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What changed in APTARGROUP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of APTARGROUP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+308 added−295 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-17)

Top changes in APTARGROUP, INC.'s 2023 10-K

308 paragraphs added · 295 removed · 236 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

91 edited+15 added−17 removed38 unchanged
Biggest changeAlso in December 2022, Aptar was once again named one of the Most Responsible Companies in France by Le Point Magazine. Additionally, in 2022 Aptar achieved a Platinum Sustainability Rating from EcoVadis. Future regulations on environmental matters regarding recycling or material inputs could impact our business. GOVERNMENT REGULATION Certain of our products are directly or indirectly affected by government regulation.
Biggest changeFuture regulations on environmental matters regarding recycling or material inputs could impact our business. 7/ATR 2023 Form 10-K Table of Contents GOVERNMENT REGULATION Certain of our products are directly or indirectly affected by government regulation. In 2022, the United Nations Environment Assembly adopted a resolution to end plastic waste pollution and forge an internationally binding agreement by 2024.
These components are used in the injectables market. Products include stoppers for infusion, antibiotic, lyophilization and diagnostic vials. Our elastomeric components also include pre-filled syringe components, such as plungers, needle shields, tip caps and cartridges.
These components are used in the injectables market. Products include stoppers for infusion, antibiotic, lyophilization and diagnostic vials. Our elastomeric components also include pre-filled syringe components, such as plungers, needle shields, tip caps and components for cartridges.
(iii) Excellence in Core Business Functions: We have established three pillars of functional excellence to ensure we perform at best in class levels in the core functions of any manufacturing business, namely “innovate,” “produce” and “sell,” and that our business teams are supported in the areas of Innovation, Operations and Commercial Excellence.
(iii) Excellence in Core Business Functions: We have established three pillars of functional excellence designed to ensure we perform at best in class levels in the core functions of any manufacturing operations, namely “innovate,” “produce” and “sell,” and that our business teams are supported in the areas of Innovation, Operations and Commercial Excellence.
Injectables are elastomeric primary packaging components that assist with the administration of injected medicines. Injectable products offered include stoppers for vials and pre-filled syringe components, such as plungers, needle shields, tip caps and components for cartridges.
Injectables are elastomeric primary packaging components that assist with the administration of injected medicines. Injectable products offered include stoppers for vials and pre-filled syringe components, such as plungers, rigid needle shields, tip caps and components for cartridges.
We believe we have adequate safety stock to mitigate any significant supply concerns. CUSTOMERS We have approximately 5,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of 2022 Net Sales. INTERNATIONAL BUSINESS We are geographically diverse with manufacturing and sales operations in Asia, Europe, Latin America (including Mexico) and North America.
We believe we have adequate safety stock to mitigate any significant supply concerns. CUSTOMERS We have approximately 5,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of 2023 Net Sales. INTERNATIONAL BUSINESS We are geographically diverse with manufacturing and sales operations in Asia, Europe, Latin America (including Mexico) and North America.
Sales of pumps to deliver prescription allergy medicine that is now available over-the-counter remains part of our prescription drug division. Our nasal pumps and unit dose and bidose devices are also used to deliver liquid and powder pain management and central nervous system therapies. MDIs are used for dispensing precise amounts of aerosolized medication.
Sales of pumps to deliver prescription allergy medicine that is now available over-the-counter remains part of our prescription drug division. Our nasal pumps and unit dose and bidose devices are also used to deliver liquid and powder pain management, emergency medicines and central nervous system therapies. MDIs are used for dispensing precise amounts of aerosolized medication.
When molding dispensing closures, or plastic components to be used in pump or aerosol valve products, we use advanced plastic injection molding technology, including large cavitation plastic injection molds. We are able to mold within tolerances as small as one one-thousandth of an inch and we assemble products in a high-speed, cost-effective manner.
When molding dispensing closures, or plastic components to be used in pump or aerosol valve products, we use advanced plastic injection molding technology, including large cavitation plastic injection molds, bi-injection molding and in-mold assembly. We are able to mold within tolerances as small as one one-thousandth of an inch and we assemble products in a high-speed, cost-effective manner.
We are a net exporter of goods from Europe and a net importer of goods to the North American, Asian and Latin American regions. 5/ATR 2022 Form 10-K Table of Contents FOREIGN CURRENCY Because of our international presence, movements in exchange rates have a significant impact on the translation of the financial statements of our foreign subsidiaries.
We are a net exporter of goods from Europe and a net importer of goods to the North American, Asian and Latin American regions. 5/ATR 2023 Form 10-K Table of Contents FOREIGN CURRENCY Because of our international presence, movements in exchange rates have a significant impact on the translation of the financial statements of our foreign subsidiaries.
Vinczeller has been Chief Human Resources Officer since November 2018. Prior to this, Ms. Vinczeller spent 12 years in Human Resources leadership roles at International Paper, one of the world’s leading producers of fiber-based packaging, pulp and paper. Kimberly Y. Chainey 47 Executive Vice President, Chief Legal Officer and Corporate Secretary Ms.
Vinczeller has been Chief Human Resources Officer since November 2018. Prior to this, Ms. Vinczeller spent 12 years in Human Resources leadership roles at International Paper, one of the world’s leading producers of fiber-based packaging, pulp and paper. Kimberly Y. Chainey 48 Executive Vice President, Chief Legal Officer and Corporate Secretary Ms.
Tlili held leadership positions at our packaging solutions peers Albéa and Sonoco. He was a Cluster Deputy Manager in Albéa Group from September 2014 to March 2016, Country General Manager in Sonoco from April 2013 to June 2014 and European Sales and Marketing Director from September 2011 to March 2013 in Sonoco. Gael Touya 53 President, Aptar Pharma Mr.
Tlili held leadership positions at our packaging solutions peers Albéa and Sonoco. He was a Cluster Deputy Manager in Albéa Group from September 2014 to March 2016, Country General Manager in Sonoco from April 2013 to June 2014 and European Sales and Marketing Director from September 2011 to March 2013 in Sonoco. Gael Touya 54 President, Aptar Pharma Mr.
Touya has been President of Aptar Pharma since September 2018. Prior to this, Mr. Touya was President of Aptar Food + Beverage from 2016 to August 2018, President of Aptar Food + Beverage Europe from 2012 to 2015 and Business Development Vice President Skin Care and Color Cosmetics from 2010 to 2011. Xiangwei Gong 53 President, Aptar Asia Ms.
Touya has been President of Aptar Pharma since September 2018. Prior to this, Mr. Touya was President of Aptar Food + Beverage from 2016 to August 2018, President of Aptar Food + Beverage Europe from 2012 to 2015 and Business Development Vice President Skin Care and Color Cosmetics from 2010 to 2011. Xiangwei Gong 54 President, Aptar Asia Ms.
Available as standalone or as a fully integrated offering in our existing range of drug delivery solutions, we have digital health solutions covering a wide range of therapeutic areas including, but not limited to, pulmonary, oncology, diabetes, immunology, and neurology.
Available as standalone or as a fully integrated offering in our existing range of drug delivery solutions, we have digital health solutions covering a wide range of therapeutic areas including, but not limited to, pulmonary, oncology, neurology, diabetes, immunology and rare disease.
She was President of DSM Hydrocolloids from 2014 to 2018, President Asia of DSM Food Specialties from 2011 to 2014, Vice President of Channel Marketing from 2008 to 2011 and Vice President of Personal Care in DSM North America from 2005 to 2008. Shiela Vinczeller 59 Chief Human Resources Officer Ms.
She was President of DSM Hydrocolloids from 2014 to 2018, President Asia of DSM Food Specialties from 2011 to 2014, Vice President of Channel Marketing from 2008 to 2011 and Vice President of Personal Care in DSM North America from 2005 to 2008. Shiela Vinczeller 60 Chief Human Resources Officer Ms.
There were no arrangements or understandings between any of the executive officers and any other person(s) pursuant to which such officers were elected. 9/ATR 2022 Form 10-K Table of Contents
There were no arrangements or understandings between any of the executive officers and any other person(s) pursuant to which such officers were elected. 9/ATR 2023 Form 10-K Table of Contents
While we expect that these types of new products will come to market in the future, it is difficult to estimate when, as the rigors of pharmaceutical regulations affect the timing of product introductions by our pharmaceutical customers that use our drug delivery and dispensing systems. Consumer Health Care.
While we expect that these types of new products will come to market in the future, it is difficult to estimate when, as the rigors of pharmaceutical regulations affect the timing of product introductions by our pharmaceutical customers that use our proprietary drug delivery systems. Consumer Health Care.
We are working with the suppliers of these alternative propellants and our customers to develop new solutions. Pharma regulatory agencies in the United States and European Union have developed and introduced Combination Products specific guidelines for more complex drug delivery products, including dispensing systems.
We are working with the suppliers of these alternative propellants and our customers to develop new solutions. Pharma regulatory agencies in the United States and EU have developed and introduced Combination Products specific guidelines for more complex drug delivery products, including dispensing systems.
Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect.
Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Argentine peso, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements.
This technology allows medication to be broken up into very fine particles, which enables the drug to be delivered typically via the pulmonary route. Currently the majority of our MDIs sold are used for respiratory ailments such as asthma and chronic obstructive pulmonary disease (COPD). We continue to develop new drug delivery and dispensing systems and accessories in this segment.
This technology allows medication to be broken up into very fine particles, which enables the drug to be delivered typically via the pulmonary route. Currently the majority of our MDIs sold are used for respiratory ailments such as asthma and chronic obstructive pulmonary disease (COPD). We continue to develop proprietary drug delivery systems and accessories in this division.
Hedi Tlili 48 President, Aptar Food + Beverage Mr. Tlili has been President of Aptar Food + Beverage since December 2019. Prior to this, Mr. Tlili was President of Aptar EMEA Beauty + Home from June 2018 to November 2019 and President of Aptar EMEA Food + Beverage from May 2016 to May 2018. Prior to joining Aptar, Mr.
Hedi Tlili 49 President, Aptar Closures Mr. Tlili has been President of Aptar Closures since December 2019. Prior to this, Mr. Tlili was President of Aptar EMEA Beauty + Home from June 2018 to November 2019 and President of Aptar EMEA Food + Beverage from May 2016 to May 2018. Prior to joining Aptar, Mr.
Export sales from the United States were $211.1 million and $204.6 million in 2022 and 2021, respectively. Although Europe represents the largest region for us in terms of sales, our beauty and pharmaceutical customers often export their finished products using our technology around the world for consumption.
Export sales from the United States were $196.6 million and $211.1 million in 2023 and 2022, respectively. Although Europe represents the largest region for us in terms of sales, our beauty and pharmaceutical customers often export their finished products using our technology around the world for consumption.
The majority of our European and Latin American employees are covered by collective bargaining arrangements made at either the local or national level in their respective countries. The total labor force covered by a collective bargaining agreement represents 49.3% of the total employee population.
The majority of our European and Latin American employees are covered by collective bargaining arrangements made at either the local or national level in their respective countries. The total labor force covered by a collective bargaining agreement represents approximately 55% of the total employee population.
Europe is our largest region in terms of sales, where sales (including exports) for the years ended December 31, 2022 and 2021 were approximately 53% of our consolidated sales. Asia and Latin America when aggregated represented approximately 14% and 13% of our consolidated sales for the years ended December 31, 2022 and 2021, respectively.
Europe is our largest region in terms of sales, where sales (including exports) for the years ended December 31, 2023 and 2022 were approximately 57% and 53% of our consolidated sales, respectively. Asia and Latin America when aggregated represented approximately 14% and 14% of our consolidated sales for the years ended December 31, 2023 and 2022, respectively.
A considerable amount of research and coordination with our customers is required to qualify a pump for use with their products. Within the market, we expect the use of pumps to continue to increase, particularly in the cosmetics and sampling sectors.
A considerable amount of research and coordination with our customers is required to qualify a pump for use with their products. Within the market, we expect the use of pumps to continue to increase, particularly in the fragrance, facial skincare and sampling sectors.
Sales to the home care market accounted for approximately 7% of the segment’s total net sales in 2022 and primarily included sales of continuous or metered dose spray aerosol valves, closures and to a lesser degree spray and lotion pumps. Product applications for continuous spray valves include disinfectants, spray paints, insecticides and automotive products.
