO and net periodic benefit cost will decrease (or increase) accordingly. The estimated effect of a 1% decrease in each discount rate would be a $45.5 million increase in the PBO ($32.9 million for the domestic plans and $12.6 million for the foreign plans) and a $3.0 million increase in net periodic benefit cost ($2.0 million for the domestic plans and $1.0 million for the foreign plans). To the extent the PBO increases, the after-tax effect of such increase could reduce Other Comprehensive Income and Stockholders' Equity. The estimated effect of a 1% increase in each discount rate would be a $36.8 million decrease in the PBO ($26.2 million for the domestic plans and $10.6 million for the foreign plans) and a $5.6 million decrease in net periodic benefit cost ($4.7 million for the domestic plans and $0.9 million for the foreign plans).
The assumed expected long-term rate of return on assets is the average rate of earnings expected on the funds invested to provide for the benefits included in the PBO. Of domestic plan assets, approximately 50% was invested in equities, 25% was invested in fixed income securities, 11% was invested in hedge funds, 7% was invested in infrastructure securities, 4% was invested in real estate securities and 3% was invested in money market funds, at December 31, 2025. Of foreign plan assets, approximately 94% was invested in investment funds, 2% was invested in equity securities, 3% was invested in corporate debt securities, 1% was invested in fixed income securities and 0% was invested in money market funds at December 31, 2025.
The expected long-term rate of return assumptions are determined based on our investment policy combined with expected risk premiums of equities and fixed income securities over the underlying risk-free rate. This rate is utilized principally in calculating the expected return on the plan assets component of the net periodic benefit cost. To the extent the actual rate of return on assets realized over the course of a year is greater or less than the assumed rate, that year's net periodic benefit cost is not affected. Rather, this gain (or loss) reduces (or increases) future net periodic benefit cost over a period of approximately 15 to 20 years. To the extent the expected long-term rate of return on assets increases (or decreases), our net periodic benefit cost will decrease (or increase) accordingly. The estimated effect of a 1% decrease (or increase) in each expected long-term rate of return on assets would be a $2.5 million increase (or decrease) in net periodic benefit cost.
The average rate of compensation increase is utilized principally in calculating the PBO and the net periodic benefit cost. The estimated effect of a 0.5% decrease in each of the expected compensation rates would be a $5.9 million decrease in the PBO ($1.2 million decrease for the domestic plans and $4.7 million decrease for the foreign plans) and a $1.1 million decrease to the net periodic benefit cost. The estimated effect of a 0.5% increase in each of the expected compensation rates would be a $6.2 million increase in the PBO ($1.2 million increase for the domestic plans and $5.0 million increase for the foreign plans) and a $1.1 million increase to the net periodic benefit cost.
Our primary pension related assumptions as of December 31, 2025 and 2024 were as follows:
| Actuarial Assumptions as of December 31, | 2025 | 2024 | ||||||
| Discount rate: | ||||||||
| Domestic plans | 5.63 | % | 5.60 | % | ||||
| Foreign plans | 3.90 | % | 3.33 | % | ||||
|
Expected long-term rate of return on plan assets:
|
||||||||
| Domestic plans | 7.00 | % | 7.00 | % | ||||
| Foreign plans | 3.23 | % | 3.22 | % | ||||
| Rate of compensation increase: | ||||||||
| Domestic plans | 3.27 | % | 3.24 | % | ||||
| Foreign plans | 3.20 | % | 3.21 | % | ||||
In order to determine the 2026 net periodic benefit cost, we expect to use the discount rates, expected long-term rates of return on plan assets and rates of compensation assumptions as of December 31, 2025. The estimated impact of the changes to the assumptions as noted in the table above on our 2026 net periodic benefit cost is expected to be a decrease of approximately $0.7 million.
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35/ATR
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2025 Form 10-K
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OPERATIONS OUTLOOK
Aptar expects earnings per share for the first quarter of 2026, excluding any restructuring expenses, changes in the fair value of equity investments and acquisition-related costs, to be in the range of $1.13 to $1.21 and this guidance is based on an effective tax rate range of 21% to 23%. The earnings per share guidance range is based on spot rates at the end of December for all currencies.
FORWARD-LOOKING STATEMENTS
Certain statements in MD&A and other sections of this Form 10-K are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in the Significant Developments, Restructuring Initiatives, Liquidity and Capital Resources, Contingencies and Operations Outlook sections of this Form 10-K. Words such as "expects," "anticipates," "believes," "estimates," "future", "potential", "continues", "are optimistic" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could" are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results or other events may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment, including but not limited to:
•our ability to protect and defend our intellectual property rights, as well as litigation involving intellectual property rights;
•the outcome of any legal proceeding that has been or may be instituted against us and others;
•geopolitical conflicts worldwide and the resulting indirect impact on demand from our customers selling their products into these countries, and certain supply chain disruptions;
•cybersecurity threats against our systems and/or service providers that could impact our networks and reporting systems;
•loss of one or more key products or accounts;
•loss of royalty revenue due to contract expirations;
•the availability of raw materials and components (particularly from sole-sourced suppliers for some of our Pharma solutions) as well as the financial viability of these suppliers;
•lower demand and asset utilization due to an economic recession either globally or in key markets we operate within;
•economic conditions worldwide, including inflationary conditions and potential deflationary conditions in other regions we rely on for growth;
•competition, including technological advances;
•significant tariffs and other restrictions on foreign imports imposed by the U.S. and related countermeasures are taken by impacted foreign countries;
•the demand for existing and new products;
•our ability to successfully implement facility expansions and new facility projects;
•fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs;
•significant fluctuations in foreign currency exchange rates or our effective tax rate;
•the impact of tax reform legislation, changes in tax rates and other tax-related events or transactions that could impact our effective tax rate and cash flow;
•financial conditions of customers and suppliers;
•consolidations within our customer or supplier bases;
•changes in customer and/or consumer spending levels;
•our ability to offset inflationary impacts with cost containment, productivity initiatives and price increases;
•changes in capital availability or cost, including rising interest rates;
•volatility of global credit markets;
•our ability to identify potential new acquisitions and to successfully acquire and integrate such operations, including the successful integration of the businesses we have acquired;
•our ability to build out acquired businesses and integrate the product/service offerings of the acquired entities into our existing product/service portfolio;
•direct or indirect consequences of acts of war, terrorism or social unrest;
•the impact of natural disasters and other weather-related occurrences;
•fiscal and monetary policies and other regulations;
•changes, difficulties or failures in complying with government regulation, including FDA or similar foreign governmental authorities;
•changing regulations or market conditions regarding environmental sustainability;
•our ability to retain key members of management and manage labor costs;
•work stoppages due to labor disputes;
•our ability to meet future cash flow estimates to support our goodwill impairment testing;
•the success of our customers' products, particularly in the pharmaceutical industry;
•our ability to manage worldwide customer launches of complex technical products, particularly in developing markets;
•difficulties in product development and uncertainties related to the timing or outcome of product development;
•significant product liability claims; and
•other risks associated with our operations.
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36/ATR
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2025 Form 10-K
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Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Please refer to Part 1, Item 1A - Risk Factors included in this Form 10-K for additional risk factors affecting the Company.
AptarGroup Inc. published this content on February 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 06, 2026 at 16:58 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]