Sales to the home care market accounted for approximately 4% of the segment’s total net sales in 2023 and primarily included sales of continuous or metered dose spray aerosol valves, and to a lesser degree spray and lotion pumps. Product applications for continuous spray valves include disinfectants, spray paints, insecticides and automotive products.
The information provided on our website is not part of this report and is therefore not incorporated herein by reference. 8/ATR 2022 Form 10-K Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 17, 2023 are as follows: Name Age Position with the Company Stephan Tanda 57 President and Chief Executive Officer Mr.
The information provided on our website is not part of this report and is therefore not incorporated herein by reference. 8/ATR 2023 Form 10-K Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers as of February 9, 2024 are as follows: Name Age Position with the Company Stephan Tanda 58 President and Chief Executive Officer Mr.
Sales to the prescription drug market accounted for approximately 41% of the segment’s total net sales in 2022. Pumps sold to the prescription drug market deliver medications nasally, orally or topically. Currently the majority of our pumps sold are for nasal allergy treatments.
Sales to the prescription drug market accounted for approximately 46% of the segment’s total net sales in 2023. Pumps sold to the prescription drug market deliver medications nasally, orally or topically. Currently the majority of our pumps sold are for nasal allergy treatments.
We provide active material science solutions using our platform technology to maintain container closure integrity, extend shelf-life, control moisture and protect drug products from overall environmental exposures and degradations. Our digital health solutions aim to improve patients' treatment experience and outcomes.
We provide active material science solutions using our platform technology to maintain container closure integrity, extend shelf-life, control moisture and oxygen while also protecting drug products from overall environmental exposures and degradations. Our digital health solutions aim to improve patients' treatment experience and outcomes.
Robert Kuhn 60 Executive Vice President and Chief Financial Officer Mr. Kuhn has been Executive Vice President and Chief Financial Officer since September 2008. Mr. Kuhn served as Secretary from June 2011 to January 2021. Marc Prieur 57 President, Aptar Beauty + Home Mr. Prieur has been President of Aptar Beauty + Home since December 2019. Prior to this, Mr.
Robert Kuhn 61 Executive Vice President and Chief Financial Officer Mr. Kuhn has been Executive Vice President and Chief Financial Officer since September 2008. Mr. Kuhn served as Secretary from June 2011 to January 2021. Marc Prieur 58 President, Aptar Beauty Mr. Prieur has been President of Aptar Beauty since December 2019. Prior to this, Mr.
Sales of dispensing closures have grown as consumers worldwide have demonstrated a preference for a package utilizing the convenience of a dispensing closure.
In recent years, sales of dispensing closures have grown as consumers worldwide have demonstrated a preference for a package utilizing the convenience of a dispensing closure.
In February 2022, Aptar was named one of Barron’s 100 Most Sustainable Companies for 2022, marking the fourth consecutive year Aptar was included on the Barron’s list. Also in February 2022, Aptar was named on CDP's Supplier Engagement Leaderboard, for the second consecutive year, in recognition of our efforts to measure and reduce climate risk within our supply chain.
In March 2023, Aptar was named one of Barron’s 100 Most Sustainable Companies for 2022, marking the fifth consecutive year Aptar was included on the Barron’s list. Also in March 2023, Aptar was named on CDP's Supplier Engagement Leaderboard, for the third consecutive year, in recognition of our efforts to measure and reduce climate risk within our supply chain.
Our new product offerings include: Purity Lite, a mono-material, lightweight, fully-recyclable closure; SimpliCycle, an award winning recyclable valve; Rocket, a sports cap awarded Best in Cap at the 17th Global Water Drinks Congress in 2020, tethered and with no losable component; and Future, a mono-material, fully-recyclable pump.
Our new product offerings include: Purity Lite, a mono-material, lightweight, fully-recyclable closure; SimpliCycle, an award winning recyclable valve; Rocket, a sports cap awarded Best in Cap at the 17th Global Water Drinks Congress in 2020, tethered and with no losable component; Future, a mono-material, fully-recyclable pump; APF Futurity, our highly recyclable nasal spray pump and Mono Micro, our mono-material and fully recyclable airless dispenser.
This will help ensure our margins improve as the business grows. (v) Acquisitions and Partnerships: We will continue to focus on growing the Company through appropriate business acquisition opportunities as well as developing partnerships to expand the scope of our technologies, geographic presence and product offerings.
(v) Acquisitions and Partnerships: We will continue to focus on growing the Company through appropriate business acquisition opportunities as well as developing partnerships to expand the scope of our technologies, geographic presence and product offerings.
We leverage connected devices, diagnostic and digital therapeutics tools that support patients to manage their disease as well as enabling care teams to remotely monitor the health of the patients when needed.
We leverage companion and regulated software solutions, connected devices and diagnostic tools that support patients to manage their disease as well as enabling care teams to remotely monitor the health of the patients when needed.
We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies. EMPLOYEE AND LABOR RELATIONS Human Capital. Our key human capital management objectives are to attract, retain and develop the highest quality talent.
Conversely, a strengthening U.S. dollar has a dilutive effect. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies. EMPLOYEE AND LABOR RELATIONS Human Capital. Our key human capital management objectives are to attract, retain and develop the highest quality talent.
The final version is expected by the end of 2023. In Europe and in parts of the United States (including California), regulations require food and beverage companies to tether plastic caps to ensure the caps stay with the package, thus improving the likelihood the caps will enter the recycling stream.
In Europe and in parts of the United States (including California), regulations require food and beverage companies to tether plastic caps to ensure the caps stay with the package, thus improving the likelihood the caps will enter the recycling stream.
As of December 31, 2022, Aptar had approximately 13,500 full-time employees. Of the full-time employees, approximately 8,200 were located in Europe, 2,800 were located in Asia and Latin America and the remaining 2,500 were located in North America.
As of December 31, 2023, Aptar had approximately 13,800 full-time employees. Of the full-time employees, approximately 8,400 were located in Europe, 2,800 were located in Asia and Latin America and the remaining 2,600 were located in North America.
The digital health solutions we provide improve patients' treatment, experience and outcomes. We leverage connected devices, diagnostics and digital therapeutic tools that support patients in managing their disease as well as enable care teams to remotely monitor the health of the patients when needed.
We leverage connected devices, diagnostics and digital therapeutic tools that support patients in managing their disease as well as enable care teams to remotely monitor the health of the patients when needed.
Other products sold to this market include airless pump systems for dermal drug delivery product applications. We have recently seen a trend toward more child resistant and senior-friendly packaging solutions and have developed products to meet these market needs. Injectables. Sales to the injectables market accounted for approximately 21% of the segment’s total net sales in 2022.
Other products sold to this market include airless pump systems for dermal drug delivery product applications. We continue to see trends toward more child resistant and senior-friendly packaging solutions and have developed products to meet these market needs. Injectables. Sales to the injectables market accounted for approximately 18% of the segment’s total net sales in 2023.
Aptar also has developed and deployed an integrated talent management system that includes annual talent reviews, three tiered succession planning, and individual development planning. Promotions from within provide career growth opportunities for our employees. Diversity, Equity & Inclusion. At AptarGroup, our goal is to promote a diverse, equitable and inclusive culture.
Aptar also has developed and deployed an integrated talent management system that includes annual talent reviews, three tiered succession planning, and individual development planning. Promotions from within provide career growth opportunities for our employees. Diversity, Equity & Inclusion.
These three employee resource groups collaborated to host DEI Week for the employee population. Aptar is included in the SPDR SSGA Gender Diversity Index ETF (SHE) which invests in companies that rank among the highest in gender diversity within senior leadership. Aptar is also a participant in the Catalyst CEO Champions for Change and the Gender and Diversity KPI Alliance.
Aptar is included in the SPDR SSGA Gender Diversity Index ETF (SHE) which invests in companies that rank among the highest in gender diversity within senior leadership. Aptar is also a participant in the Catalyst CEO Champions for Change and the Gender and Diversity KPI Alliance.
Product applications for dispensing closures include sauces, condiments, infant nutrition and other food products. We also leverage our material science technology to sell and further develop packaging solutions to the food service market to enhance the shelf life of those products. 4/ATR 2022 Form 10-K Table of Contents Beverage.
Product applications for dispensing closures include sauces, condiments, infant nutrition and other food products. We also leverage our material science technology to sell and further develop packaging solutions to the food service market to enhance the shelf life of those products. Beauty, Personal Care and Home Care.
Competitors include privately and publicly held entities that range from regional to international companies. We expect the market for our products to remain competitive, as consolidation among our competitors is increasing in the current economic climate.
Competitors include privately and publicly held entities that range from regional to international companies. We expect the market for our products to remain competitive, as our competitors continue to grow both organically and through consolidation and/or changing of ownership in the current economic climate.
Many of our product solutions for the beauty, personal care, home care, food and beverage markets are recyclable, reusable or made with recycled content. We partner with our customers by providing innovative delivery systems and a suite of comprehensive services to help them succeed.
Many of our product solutions for the beauty, personal care, home care, food and beverage markets are recyclable, reusable or made with recycled content. We partner with our customers by providing innovative solutions and end market expertise.
Globally this process is certified to the ISO 14064 standard for energy and greenhouse gas emission reporting. Compared to our 2019 baseline, Aptar has made progress cutting emissions, and continues efforts to mitigate climate risks and further the low-carbon economy, as reported by the Company through global environmental non-profit CDP's 2022 climate change and water questionnaires.
Compared to our 2019 baseline, Aptar has made progress cutting emissions, and continues efforts to mitigate climate risks and further the low-carbon economy, as reported by the Company through global environmental non-profit CDP's 2023 climate change and water questionnaires.
Our recent capital investment commitments in this business will enable us to market prefilled and coated stoppers which better protect the contents of the primary packaging container and the integrity of biologic formulations. Pharmaceutical applications for this market include vaccines, anti-thrombotic, small molecules and biologics. Active Material Science Solutions.
Our recent capital investment commitments in this business have enabled us to bring to market a broader offering of higher value products including prefilled and coated stoppers and plungers which better protect the contents of the primary packaging container and the integrity of biologic formulations. Pharmaceutical applications for this market include vaccines, anti-thrombotic, small molecules and biologics.
Sales to the personal care market accounted for approximately 42% of the segment’s total net sales in 2022 and primarily included sales of lotion pumps, closures, fine mist spray pumps, continuous spray aerosol valves and elastomeric flow-control components. Personal care lotion pump product applications include hand sanitizers, soaps, cleaners and skin moisturizers.
Sales to the personal care market accounted for approximately 33% of the segment’s total net sales in 2023 and primarily included sales of lotion pumps, spray pumps and continuous spray aerosol valves. Personal care lotion pump product applications include hand sanitizers, hand soaps, bath and shower cleansers and skin moisturizers.
In this report, we may refer to AptarGroup, Inc. and its subsidiaries as “AptarGroup”, “Aptar” or the “Company”. We have manufacturing facilities located throughout the world including North America, Europe, Asia and Latin America. We have approximately 5,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of our 2022 Net Sales.
We have manufacturing facilities located throughout the world including North America, Europe, Asia and Latin America. We have approximately 5,000 customers with no single customer or group of affiliated customers accounting for greater than 5% of our 2023 Net Sales.
Closures that were developed in Beauty + Home and Pharma will move to Aptar Closures together with the operations of legacy Food + Beverage. Aptar's food protection business and our elastomeric flow-control technology business will continue to report through the Aptar Closures segment.
Closures that were developed in Beauty + Home moved to Aptar Closures together with the operations of the legacy Food + Beverage segment. Aptar's food protection business and our elastomeric flow-control technology business continue to report through the Aptar Closures segment. The realignment brings us closer to how our customers are structured and operate their businesses.
At the same time, consumer marketers are trying to differentiate their products by incorporating performance enhancing features such as flow-control and no-drip dispensing, inverted packaging and directional flow to make packages simpler to use, cleaner and more appealing to consumers. We also have an increasing number of product solutions that address the increased use of flexible packaging formats. Food.
At the same time, consumer marketers are trying to differentiate their products by incorporating performance enhancing features such as flow-control and no-drip dispensing, e-commerce capable solution, inverted packaging and directional flow to make packages simpler to use, cleaner and more appealing to consumers.
In the cosmetic sector, packaging for certain products such as natural and organic cosmetics and anti-aging lotions continue to provide us with growth opportunities. We are a leading provider of packaging solutions for prestige and mass market fragrance products.
Packaging for certain products such as natural and organic cosmetics, dermo-cosmetic formulas and anti-aging lotions continue to provide us with growth opportunities. We are a leading provider of packaging solutions for prestige and mass market fragrance products. Our cosmetic lotion pumps, airless dispensing systems, and decorative capabilities are also expected to provide growth opportunities. Personal Care.
Aptar has launched products and components in North America, Europe and Asia made with post-consumer recycled (PCR) resins and continues to explore additional opportunities for alternative resins and recyclable products.
We have teams dedicated to designing for sustainability by providing products that improve recyclability and use less material. Aptar has launched products and components in North America, Europe and Asia made with post-consumer recycled (PCR) resins and continues to explore additional opportunities for alternative resins and recyclable products.
ITEM 1. BUSINESS WHO ARE WE AND WHAT DO WE DO Aptar is a global leader in the design and manufacturing of a broad range of drug delivery, consumer product dispensing, and active material science solutions and services. Aptar's innovative solutions and services serve a variety of end markets including pharmaceutical, beauty, personal care, home care, food and beverage.
ITEM 1. BUSINESS WHO ARE WE AND WHAT DO WE DO Aptar is a global leader in the design and manufacturing of drug and consumer product dosing, dispensing and protection technologies. Aptar serves a number of attractive end markets including pharmaceutical, beauty, food, beverage, personal care, and home care.
GENERAL BUSINESS INFORMATION RESEARCH AND DEVELOPMENT Our commitment to innovation, one of our competitive strengths, has resulted in an emphasis on research and development directed toward developing affordable, new, sustainable and innovative packaging, drug delivery solutions and connected devices and adapting existing products for new markets or customer requirements.
Examples of beverage products currently utilizing dispensing closures include bottled water, sport and energy drinks, juices and concentrated water flavorings. 4/ATR 2023 Form 10-K Table of Contents GENERAL BUSINESS INFORMATION RESEARCH AND DEVELOPMENT Our commitment to innovation, one of our competitive strengths, has resulted in an emphasis on research and development directed toward developing affordable, new, sustainable and innovative packaging, drug delivery solutions and connected devices and adapting existing products for new markets or customer requirements.
Sales to the consumer health care market accounted for approximately 23% of the segment’s total net sales in 2022. Many product applications for this market are similar to the prescription market; however, these product applications are sold over-the-counter without a prescription. Typical consumer health care spray product applications include nasal decongestants, nasal salines and cough and cold product applications.
Sales to the consumer health care market accounted for approximately 25% of the segment’s total net sales in 2023. Many product applications for this market are similar to the prescription market proprietary drug delivery systems; however, these product applications are sold over-the-counter without a prescription.
Our research and development teams continue to design unique accessories that increase the value of our continuous spray aerosol valve offerings. Home Care.
Typical spray pump product applications include hair care, body care and sun care products. Personal care continuous spray aerosol valve product applications include hair care products, deodorants, shaving creams and sun care products. Our research and development teams continue to design unique accessories that increase the value of our continuous spray aerosol valve offerings. Home Care.
Aptar began reporting on digital health solutions in the fourth quarter of 2021 with the acquisition of Voluntis. Sales to the digital health market accounted for 1% of the segment's total net sales in 2022 and are expected to increase in the future as we expand the division's platform for services provided.
Sales to the digital health market accounted for 1% of the segment's total net sales in 2023 and are expected to increase in the future as we expand the division's platform for services provided. The digital health solutions we provide improve patients' treatment, experience and outcomes.
Our goal is to ensure that Aptar is well positioned for long-term growth and that we continue to be a high-performing, values-based, customer-focused company, with active commitments to innovation and sustainability. Employee Development & Leadership Succession. Developing our employees to reach their full potential is an integral part of our Core Values.
At Aptar, we conduct annual leadership for growth surveys. We have focused on organizational development based on our leadership principles, core values and strategic priorities. Our goal is to ensure that Aptar is well positioned for long-term growth and that we continue to be a high-performing, values-based, customer-focused company, with active commitments to innovation and sustainability.
Therefore, in 2022 we began working with SBTi to revise the Scope 1 and Scope 2 target to a more aggressive ambition, and to align it to the requirements to keep global warming at 1.5° Celsius by 2030. Aptar’s Scope 3 ambition remains the same, as does our commitment to increase annual sourcing of renewable electricity to 100% by 2030.
Therefore, in 2022 we began working with SBTi to revise the Scope 1 and Scope 2 target to a more aggressive ambition, and to align it to the requirements to keep global warming at 1.5° Celsius by 2030. This updated target was validated by SBTi in early 2023.
At the same time, we are simplifying and focusing our Beauty + Home segment to better leverage our complex spray and dispensing solutions for prestige and premium brands in the beauty and personal care markets.
At the same time, we have simplified and focused our Beauty + Home segment to better leverage our complex spray and dispensing solutions for prestige and mass brands in the beauty, personal care and home care markets. For many of our customers, personal care products are considered part of "beauty" and so we renamed this segment, Aptar Beauty.
OUR STRATEGY We seek to enhance our position as a leading global provider of drug delivery, consumer product dispensing and active material science solutions and services to deliver increased value to our customers and stockholders through strategic focus and execution in the following areas: (i) Focus on Organic Growth: We are focused on accelerating our top line growth with added emphasis on high growth economies.
OUR STRATEGY We seek to enhance our position as a leading global provider in drug and consumer dosing, dispensing and protection technologies to deliver increased value to our customers and stockholders through strategic focus and execution in the following areas: (i) Focus on Organic Growth with an added focus on high growth regions: We are focused on profitable growth by leveraging capabilities, assets, capacity and by sharing capabilities across segments.
Termination of employees at certain of our international operations could be costly due to local regulations regarding severance benefits. There were no material work stoppages in 2022 and management considers our employee relations to be satisfactory. In 2022, we continued to experience competition for talent and wage inflation.
Termination of employees at certain of our international operations could be costly due to local regulations regarding severance benefits. There were no material work stoppages in 2023 and management considers our employee relations to be satisfactory. Higher employee turnover levels or our failure to attract and retain talent in a timely manner could impact our future results. Employee Engagement.
We will continue to have three reporting segments and they will be called Aptar Pharma, Aptar Beauty and Aptar Closures. We are combining all of our closures operations into a single segment - Aptar Closures. The Aptar Closures business will serve multiple markets, including food, beverage, personal care, home care, beauty and healthcare.
We continue to have three reporting segments; Aptar Pharma and Aptar Beauty are named for the markets they serve with multiple product platforms, while Aptar Closures is named primarily for a single product platform that serves all available markets. The Aptar Closures business serves multiple markets, including food, beverage, personal care, home care, beauty and healthcare.
Connecting with other companies through organizations like Ellen MacArthur Foundation’s New Plastics Economy and the World Business Council for Sustainable Development (WBCSD) provides an invaluable opportunity to share best practices and work on larger projects with aligned objectives toward a more circular economy. 7/ATR 2022 Form 10-K Table of Contents In January 2022, Aptar was ranked in the top 20 overall, and first in our industry, for the category of Leading on Environmental Impact within JUST Capital's America's Most JUST Companies 2022.
Connecting with other companies through organizations like Ellen MacArthur Foundation’s New Plastics Economy and the World Business Council for Sustainable Development (WBCSD) provides an invaluable opportunity to share best practices and work on larger projects with aligned objectives toward a more circular economy.
To a limited extent, we use independent representatives and distributors to increase our reach to smaller customers and export markets. Effective January 1, 2023, there was a realignment of two of our segments, allowing us to better serve our customers and positioning us for long-term profitable growth.
Effective January 1, 2023, we realigned two of our segments, allowing us to better serve our customers and positioning us for long-term profitable growth.
Sales to the beauty market accounted for approximately 51% of the segment’s total net sales in 2022. The beauty market requires a broad range of spray and lotion pumps, closures, elastomeric flow-control components and sampling dispensing systems to meet functional as well as aesthetic requirements.
Sales to these markets accounted for approximately 63% of the segment’s total net sales in 2023. The fragrance, facial skincare, and color cosmetics markets require a broad range of spray and lotion pumps and sampling dispensing systems to meet functional as well as aesthetic requirements.
Using insights, proprietary design, engineering and science 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, looks, health and homes of millions of patients and consumers around the world.
Using market expertise, proprietary design, engineering and science to create innovative solutions for many of the world's leading brands, Aptar in turn makes a meaningful difference in the lives, looks, health and homes of millions of patients and consumers around the world. Aptar is headquartered in Crystal Lake, Illinois and has approximately 13,800 dedicated employees in 20 different countries.
The Beauty + Home segment primarily sells pumps and decorative components to the beauty market and pumps, closures, aerosol valves, accessories and sealing solutions to the personal care and home care markets. We believe we are a leading supplier for the majority of the products we sell primarily to the beauty and personal care markets. Beauty.
The Aptar Beauty segment sells a broad variety of pumps, airless systems and valves to the fragrance, color cosmetics, facial skincare, personal care and home care markets. We believe we are a leading supplier for the majority of the products we sell primarily to the beauty markets. Fragrance, facial skincare, color cosmetics.
Aptar was named #70 on the World's Top Female-Friendly Companies for 2022 by Forbes. Additionally, SHero has recognized Aptar Greater China as one of the Best Companies for Female Executives 2022. Aptar is launching its first Diversity Supplier Program in 2023. Diversity, equity and inclusion continue to be part of Aptar's strategic priorities. Employee Well-being & Safety.
Aptar was named on the World's Top Female-Friendly Companies by Forbes for 2022 and 2023. Aptar was also recognized by Women's Forum of NY for having 50% female board directors. Additionally, SHero has recognized Aptar Greater China as one of the Best Companies for Female Executives 2022. Aptar launched its first Diversity Supplier Program in 2023.
Sales of dispensing closures to the beverage market have increased over the last several years, reflecting an increase in on-the-go consumption, as we continue to see an increase of interest from marketers using dispensing closures for their products. Examples of beverage products currently utilizing dispensing closures include bottled water, sport and energy drinks, juices and concentrated water flavorings.
Sales of dispensing closures to the beverage market have increased over the last several years, reflecting the rebound of on-the-go consumption from consumers. We see continued interest from marketers using dispensing closures for their products.
Sales to the beverage market accounted for approximately 25% of the segment’s total net sales in 2022 and primarily include sales of dispensing closures including those utilizing elastomeric flow-control components.
Sustainability, e-commerce, and value providing solutions are what we see as the key drivers for growth in these markets. Beverage. Sales to the beverage market accounted for approximately 21% of the segment’s total net sales in 2023 and primarily include sales of dispensing closures including those utilizing elastomeric flow-control components.
Typical consumer health care valve product applications include nasal saline using our bag-on valve technology. We have developed a multi dose ophthalmic dispensing device suitable for unpreserved formulations. This technology is successfully marketed in Europe, North America and Latin America and is under development for other markets both for over-the-counter and prescription product applications.
Typical consumer health care spray product applications include nasal decongestants, nasal salines and cough and cold products. Typical consumer health care valve product applications include nasal saline using our bag-on valve technology. We have developed a multi dose ophthalmic dispensing device suitable for unpreserved formulations.
Sales to the food market accounted for approximately 75% of the segment’s total net sales in 2022 and primarily include sales of dispensing closures including those utilizing elastomeric flow-control components, and absorbent and non-absorbent food service trays. To a lesser degree we also sell continuous spray aerosol valves and spray pumps to this market.
We also have an increasing number of product solutions that address the increased use of flexible packaging formats. Food. Sales to the food market accounted for approximately 52% of the segment’s total net sales in 2023 and primarily include sales of dispensing closures including those utilizing elastomeric flow-control components, and absorbent and non-absorbent food service trays.
While we have experienced some competition in Europe, Latin America and the United States from low cost Asian suppliers, particularly in the beauty and personal care market, this has not been significant.
While we have experienced some competition in Europe, Latin America and the United States from low cost Asian suppliers, particularly in the beauty and personal care market, more customers often prefer local suppliers citing shorter lead times, higher reactivity and service, and stronger safety of supply.
Although using low cost Asian suppliers may have a cost advantage, more and more customers prefer local suppliers citing shorter lead times, higher reactivity and service, and stronger safety of supply. We have also reduced our carbon footprint due to the increased use of lower-carbon fuels within some of our shipping lanes, which we see as a competitive advantage.
We have also reduced our carbon footprint due to the increased use of lower-carbon fuels within some of our shipping lanes, which we see as a competitive advantage.
This science-based approach incorporates our own operations and operations within the value chain. In addition, we annually undergo data assurance as part of our sustainability reporting. This assurance process allows for data on consumption of electricity, fuel oil, and natural gas and renewable energy purchases to be verified for accuracy and completeness by an external organization.
This assurance process allows for data on consumption of electricity, fuel oil, and natural gas and renewable energy purchases to be verified for accuracy and completeness by an external organization. Globally this process is certified to the ISO 14064 standard for energy and greenhouse gas emission reporting.
Accordingly, we empower regional, cross-functional profit and loss (“P&L”) teams who are fully accountable to drive profitable growth. (ii) Focus on Talent and Leadership: Execution of our strategy requires a talented, motivated, diverse, global team. We have continued to focus on talent acquisition and development strategy to ensure our teams have the right skills to execute our strategy.
We seek to maximize our return on investments while focusing on the top and bottom lines. (ii) Focus on Talent and Leadership: Execution of our strategy requires a talented, motivated, diverse, global team. We have continued to focus on talent acquisition and development strategies designed to ensure our teams have the right skills to execute our strategy.
Available as standalone or as a fully integrated offering in our existing range of drug delivery solutions, we have digital health solutions covering a wide range of therapeutic areas including, but not limited to, pulmonary, oncology, diabetes, immunology and neurology.
Available as standalone or as a fully integrated offering in our existing range of drug delivery solutions, we have digital health solutions covering a wide range of therapeutic areas including, but not limited to, pulmonary, oncology, diabetes, immunology and neurology. 3/ATR 2023 Form 10-K Table of Contents APTAR BEAUTY SEGMENT Our Aptar Beauty segment is our second largest segment in terms of net sales and total assets, representing 36% and 32% of our Net Sales and Total Assets, respectively, for 2023 and accounted for 21% of our Adjusted EBITDA excluding non-allocated corporate costs in 2023.
Aptar is headquartered in Crystal Lake, Illinois and has approximately 13,500 dedicated employees in 20 different countries. For more information, visit www.aptar.com. Our business was started in the late 1940’s, manufacturing and selling aerosol valves in the United States, and has grown primarily through acquisitions and internal expansion.
For more information, visit www.aptar.com. Our business was started in the late 1940’s, manufacturing and selling aerosol valves in the United States, and has grown primarily through acquisitions and internal expansion. In this report, we may refer to AptarGroup, Inc. and its subsidiaries as “AptarGroup”, “Aptar” or the “Company”.
Some actions have resulted in regulations aimed to reduce marine litter, increase plastic recycling rates, prohibit single-use plastic packaging and introduce new taxes in relation to the end-of-life management of packaging. For example, the EU released in 2022 a draft regulation on packaging and packaging waste with a focus on recyclability, recycled content, compostability and reusability.
In addition, the European Union (EU) has adopted a circular economy package. The package maps out a series of actions planned over several years. Some actions have resulted in regulations aimed to reduce marine litter, increase plastic recycling rates, prohibit single-use plastic packaging and introduce new taxes in relation to the end-of-life management of packaging.
Additionally, we expanded employee assistance and mindfulness programs globally to help employees and their families manage anxiety, stress and overall well-being. 6/ATR 2022 Form 10-K Table of Contents COMPETITION All of the markets in which we operate are highly competitive and we continue to experience price competition in all product lines and markets.
In the post-pandemic era, we continue to follow public and private sector policies to keep employees safe. 6/ATR 2023 Form 10-K Table of Contents COMPETITION All of the markets in which we operate are highly competitive and we continue to experience price competition in all product lines and markets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, any failure to comply with environmental laws could result in penalties or investigations, which could materially adversely affect our reputation, business and results of operations. Future government regulations of healthcare cost containment policies may impact our pharmaceutical sales.
Biggest changeFor example, the EU and the United States are planning new regulations to ban PFAS materials used in the packaging industry. The potential exists for these types of regulations to expand worldwide. Additionally, any failure to comply with environmental laws could result in claims, investigations, penalties or damages, which could materially adversely affect our reputation, business and results of operations.
Although our business is diversified across ten end markets and many geographies and we believe our diverse business model, coupled with our diverse and global customer base, allow some protection from dependency on any one geographic region, country or even trade route, our diversification efforts may not be successful in insulating our operations from disruptive geopolitical conditions and we do face some risk related to trade policies specific to any country we operate in or to which our customers export their products.
Although our business is diversified across 10 end markets and many geographies and we believe our diverse business model, coupled with our diverse and global customer base, allow some protection from dependency on any one geographic region, country or even trade route, our diversification efforts may not be successful in insulating our operations from disruptive geopolitical conditions and we do face some risk related to trade policies specific to any country we operate in or to which our customers export their products.
Doing business globally requires us to comply with anti-corruption, trade, sanctions and similar laws, and to implement policies and procedures designed to ensure that our company, employees and other intermediaries comply with the applicable restrictions.
Doing business globally requires us to comply with anti-corruption, trade, sanctions, competition and similar laws, and to implement policies and procedures designed to ensure that our company, employees and other intermediaries comply with the applicable restrictions.
The cost of raw materials and other inputs (particularly plastic resin, rubber, metal, anodization costs and transportation and energy costs) are volatile and susceptible to rapid and substantial changes due to factors beyond our control, such as changing economic conditions, currency fluctuations, weather conditions, political and social instability, acts of war, terrorist activity or other similar events in energy-producing nations, and supply and demand pressures.
The cost of raw materials and other inputs (particularly plastic resin, rubber, metal, anodization costs and transportation and energy costs) are volatile and susceptible to rapid and substantial changes due to factors beyond our control, such as changing economic conditions, currency fluctuations, weather conditions, health crises, political and social instability, acts of war, terrorist activity or other similar events in energy-producing nations, and supply and demand pressures.
In addition, our customers may export their finished products using our dispensing devices that were sold in other regions and an adverse geopolitical event may impact the sales of our customers’ products and thus indirectly negatively impact the demand for our dispensing solutions.
In addition, our customers may export their finished products using our dispensing mechanisms that were sold in other regions and an adverse geopolitical event may impact the sales of our customers’ products and thus indirectly negatively impact the demand for our dispensing solutions.
During 2020 the COVID-19 pandemic adversely affected our sales of products to our prescription pharma customers, due to lower incidences of common illnesses and doctors appointments, and to our travel and retail beauty business and on-the-go beverage customers.
For example, during 2020 the COVID-19 pandemic adversely affected our sales of products to our prescription pharma customers, due to lower incidences of common illnesses and doctors appointments, and to our travel and retail beauty business and on-the-go beverage customers.
Increased global information security threats and more sophisticated, targeted computer crime pose a risk to the confidentiality, availability and integrity of our data, operations and infrastructure, as well as the data of our customers.
Increased global cybersecurity threats and more sophisticated, targeted computer crime could pose a risk to our operations. Increased global information security threats and more sophisticated, targeted computer crime pose a risk to the confidentiality, availability and integrity of our data, operations and infrastructure, as well as the data of our customers.
We are also required to comply with a variety of other laws and regulations in the ordinary course of business, including those related to data privacy. Privacy regulations, such as the European Union’s General Data Protection Regulation (“GDPR”) and the California Privacy Rights Act of 2020 (“CPRA”), are complex, rigorous and sometimes conflicting.
We are also required to comply with a variety of other laws and regulations in the ordinary course of business, including those related to data privacy. Privacy regulations, such as the EU’s General Data Protection Regulation (“GDPR”) and the California Privacy Rights Act of 2020 (“CPRA”), are complex, rigorous and sometimes conflicting.
Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc, and other Asian, European and Latin American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive translation effect.
Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Argentine peso, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements.
Employee retention or labor cost inflation could disrupt our business. Labor cost and availability are subject factors that are beyond our control. As a result, there is no assurance that we will be able to recruit, train, assimilate, motivate and retain employees in the future.
Employee reten t ion or labor cost inflation could disrupt our business. Labor cost and availability are subject factors that are beyond our control. As a result, there is no assurance that we will be able to recruit, train, assimilate, motivate and retain employees in the future.
As our fixed rate debt obligations become due, any refinancing or additional borrowings could potentially be under higher interest rates. In addition, as interest rates increase, our debt service obligation on refinanced indebtedness will increase, impacting our results of operations and cash flows.
Interest rate volatility could increase our borrowing costs. As our fixed rate debt obligations become due, any refinancing or additional borrowings could potentially be under higher interest rates. As interest rates increase, our debt service obligation on refinanced indebtedness will increase, impacting our results of operations and cash flows.
We expect the market for our products to remain competitive, as consolidation among our competitors is increasing in the current economic climate. Customers and consumers are increasingly requesting solutions that can be refilled and reused as the market moves toward more sustainable products.
We expect the market for our products to remain competitive, as consolidation and/or changing of ownership among our competitors and key customers are increasing in the current economic climate. Customers and consumers are increasingly requesting solutions that can be refilled and reused as the market moves toward more sustainable products.
If disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage, we could experience a significant disruption of operations, which could have a material adverse effect on our business, operating results and financial position. 11/ATR 2022 Form 10-K Table of Contents Single sourced materials and manufacturing sites could adversely impact our ability to deliver product.
If disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage, we could experience a significant disruption of operations, which could have a material adverse effect on our business, operating results and financial position. Single sourced materials and manufacturing sites could adversely impact our ability to deliver product.
Customer demand across all segments may decrease quickly as a result of future developments related to the COVID-19 pandemic, including the extent, duration and severity of further resurgences, the availability, adoption and efficacy of approved vaccines and treatments, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extended in response to further resurgences of the virus, and numerous other uncertainties.
Customer demand across all segments may decrease quickly as a result of future developments related to the health crises, including the extent, duration and severity of outbreaks, the availability, adoption and efficacy of approved vaccines and treatments, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extended in response to outbreaks, and numerous other uncertainties.
We may encounter increased costs as we reformulate and redesign our product offerings in response to the changing regulatory landscape. Market risks, like the increased cost or limited availability of certain raw material inputs for our products, including post-consumer recycled (PCR) resins, may impede the production, distribution and sale of certain of our customers' products.
We may encounter increased costs as we reformulate and redesign our product offerings in response to the changing regulatory landscape. 14/ATR 2023 Form 10-K Table of Contents Market risks, like the increased cost or limited availability of certain raw material inputs for our products, including post-consumer recycled (PCR) resins, may impede the production, distribution and sale of certain of our customers' products.
In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge certain transactions and firm purchase and sales commitments denominated in foreign currencies.
Conversely, a strengthening U.S. dollar has a dilutive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge certain transactions and firm purchase and sales commitments denominated in foreign currencies.
We are subject to a number of lawsuits and claims that arise in the ordinary course of our business, which include infringement, product liability, commercial, employment, tort, and other litigation. The failure of our devices to operate as intended may result in a product liability claim against us.
We are subject to a number of lawsuits and claims that arise in the ordinary course of our business, which include infringement, product liability, commercial, employment, tort, and other litigation. We are also subject to indemnification claims under various contracts. Further, the failure of our products to operate as intended may result in a product liability claim against us.
The loss of a substantial number of our employees or a prolonged labor dispute could disrupt our business and result in a material adverse effect on our business and operating results. 10/ATR 2022 Form 10-K Table of Contents We face strong global competition and our market share could decline.
The loss of a substantial number of our employees or a prolonged labor dispute could disrupt our business and result in a material adverse effect on our business and operating results. We face strong global competition and our market share could decline.
We are also subject to indemnification claims under various contracts. Current and future litigation, proceedings or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome. In addition, these matters could lead to increased operating costs or interruptions of our normal business operations.
Current and future litigation, claims, investigations, audits and other proceedings or indemnification claims that we face may result in substantial costs and expenses and significantly divert the attention of our management regardless of the outcome. In addition, these matters could lead to increased operating costs or interruptions of our normal business operations.
If our integration of acquisitions or significant capital investments fail to generate expected returns, our financial performance may suffer. We continue to pursue growth through acquisitions, including the recent Metaphase, Voluntis, and Hengyu acquisitions.
If our integration of acquisitions or significant capital investments fail to generate expected returns, our financial performance may suffer. We continue to pursue growth through acquisitions and equity investments, including the recent iD Scent, Gulf Closures, and Metaphase acquisitions.
However, there is no guarantee that our hedging strategy will be effective, and the volatility of currency exchange rates may materially affect our operating results. We have approximately $945.6 million in recorded goodwill at December 31, 2022, and changes in future business conditions could cause this asset to become impaired, requiring write-downs that would reduce our operating income.
However, there is no guarantee that our hedging strategy will be effective, and the volatility of currency exchange rates may materially affect our operating results. 12/ATR 2023 Form 10-K Table of Contents We have approximately $963.4 million in recorded goodwill at December 31, 2023, and changes in future business conditions could cause this asset to become impaired, requiring write-downs that would reduce our operating income.
As of December 31, 2022, less than 1% of our consolidated net sales were from Russia and Ukraine; in addition, less than 2% is imported into Russia and Ukraine and therefore we do not currently expect the war to have a material direct impact to our consolidated results.
As of December 31, 2023, less than 1% of our consolidated net sales were from Russia and Ukraine; in addition, less than 2% is imported into Russia and Ukraine and therefore the war has not had, and we continue to expect that it would not have a material direct impact to our consolidated results.
Government regulation on environmental matters regarding recycling or environmental sustainability policies could impact our business. Future government regulations mandating the use or limitations of certain materials could impact our suppliers, manufacturing processes or the technologies we use and force faster development and adoption of alternative materials or assets used in the production of our products.
Future government regulations mandating the use or limitations of certain materials could impact our suppliers, manufacturing processes or the technologies we use and force faster development and adoption of alternative materials or assets used in the production of our products.
Review by governments or private insurers of cost containment policies of the number of drugs and prices thereof that will be paid by their insurance systems could affect future sales to the pharmaceutical industry and thereby adversely affect prices of and demand for our pharmaceutical products. Interest rate volatility could increase our borrowing costs.
Future government regulations of healthcare cost containment policies may impact our pharmaceutical sales. Review by governments or private insurers of cost containment policies of the number of drugs and prices thereof that will be paid by their insurance systems could affect future sales to the pharmaceutical industry and thereby adversely affect prices of and demand for our pharmaceutical products.
The use of our intellectual property by someone else without our authorization could reduce or eliminate certain of our competitive advantages, cause us to lose sales or otherwise harm our business. The costs associated with protecting our intellectual property rights could also adversely impact our business.
The use of our intellectual property by someone else without our authorization could reduce or eliminate certain of our competitive advantages, cause us to lose sales or otherwise harm our business.
Our effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, the introduction of new taxes, or changes in tax laws or their interpretations. We are also subject to examination of our returns and other tax matters by the U.S.
Our effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, the introduction of new taxes, or changes in tax laws or their interpretations.
We also periodically test our systems for vulnerabilities and regularly rely on third parties to conduct such tests. To date, we have seen no material impact on our business or operations from these threats; however, we cannot guarantee that our security efforts will prevent unauthorized access or loss of functionality to our or our third-party providers' systems.
To date, we have seen no material impact on our business or operations from these threats; however, we cannot guarantee that our security efforts will prevent unauthorized access or loss of functionality to our or our third-party providers' systems.
We continue to assess potential threats, including computer viruses, cyberattacks, ransomware attacks, phishing attacks and other malicious activity, and make investments seeking to reduce the risk of these threats by employing a number of security measures, including employee training, monitoring of our networks and systems, ensuring strong data protection standards including authentication mechanisms are in place and safeguarding our critical information assets.
We continue to assess potential threats, including computer viruses, cyberattacks, ransomware attacks, phishing attacks and other malicious activity, and make investments seeking to reduce the risk of these threats by employing a number of security measures, including employee training, monitoring of our networks and systems, ensuring strong data protection standards including authentication mechanisms are in place and safeguarding our critical information assets. 10/ATR 2023 Form 10-K Table of Contents We also periodically test our systems for vulnerabilities and regularly rely on third parties to conduct such tests.
If we fail to comply with applicable laws and regulations, we may be subject to investigations, criminal and civil penalties and other remedial measures, which could materially adversely affect our reputation, business and results of operations.
If we fail to comply with applicable laws and regulations, we may be subject to investigations, criminal and civil penalties and other remedial measures, which could materially adversely affect our reputation, business and results of operations. In addition, Aptar's customers' products, as well as certain of Aptar's products and services, are subject to regulation in the U.S. by the U.S.
We may encounter increased costs as we reformulate and redesign our product offerings in response to changing customer behaviors, and our efforts may be unsuccessful. Ownership by Certain Significant Stockholders. Currently, Aptar has five institutional stockholders who each own between 5% and 11% of our outstanding common stock. None of these stockholders have direct representation on our Board of Directors.
We may encounter increased costs as we reformulate and redesign our product offerings in response to changing customer behaviors, and our efforts may be unsuccessful. Ownership by Certain Significant Stockholders. Based on filings with the SEC as of the date of this report, Aptar has two institutional stockholders who each own between 5% and 10% of our outstanding common stock.
Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. We are also periodically subject to tax assessments resulting from custom duties.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations.
If one of these stockholders decides to sell significant volumes of our stock, this could put downward pressure on the price of the stock.
None of these stockholders have direct representation on our Board of Directors. If one of these stockholders decides to sell significant volumes of our stock, this could put downward pressure on the price of the stock. ITEM 1B. UNRESOLVED STAFF COMMENTS We have no unresolved comments from the SEC.
The COVID-19 pandemic has adversely affected our business, and future developments or other global pandemics could continue to cause adverse effects, which may be material.
Global health crises, such as the COVID-19 pandemic, have adversely affected our business, and future developments or other global pandemics could cause adverse effects, which may be material. Global health crises could have a material impact on our operations our employees and our customer, which could adversely impact our business, financial condition and results of operations.
If the customer’s pharmaceutical product is not approved by regulatory bodies or it is not successful on the market, the associated costs may not be recovered. Higher raw material costs and other inputs and an inability to offset these higher costs with price increases may materially adversely affect our operating results and financial condition.
Higher raw material costs and other inputs and an inability to offset these higher costs with price increases may materially adversely affect our operating results and financial condition.
We are also from time to time subject to claims from third parties suggesting that we may be infringing on their intellectual property rights. If we were held liable for infringement, we could be required to pay damages, obtain licenses or cease making or selling certain products.
If we were held liable for infringement, we could be required to pay damages, obtain licenses or cease making or selling certain products.
We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks and other intellectual property rights may have a material adverse effect on our business, consolidated financial condition or results of operations.
We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all.
However, we have experienced indirect impacts on our business, including higher energy and other input costs as well as certain supply chain disruptions, which could materially adversely affect our results of operations and financial condition. Increased global cybersecurity threats and more sophisticated, targeted computer crime could pose a risk to our operations.
However, we have experienced indirect impacts on our business, including higher energy and other input costs as well as certain supply chain disruptions, which could materially adversely affect our results of operations and financial condition. In addition, some Aptar products and services are subject to various sanctions regimes, including in the U.S. and the EU, relating to Russia.
However, a product liability claim in excess of our insurance coverage or not covered by existing insurance may materially adversely affect our business, results of operations or cash flows. 12/ATR 2022 Form 10-K Table of Contents In addition, we are subject to investigations, audits and other proceedings initiated by federal, state, international, national, provincial and local authorities, including regulatory agencies such as the Food and Drug Administration as a result of the products manufactured by our Pharma segment.
In addition, we are subject to investigations, audits and other proceedings initiated by federal, state, international, national, provincial and local authorities, including regulatory agencies such as the FDA as a result of the products manufactured by our Aptar Pharma segment.
We believe we maintain adequate levels of product liability insurance coverage and robust quality control systems at our facilitates.
We believe we maintain adequate levels of product liability insurance coverage and robust quality control systems at our facilitates. However, a product liability claim in excess of our insurance coverage or not covered by existing insurance may materially adversely affect our business, results of operations or cash flows.
Removed
While during 2021 and 2022 we have experienced a return toward pre-pandemic levels in several of our markets, there remain uncertainties related to the pandemic that could adversely affect our business.
Added
Although we currently have relevant licenses regarding our products and services, changes in the sanctions regimes without obtaining necessary licenses could adversely affect our operations in Russia and, as a result, our relationship with certain customers.
Removed
We may be adversely affected by the transition away from the London Interbank Offered Rate (“LIBOR”) or other Interbank Rates (IBORs) to Risk Free Rates for our variable rate loans, derivative contracts and other financial assets and liabilities.
Added
Additionally, ongoing conflicts in the Middle East, heightened tensions in the Red Sea and disruption of the Suez Canal shipping channels may cause delays in the global supply chain and have the potential to significantly increase shipping costs. At this time, impacts to our business are minimal.
Removed
The publication of the one-week and two-month U.S. dollar LIBOR tenors and all non-U.S. dollar LIBOR tenors have ceased effective January 1, 2022, with publication of the remaining most common U.S. dollar LIBOR tenors (overnight and one, three, six and twelve months) ceasing immediately after June 30, 2023. 13/ATR 2022 Form 10-K Table of Contents The ongoing transition from LIBOR may cause us to incur increased costs and additional risk.
Added
Furthermore, a deterioration in the relationship between the U.S. and China which could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, could materially adversely affect our operations and financial condition.
Removed
Our revolving credit facility contains provisions allowing for a transition away from U.S. dollar LIBOR.
Added
The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
Removed
Although the Secured Overnight Financing Rate ("SOFR") has been identified as a recommended alternative reference rate to U.S. dollar LIBOR, SOFR has a limited history and SOFR-based reference rates may perform differently from U.S. dollar LIBOR, which may affect our net interest expense, change our market risk profile and require changes to our risk, pricing and hedging strategies.
Added
If the customer’s pharmaceutical product is not approved by regulatory bodies or it is not successful on the market, the associated costs may not be recovered. 11/ATR 2023 Form 10-K Table of Contents Our revenue and results of operations may suffer upon the bankruptcy, insolvency or other credit failure of our customers .
Added
As mentioned above, shifting consumer preferences put our customers under pressure in their markets. In addition, general economic conditions, competition and other factors may adversely affect the solvency or creditworthiness of our customers.
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If our customers suffer significant financial difficulty, they may be unable to pay their debts to us timely or at all, which could have a material adverse effect on our results of operations. It is possible that customers may contest their contractual obligations to us under bankruptcy laws or otherwise.
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Customer bankruptcies could further adversely affect our net sales and increase our operating expenses by requiring larger provisions for bad debt expense. In addition, even when our contracts with these customers are not contested, if customers are unable to meet their obligations on a timely basis, it could adversely affect our ability to collect receivables.
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Further, we may have to negotiate significant discounts and/or extended financing terms with customers in these situations. If we are unable to collect upon our accounts receivable as they come due in an efficient and timely manner, our business, financial condition or results of operations may be materially adversely affected.
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Food and Drug Administration (FDA) and by comparable government agencies in other countries. The regulatory clearance and approval process may result in, among other things, delayed realization of product revenues, substantial additional costs or limitations on indicated uses of products, any one of which could have a material adverse effect on our financial condition and results of operations.
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The costs associated with protecting our intellectual property rights could also adversely impact our business. 13/ATR 2023 Form 10-K Table of Contents We are also from time to time subject to claims from third parties suggesting that we may be infringing on their intellectual property rights.
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Failure to protect our patents, trademarks and other intellectual property rights, or failure to successfully defend against intellectual property litigation, may have a material adverse effect on our business, consolidated financial condition or results of operations. Government regulation on environmental matters, including recycling or environmental sustainability policies could impact our business.
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We continue to monitor countries' progress toward enactment of the Organization of Economic Cooperation and Development's model rules on a global minimum tax. During 2023, various countries enacted domestic legislation to adopt the minimum tax rules which will be effective for years beginning on or after January 1, 2024.
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These specific actions did not affect our Consolidated Financial Statements in 2023. We are currently evaluating the impact of this rule on our consolidated results for 2024. We are also subject to examination of our returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies.
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We are also periodically subject to tax assessments resulting from custom duties, including those described in Note 13 - Commitments and Contingencies of the Notes to Consolidated Financial Statements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe locations of our manufacturing facilities, by geographic region/country, are set forth below: Geographic Region/Country Number of Manufacturing Facilities Pharma Manufacturing Facilities Beauty + Home Manufacturing Facilities Food + Beverage Manufacturing Facilities France 12 5 8 0 Germany 6 4 5 2 Rest of Europe 7 2 6 5 North America 9 6 5 6 Latin America 7 1 7 3 China 5 3 2 4 Other Asia 3 1 2 1 Total 49 22 35 21 Our head corporate office is located in Crystal Lake, Illinois.
Biggest changeThe locations of our manufacturing facilities, by geographic region/country, are set forth below: Geographic Region/Country Number of Manufacturing Facilities Aptar Pharma Manufacturing Facilities Aptar Beauty Manufacturing Facilities Aptar Closures Manufacturing Facilities France 12 6 7 1 Germany 6 4 4 1 Rest of Europe 7 2 2 4 North America 9 5 3 6 Latin America 7 1 7 3 China 5 3 2 4 Other Asia 4 1 2 3 Total 50 22 27 22 Our head corporate office is located in Crystal Lake, Illinois.
We manufacture products in 49 locations, with 15 of those facilities serving two segments and seven serving all three of our segments as of December 31, 2022.
We manufacture products in 50 locations, with 13 of those facilities serving two segments and four serving all three of our segments as of December 31, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDIVIDENDS On January 19, 2023, our Board of Directors declared a quarterly cash dividend of $0.38 per share of common stock, which will be paid on February 23, 2023 to stockholders of record as of February 2, 2023. We have paid an increased annual cash dividend total to stockholders each year for the past 29 years.
Biggest changeDIVIDENDS On January 18, 2024, our Board of Directors declared a quarterly cash dividend of $0.41 per share of common stock, which will be paid on February 22, 2024 to stockholders of record as of February 1, 2024. During 2023, we paid $103.7 million in dividends to stockholders.
The companies included in the peer group are: Albemarle Corporation, Ashland Inc., Berry Global Group, Inc., Catalent, Inc., CCL Industries Inc., ICU Medical, Inc., Ingredion Inc., International Flavors & Fragrances, Inc., McCormick & Company, Inc., Sealed Air Corporation, Sensient Technologies Corporation, Silgan Holdings, Inc., Sonoco Products Company, Stericycle, Inc., STERIS plc, Teleflex Inc. and West Pharmaceutical Services, Inc.
The companies included in the peer group are: Albemarle Corporation, Ashland Inc., Berry Global Group, Inc., Catalent, Inc., CCL Industries Inc., Enovis Corporation, ICU Medical, Inc., Ingredion Inc., International Flavors & Fragrances, Inc., McCormick & Company, Inc., Perrigo Company plc, Revvity, Inc., Sealed Air Corporation, Sensient Technologies Corporation, Silgan Holdings, Inc., Sonoco Products Company, Stericycle, Inc., STERIS plc, Teleflex Inc. and West Pharmaceutical Services, Inc.
While we expect to continue to pay a regular quarterly dividend of $0.38 per share in 2023, the timing, declaration, amount and payment of any future cash dividends are at the discretion of the Board of Directors and will depend on our available cash, working capital, financial condition, results of operations, capital requirements, covenants in our credit facility, applicable law and other factors that the Board of Directors considers relevant.
While we expect to continue to pay a regular quarterly dividend of $0.41 per share in 2024, the timing, declaration, amount and payment of any future cash dividends are at the discretion of the Board of Directors and will depend on our available cash, working capital, financial condition, results of operations, capital requirements, covenants in our credit facility, applicable law and other factors that the Board of Directors considers relevant.
At December 31, 2022, the Plan owned 118,132 shares of our common stock. ISSUER PURCHASES OF EQUITY SECURITIES On April 18, 2019, we announced a share repurchase authorization of up to $350 million of common stock. This authorization replaces previous authorizations and has no expiration date.
At December 31, 2023, the Plan owned 113,946 shares of our common stock. ISSUER PURCHASES OF EQUITY SECURITIES On April 18, 2019, we announced a share repurchase authorization of up to $350 million of common stock. This authorization replaces previous authorizations and has no expiration date.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR REGISTRANT’S COMMON EQUITY Our common stock is traded on the New York Stock Exchange under the symbol “ATR”. As of February 13, 2023, there were approximately 160 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR REGISTRANT’S COMMON EQUITY Our common stock is traded on the New York Stock Exchange under the symbol “ATR”. As of February 5, 2024, there were 152 holders of record of our common stock.
We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions. During the fourth quarter of 2022, we repurchased approximately 191 thousand shares for approximately $19.8 million.
We may repurchase shares through the open market, privately negotiated transactions or other programs, subject to market conditions. During the fourth quarter of 2023, we repurchased approximately 81 thousand shares for approximately $10.3 million.
The following table summarizes our purchases of our securities for the quarter ended December 31, 2022: Period Total Number Of Shares Purchased Average Price Paid Per Share Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs (in millions) 10/1 - 10/31/22 — $ — — $ 128.1 11/1 - 11/30/22 147,000 102.56 147,000 113.0 12/1 - 12/31/22 44,000 107.30 44,000 108.3 Total 191,000 $ 103.65 191,000 $ 108.3 16/ATR 2022 Form 10-K Table of Contents SHARE PERFORMANCE The following graph shows a five year comparison of the cumulative total stockholder return on our common stock as compared to the cumulative total return of the Standard & Poor’s 500 Composite Stock Price Index and to an index of peer group companies we selected.
The following table summarizes our purchases of our securities for the quarter ended December 31, 2023: Period Total Number Of Shares Purchased Average Price Paid Per Share Total Number Of Shares Purchased As Part Of Publicly Announced Plans Or Programs Dollar Value Of Shares That May Yet Be Purchased Under The Plans Or Programs (in millions) 10/1 - 10/31/23 — $ — — $ 70.9 11/1 - 11/30/23 62,869 126.23 62,869 63.0 12/1 - 12/31/23 18,200 127.18 18,200 60.7 Total 81,069 $ 126.44 81,069 $ 60.7 18/ATR 2023 Form 10-K Table of Contents SHARE PERFORMANCE The following graph shows a five year comparison of the cumulative total stockholder return on our common stock as compared to the cumulative total return of the Standard & Poor’s 500 Composite Stock Price Index and to an index of peer group companies we selected.
During the quarter ended December 31, 2022, the Plan did not purchase any shares of our common stock on behalf of the participants. The Plan sold 5,121 shares of our common stock on behalf of the participants at an average price of $105.52 per share, for an aggregate amount of $540 thousand.
During the quarter ended December 31, 2023, the Plan did not purchase any shares of our common stock on behalf of the participants. The Plan sold 6,533 shares of our common stock on behalf of the participants at an average price of $124.57 per share, for an aggregate amount of $814 thousand.
Removed
During 2022, we paid $99.5 million in dividends to stockholders.
Added
The peer group is consistent with the peer companies used by the Management Development and Compensation Committee of our Board of Directors (“MD&C Committee”) in connection with certain aspects of our executive compensation programs.
Added
The MD&C Committee selected companies that (i) compete with Aptar for market share, operate in similar industries (e.g., packaging, specialty chemicals, specialty materials) and are based in the U.S.; (ii) provide similar intermediate products (e.g., structured materials, packaging, closures, spray products) to similar end-use markets (e.g., consumer, beauty, home, pharmaceutical, medical, healthcare, food, beverage); (iii) fall within a reasonable range of Aptar's size and scale based on several factors (e.g., revenue, assets, invested capital, number of employees, market capitalization); (iv) earn a considerable amount of their revenue outside of the U.S.; (v) appear to be valued like Aptar by the stock market based on their market capitalization to revenue versus Aptar’s; and (vi) compete with Aptar for senior executive talent (companies Aptar potentially would recruit senior talent from, and possibly lose senior talent to).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives. 24/ATR 2022 Form 10-K Table of Contents Year Ended December 31, 2022 Consolidated Pharma Beauty + Home Food + Beverage Corporate & Other Net Interest Net Sales $ 3,322,249 $ 1,361,256 $ 1,438,534 $ 522,459 $ — $ — Reported net income $ 239,555 Reported income taxes 95,149 Reported income before income taxes 334,704 346,995 66,978 31,057 (72,199) (38,127) Adjustments: Restructuring initiatives 6,597 — 6,460 137 — Net unrealized investment loss (1) 3,323 3,323 Transaction costs related to acquisitions 231 231 — — — Adjusted earnings before income taxes 344,855 347,226 73,438 31,194 (68,876) (38,127) Interest expense 40,827 40,827 Interest income (2,700) (2,700) Adjusted earnings before net interest and taxes (Adjusted EBIT) 382,982 347,226 73,438 31,194 (68,876) — Depreciation and amortization 233,706 94,396 93,027 40,337 5,946 — Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 616,688 $ 441,622 $ 166,465 $ 71,531 $ (62,930) $ — Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 18.6 % 32.4 % 11.6 % 13.7 % (1) Net unrealized investment loss represents the change in fair value of our investment in PCT (see Note 20 - Investment in Equity Securities for further details). 25/ATR 2022 Form 10-K Table of Contents Year Ended December 31, 2021 Consolidated Pharma Beauty + Home Food + Beverage Corporate & Other Net Interest Net Sales $ 3,227,221 $ 1,284,624 $ 1,434,022 $ 508,575 $ — $ — Reported net income $ 243,638 Reported income taxes 78,017 Reported income before income taxes 321,655 331,317 47,631 38,650 (69,327) (26,616) Adjustments: Restructuring initiatives 23,240 76 10,447 404 12,313 Net unrealized investment gain (1) (2,709) (2,709) Transaction costs related to acquisitions 3,811 3,811 — — — Adjusted earnings before income taxes 345,997 335,204 58,078 39,054 (59,723) (26,616) Interest expense 30,284 30,284 Interest income (3,668) (3,668) Adjusted earnings before net interest and taxes (Adjusted EBIT) 372,613 335,204 58,078 39,054 (59,723) — Depreciation and amortization 234,853 90,510 96,611 40,323 7,409 — Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 607,466 $ 425,714 $ 154,689 $ 79,377 $ (52,314) $ — Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 18.8 % 33.1 % 10.8 % 15.6 % (1) Net unrealized investment gain represents the change in fair value of our investment in PCT (see Note 20 - Investment in Equity Securities for further details).
Biggest changeWe believe that it is meaningful to investors in evaluating our financial performance and measuring our ability to generate cash internally to fund our initiatives. 26/ATR 2023 Form 10-K Table of Contents Year Ended December 31, 2023 Consolidated Aptar Pharma Aptar Beauty Aptar Closures Corporate & Other Net Interest Net Sales $ 3,487,450 $ 1,520,993 $ 1,267,697 $ 698,760 $ — $ — Reported net income $ 284,176 Reported income taxes 90,649 Reported income before income taxes 374,825 388,415 59,210 33,615 (70,370) (36,045) Adjustments: Restructuring initiatives 45,004 4,852 20,683 17,927 1,542 Net investment gain (1) (1,413) (1,413) Realized gain on investments included in net investment gain above 4,188 4,188 Transaction costs related to acquisitions 480 — 424 56 — Adjusted earnings before income taxes 423,084 393,267 80,317 51,598 (66,053) (36,045) Interest expense 40,418 40,418 Interest income (4,373) (4,373) Adjusted earnings before net interest and taxes (Adjusted EBIT) 459,129 393,267 80,317 51,598 (66,053) — Depreciation and amortization 248,593 109,366 83,399 52,095 3,733 — Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 707,722 $ 502,633 $ 163,716 $ 103,693 $ (62,320) $ — Reported net income margin (Reported net income / Reported Net Sales) 8.1 % Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 20.3 % 33.0 % 12.9 % 14.8 % (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). 27/ATR 2023 Form 10-K Table of Contents Year Ended December 31, 2022 Consolidated Aptar Pharma Aptar Beauty Aptar Closures Corporate & Other Net Interest Net Sales $ 3,322,249 $ 1,361,256 $ 1,222,535 $ 738,458 $ — $ — Reported net income $ 239,555 Reported income taxes 95,149 Reported income before income taxes 334,704 346,995 65,850 32,185 (72,199) (38,127) Adjustments: Restructuring initiatives 6,597 — 5,539 1,058 — Net investment loss (1) 2,110 2,110 Realized gain on investments included in net investment loss above 1,213 1,213 Transaction costs related to acquisitions 231 231 — — — Adjusted earnings before income taxes 344,855 347,226 71,389 33,243 (68,876) (38,127) Interest expense 40,827 40,827 Interest income (2,700) (2,700) Adjusted earnings before net interest and taxes (Adjusted EBIT) 382,982 347,226 71,389 33,243 (68,876) — Depreciation and amortization 233,706 94,396 80,498 52,866 5,946 — Adjusted earnings before net interest, taxes, depreciation and amortization (Adjusted EBITDA) $ 616,688 $ 441,622 $ 151,887 $ 86,109 $ (62,930) $ — Reported net income margin (Reported net income / Reported Net Sales) 7.2 % Adjusted EBITDA margins (Adjusted EBITDA / Reported Net Sales) 18.6 % 32.4 % 12.4 % 11.7 % (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).
Based upon the above consolidated leverage ratio covenant, we would have the ability to borrow approximately an additional $1.1 billion before the 3.50 to 1.00 maximum ratio requirement would be exceeded.
Based upon the above consolidated leverage ratio covenant, we would have the ability to borrow approximately an additional $1.3 billion before the 3.50 to 1.00 maximum ratio requirement would be exceeded.
Words such as “expects,” “anticipates,” “believes,” “estimates,” “future”, “potential”, "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.
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.
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.
In addition to the Aptar Pharma business reporting unit, the injectables and active material science solutions divisions of the Aptar Pharma segment qualify as separate reporting units for goodwill impairment testing apart from the remaining Aptar Pharma business.
In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $30 million that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, no balance was utilized under this arrangement as of December 31, 2022.
In October 2020, we entered into an unsecured money market borrowing arrangement to provide short term financing of up to $30 million that is available in the U.S. No borrowing on this facility is permitted over a quarter end date. As such, no balance was utilized under this arrangement as of December 31, 2023.
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, 2021 for additional information regarding cash flows for the year ended December 31, 2021 as compared to the year ended December 31, 2020. 27/ATR 2022 Form 10-K Table of Contents On June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") with a syndicate of banks to replace the then-existing facility maturing July 2022 (the "prior credit facility") and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term 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, 2022 for additional information regarding cash flows for the year ended December 31, 2022 as compared to the year ended December 31, 2021. 29/ATR 2023 Form 10-K Table of Contents On June 30, 2021, we entered into an amended and restated multi-currency revolving credit facility (the "revolving credit facility") with a syndicate of banks to replace the then-existing facility maturing July 2022 (the "prior credit facility") and to amend and restate the unsecured term loan facility extended to our wholly-owned UK subsidiary under the prior credit facility (as amended, the "amended term facility").
At December 31, 2022, 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.
At December 31, 2023, 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.
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, 2021 for additional information regarding Results of Operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
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, 2022 for additional information regarding Results of Operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Each borrowing under the revolving credit facility will bear interest at rates based on LIBOR (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.
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.
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. 32/ATR 2022 Form 10-K Table of Contents
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. 34/ATR 2023 Form 10-K Table of Contents
We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude the business transformation charges (restructuring initiatives), acquisition-related costs, purchase accounting adjustments related to acquisitions and investments and net unrealized investment gains and losses related to observable market price changes on equity securities.
We also present our adjusted earnings before net interest and taxes (“Adjusted EBIT”) and adjusted earnings before net interest, taxes, depreciation and amortization (“Adjusted EBITDA”), both of which exclude restructuring initiatives, acquisition-related costs, purchase accounting adjustments related to acquisitions and investments and net unrealized investment gains and losses related to observable market price changes on equity securities.
The estimated effect of a 0.5% decrease in each of the expected compensation rates would be a $4.8 million decrease in the PBO ($1.1 million decrease for the domestic plans and $3.7 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% decrease in each of the expected compensation rates would be a $6.0 million decrease in the PBO ($1.3 million decrease for the domestic plans and $4.7 million decrease for the foreign plans) and a $0.9 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 $5.2 million increase in the PBO ($1.2 million increase for the domestic plans and $4.0 million increase for the foreign plans) and a $1.1 million increase to the net periodic benefit cost.
The estimated effect of a 0.5% increase in each of the expected compensation rates would be a $6.4 million increase in the PBO ($1.3 million increase for the domestic plans and $5.1 million increase for the foreign plans) and a $1.0 million increase to the net periodic benefit cost.
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. For the year ended December 31, 2022, reported sales increased 3% to $3.32 billion from $3.23 billion a year ago.
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. For the year ended December 31, 2023, reported sales increased 5% to $3.49 billion from $3.32 billion a year ago.
As noted above, any unrealized investment gains or losses are removed from our Adjusted EBITDA calculation as we believe that unrealized cost investment gains and losses from changes in market prices are not considered relevant to understanding our reported consolidated earnings or evaluating our periodic economic performance. NON-U.S.
As noted above, any unrealized investment gains or losses are removed from our Adjusted EBITDA calculation as we believe that unrealized investment gains and losses from changes in market prices are not considered relevant to understanding our reported consolidated earnings or evaluating our periodic economic performance.
The revolving credit facility provides mechanics relating to a transition away from LIBOR (in the case of USD) and the 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.
The 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.
Management has discussed the development and selection of these critical accounting estimates with the audit committee of our Board of Directors and the audit committee has reviewed our disclosure relating to it in this MD&A. 28/ATR 2022 Form 10-K Table of Contents IMPAIRMENT OF GOODWILL In accordance with current accounting standards, goodwill has an indefinite life and is not amortized.
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. 30/ATR 2023 Form 10-K Table of Contents IMPAIRMENT OF GOODWILL In accordance with current accounting standards, goodwill has an indefinite life and is not amortized.
Our revolving credit facility and certain long-term obligations require us to satisfy certain financial and other covenants including: Requirement Level at December 31, 2022 Consolidated Leverage Ratio (1) Maximum of 3.50 to 1.00 1.71 to 1.00 Consolidated Interest Coverage Ratio (1) Minimum of 3.00 to 1.00 15.00 to 1.00 (1) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.
Our revolving credit facility and certain long-term obligations require us to satisfy certain financial and other covenants including: Requirement Level at December 31, 2023 Consolidated Leverage Ratio (1) Maximum of 3.50 to 1.00 1.46 to 1.00 Consolidated Interest Coverage Ratio (1) Minimum of 3.00 to 1.00 16.06 to 1.00 (1) Definitions of ratios are included as part of the revolving credit facility agreement and the private placement agreements.
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: • geopolitical conflicts worldwide including the invasion of Ukraine by the Russian military and the resulting indirect impact on demand from our customers selling their products into these countries, as well as rising input costs and certain supply chain disruptions; • lower demand and asset utilization due to an economic recession either globally or in key markets we operate within; • the impact of COVID-19 and its variants on our global supply chain and our global customers, employees and operations, which has elevated and will continue to elevate many of the risks and uncertainties discussed below; • economic conditions worldwide, including inflationary conditions and potential deflationary conditions in other regions we rely on for growth; • the execution of our fixed cost initiatives; • the availability of direct labor workers and the increase in direct labor costs, especially in North America; • our ability to preserve organizational culture and maintain employee productivity in the work-from-home environment caused by the current pandemic; • the availability of raw materials and components (particularly from sole sourced suppliers) as well as the financial viability of these suppliers; 31/ATR 2022 Form 10-K Table of Contents • fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs (particularly resin, metal, anodization costs and energy 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; • financial conditions of customers and suppliers; • consolidations within our customer or supplier bases; • changes in customer and/or consumer spending levels; • loss of one or more key accounts; • our ability to successfully implement facility expansions and new facility projects; • 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, including contingent consideration valuation; • 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; • cybersecurity threats that could impact our networks and reporting systems; • the impact of natural disasters and other weather-related occurrences; • fiscal and monetary policies and other regulations; • changes or difficulties in complying with government regulation; • changing regulations or market conditions regarding environmental sustainability; • work stoppages due to labor disputes; • competition, including technological advances; • 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; • our ability to meet future cash flow estimates to support our goodwill impairment testing; • the demand for existing and new products; • 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.
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: • geopolitical conflicts worldwide including the invasion of Ukraine by the Russian military and the recent events in the Middle East and the resulting indirect impact on demand from our customers selling their products into these countries, as well as rising input costs and certain supply chain disruptions; 33/ATR 2023 Form 10-K Table of Contents • 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; • the execution of our fixed cost reduction initiatives, including our optimization initiative; • the availability of raw materials and components (particularly from sole sourced suppliers) as well as the financial viability of these suppliers; • fluctuations in the cost of materials, components, transportation cost as a result of supply chain disruptions and labor shortages, and other input costs (particularly resin, metal, anodization costs and energy 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; • financial conditions of customers and suppliers; • consolidations within our customer or supplier bases; • changes in customer and/or consumer spending levels; • loss of one or more key accounts; • our ability to successfully implement facility expansions and new facility projects; • 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, including contingent consideration valuation; • 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; • cybersecurity threats that could impact our networks and reporting systems; • 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; • work stoppages due to labor disputes; • competition, including technological advances; • 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; • our ability to meet future cash flow estimates to support our goodwill impairment testing; • the demand for existing and new products; • 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.
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 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.
We have historically used cash flow from operations, our revolving and other credit facilities, proceeds from stock options and debt, as needed, as our primary sources of liquidity.
We have historically used cash flow from operations and our revolving and other credit facilities, as needed, as our primary sources of liquidity.
The estimated effect of a 1% decrease (or increase) in each expected long-term rate of return on assets would be a $2.4 million increase (or decrease) in net periodic benefit cost. 30/ATR 2022 Form 10-K Table of Contents The average rate of compensation increase is utilized principally in calculating the PBO and the net periodic benefit cost.
The estimated effect of a 1% decrease (or increase) in each expected long-term rate of return on assets would be a $2.4 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 1% decrease in each discount rate would be a $43.7 million increase in the PBO ($33.6 million for the domestic plans and $10.1 million for the foreign plans) and a $10.9 million increase in net periodic benefit cost ($10.3 million for the domestic plans and $0.6 million for the foreign plans).
The estimated effect of a 1% increase in each discount rate would be a $39.1 million decrease in the PBO ($28.4 million for the domestic plans and $10.7 million for the foreign plans) and a $5.3 million decrease in net periodic benefit cost ($4.6 million for the domestic plans and $0.7 million for the foreign plans).
Our primary pension related assumptions as of December 31, 2022 and 2021 were as follows: Actuarial Assumptions as of December 31, 2022 2021 Discount rate: Domestic plans 5.15 % 2.75 % Foreign plans 3.69 % 1.09 % Expected long ‑ term rate of return on plan assets: Domestic plans 7.00 % 7.00 % Foreign plans 3.53 % 3.56 % Rate of compensation increase: Domestic plans 3.20 % 3.17 % Foreign plans 3.21 % 3.05 % In order to determine the 2023 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, 2022.
Our primary pension related assumptions as of December 31, 2023 and 2022 were as follows: Actuarial Assumptions as of December 31, 2023 2022 Discount rate: Domestic plans 4.95 % 5.15 % Foreign plans 3.20 % 3.69 % Expected long ‑ term rate of return on plan assets: Domestic plans 7.00 % 7.00 % Foreign plans 3.23 % 3.53 % Rate of compensation increase: Domestic plans 3.24 % 3.20 % Foreign plans 3.20 % 3.21 % In order to determine the 2024 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, 2023.
In 2023, we expect to have financing cash outlays of approximately $107.0 million to fund short- and long-term debt obligations as discussed in Note 7 - Debt, which will be covered by cash on hand or additional borrowings on our revolving credit facility.
In 2024, we expect to have financing cash outlays of approximately $458.2 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.
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 + Home and Food + Beverage business segments represent reporting units.
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 Aptar Beauty and Aptar Closures business segments each represent a reporting unit.
Cash and equivalents increased to $141.7 million at December 31, 2022 from $122.9 million at December 31, 2021 while t otal short and long-term interest bearing debt of $1.18 billion at December 31, 2022 decreased from $1.20 billion at December 31, 2021.
Cash and equivalents increased to $223.6 million at December 31, 2023 from $141.7 million at December 31, 2022 while t otal short and long-term interest bearing debt of $1.14 billion at December 31, 2023 decreased from $1.18 billion at December 31, 2022.
Based on our current business plan and revenue prospects, we believe that our 2023 operating cash flow will be more than sufficient to fund our working capital needs, scheduled repayments of debt, outstanding purchase commitments as discussed in Note 13 - Commitments and Contingencies and lease arrangements as discussed in Note 8 - Lease Commitments.
Based on our current business plan and revenue prospects, we believe that our 2024 operating cash flow will be more than sufficient to fund our working capital needs 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 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 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 $284.5 million in 2023 compared to $239.3 million reported in 2022.
Management applied judgment in determining the fair value of the acquired assets with respect to the acquisitions of Metaphase, Voluntis, and Hengyu, including the fair values of acquired intangibles including acquired technology and customer relationships.
Management applied judgment in determining the fair value of the acquired assets with respect to the acquisitions of Metaphase, iD SCENT and Gulf Closures, including the fair values of acquired intangibles including acquired technology, trademarks and customer relationships.
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, the terminal growth factor, as well as the discount rate. Actual cash flows in the future may differ significantly from those forecasted today.
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, the terminal growth factor, as well as the discount rate.
Aptar expects earnings per share for the first quarter of 2023, excluding any restructuring expenses, changes in the fair value of equity investments and acquisition-related costs, to be in the range of $0.85 to $0.93 and this guidance is based on an effective tax rate range of 25.5% to 27.5%.
Aptar expects earnings per share for the first quarter of 2024, excluding any restructuring expenses, changes in the fair value of equity investments and acquisition-related costs, to be in the range of $1.10 to $1.18 and this guidance is based on an effective tax rate range of 24.5% to 26.5%.
Year Ended December 31, 2022 Prescription Drug Consumer Health Care Injectables Active Material Science Solutions Digital Health (2) Total Core Sales Growth 11 % 15 % 7 % 21 % — % 13 % Acquisitions — % — % 2 % — % 100 % 1 % Currency Effects (1) (8) % (8) % (9) % (4) % — % (8) % Total Reported Net Sales Growth 3 % 7 % — % 17 % 100 % 6 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Year Ended December 31, 2023 Prescription Drug Consumer Health Care Injectables Active Material Science Solutions Digital Health Total Reported Net Sales Growth 27 % 20 % (4) % (21) % — % 12 % Currency Effects (1) (1) % (3) % (2) % (1) % (4) % (2) % Acquisitions — % — % (1) % — % — % — % Core Sales Growth 26 % 17 % (7) % (22) % (4) % 10 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
The estimated effect of a 1% increase in each discount rate would be a $35.3 million decrease in the PBO ($26.5 million for the domestic plans and $8.8 million for the foreign plans) and a $8.5 million decrease in net periodic benefit cost ($7.9 million for the domestic plans and $0.6 million for the foreign plans).
The estimated effect of a 1% decrease in each discount rate would be a $49.0 million increase in the PBO ($36.3 million for the domestic plans and $12.7 million for the foreign plans) and a $3.1 million increase in net periodic benefit cost ($2.1 million for the domestic plans and $1.0 million for the foreign plans).
Of domestic plan assets, approximately 47% was invested in equities, 27% was invested in fixed income securities, 10% was invested in hedge funds, 8% was invested in infrastructure securities, 7% was invested in real estate securities and 1% was invested in money market funds, at December 31, 2022.
Of domestic plan assets, approximately 48% was invested in equities, 26% was invested in fixed income securities, 11% was invested in hedge funds, 8% was invested in infrastructure securities, 5% was invested in real estate securities and 1% was invested in money market funds, at December 31, 2023.
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. 23/ATR 2022 Form 10-K Table of Contents Corporate & Other expenses in 2022 increased to $62.9 million compared to $52.3 million in 2021.
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.
Our primary uses of cash are to invest in equipment and facilities that are necessary to support our growth, pay quarterly dividends to stockholders, repurchase shares of our common stock and to make acquisitions that will contribute to the achievement of our strategic objectives.
Our primary uses of cash are to invest in equipment and working capital for the continued growth of our business, including facilities that are necessary to support our growth, pay quarterly dividends to stockholders, make acquisitions and repurchase shares of our common stock.
PROVISION FOR INCOME TAXES The reported effective tax rate on income before income taxes for 2022 and 2021 was 28.4% and 24.3%, respectively. The tax rate for 2022 was higher compared to 2021 due primarily to lower tax benefits from share-based compensation and increased taxes related to a legal entity reorganization.
PROVISION FOR INCOME TAXES The reported effective tax rate on income before income taxes for 2023 and 2022 was 24.2% and 28.4%, respectively. The tax rate for 2023 was lower compared to 2022 due primarily to a better mix of earnings and increased tax benefits from share-based compensation.
As of December 31, 2022, we have $945.6 million of goodwill, which is allocated as follows: Reporting Unit Balance at December 31, 2022 Pharma $ 170,023 Injectables 169,226 Active Material Science Solutions 159,493 Beauty + Home 319,011 Food + Beverage 127,879 Total $ 945,632 We believe that the accounting estimates related to determining the fair value of our reporting units 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.
As of December 31, 2023, we have $963.4 million of goodwill, which is allocated as follows: In Thousands Reporting Unit Balance at December 31, 2023 Pharma $ 175,606 Injectables 171,211 Active Material Science Solutions 161,630 Beauty 287,096 Closures 167,875 Total $ 963,418 We believe that the accounting estimates related to determining the fair value of our reporting units 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.
The estimates and assumptions for future cash flows and their impact on the impairment testing of goodwill are a critical accounting estimate.
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.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE Our selling, research & development and administrative expenses (“SG&A”) decreased approximately 1% or $7.0 million to $544.3 million in 2022 compared to $551.2 million in 2021. Excluding changes in foreign currency rates, SG&A increased by approximately $22.7 million compared to the prior year.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE Our selling, research & development and administrative expenses (“SG&A”) increased approximately 4% or $21.5 million to $565.8 million in 2023 compared to $544.3 million in 2022. Excluding changes in foreign currency rates, SG&A increased by approximately $14.7 million compared to the prior year.
Year Ended December 31, 2022 Personal Care Beauty Home Care Total Core Sales Growth 3 % 13 % (12) % 7 % Currency Effects (1) (5) % (8) % (3) % (7) % Total Reported Net Sales Growth (2) % 5 % (15) % — % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Year Ended December 31, 2023 Aptar Pharma Aptar Beauty Aptar Closures Total Reported Net Sales Growth 12 % 4 % (5) % 5 % Currency Effects (1) (2) % (2) % (1) % (2) % Acquisitions — % — % (1) % — % Core Sales Growth 10 % 2 % (7) % 3 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
The ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholders’ equity plus Net Debt) decreased to 33.3% at December 31, 2022 compared to 35.1% at December 31, 2021. See the reconciliation under "Non-U.S. GAAP Measures". In 2022, our operations provided approximately $478.6 million in cash flow compared to $363.4 million in 2021.
The ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholders’ equity plus Net Debt) decreased to 28.3% at December 31, 2023 compared to 33.3% at December 31, 2022. See the reconciliation under "Non-U.S. GAAP Measures".
The 15% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinses and cough and cold solutions. Increased demand for elastomeric components for vaccines and biologics drove the 7% core sales growth in our injectables market.
The 17% core sales growth in the consumer health care market was driven by higher demand for our nasal decongestant, saline rinses, eye care and cough and cold solutions.
We previously removed the indefinite reinvestment assertion for the pre-2020 earnings in Italy, Switzerland and Colombia, and have accrued $0.6 million for those taxes. We continue to assert indefinite reinvestment with respect to foreign earnings from other countries.
We also previously removed our indefinite reinvestment assertion with respect to undistributed earnings accumulated in Germany. We also previously removed the indefinite reinvestment assertion for the pre-2020 earnings in Italy, Switzerland and Colombia. We continue to assert indefinite reinvestment with respect to foreign earnings from other countries.
Year Ended December 31, 2022 Food Beverage Total Core Sales Growth 8 % (2) % 5 % Currency Effects (1) (2) % (3) % (2) % Total Reported Net Sales Growth 6 % (5) % 3 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Year Ended December 31, 2023 Food Beverage Personal Care Other (2) Total Reported Net Sales Growth (9) % 14 % (15) % 2 % (5) % Currency Effects (1) — % (2) % (1) % — % (1) % Acquisitions — % (7) % — % — % (1) % Core Sales Growth (9) % 5 % (16) % 2 % (7) % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Based on our qualitative assessment of macroeconomic, industry, and market events and circumstances as well as the overall financial performance of the reporting units, we determined it was more likely than not that the fair value of these reporting units was greater than their carrying amounts and therefore no impairment of goodwill was recognized during the year ended December 31, 2022.
Based on our qualitative and quantitative analysis performed over the reporting units, we determined it was more likely than not that the fair value of these reporting units was greater than their carrying amounts and therefore no impairment of goodwill was recognized during the year ended December 31, 2023.
At December 31, 2022, the discount rates for our domestic and foreign plans were 5.15% and 3.69%, respectively.
At December 31, 2023, the discount rates for our domestic and foreign plans were 4.95% and 3.20%, respectively.
Year Ended December 31, 2022 2021 Amount in Thousands $ % of Net Sales Amount in Thousands $ % of Net Sales Net sales $ 3,322,249 100.0 % $ 3,227,221 100.0 % Cost of sales (exclusive of depreciation and amortization shown below) 2,158,411 65.0 2,070,538 64.1 Selling, research & development and administrative 544,262 16.4 551,242 17.1 Depreciation and amortization 233,706 7.0 234,853 7.3 Restructuring initiatives 6,597 0.2 23,240 0.7 Operating income 379,273 11.4 347,348 10.8 Interest expense (40,827) (1.2) (30,284) (0.9) Other (expense) income (3,742) (0.1) 4,591 0.1 Income before income taxes 334,704 10.1 321,655 10.0 Net Income $ 239,555 7.2 % $ 243,638 7.5 % Effective tax rate 28.4 % 24.3 % Adjusted EBITDA margin (1) 18.6 % 18.8 % (1) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales.
Year Ended December 31, 2023 2022 Amount in Thousands $ % of Net Sales Amount in Thousands $ % of Net Sales Net sales $ 3,487,450 100.0 % $ 3,322,249 100.0 % Cost of sales (exclusive of depreciation and amortization shown below) 2,224,051 63.8 2,158,411 65.0 Selling, research & development and administrative 565,783 16.2 544,262 16.4 Depreciation and amortization 248,593 7.1 233,706 7.0 Restructuring initiatives 45,004 1.3 6,597 0.2 Operating income 404,019 11.6 379,273 11.4 Interest expense (40,418) (1.2) (40,827) (1.2) Other (expense) income 11,224 0.3 (3,742) (0.1) Income before income taxes 374,825 10.7 334,704 10.1 Net Income $ 284,176 8.1 % $ 239,555 7.2 % Effective tax rate 24.2 % 28.4 % Adjusted EBITDA margin (1) 20.3 % 18.6 % (1) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Reported Net Sales.
Due to uncertainties from the war in Ukraine, potential new global pandemics or COVID-19 variants, uncertain macroeconomic conditions, including rising interest rates and the inflationary environment, in the event that customer demand decreases significantly for a prolonged period of time and adversely impacts our cash flows from operations, we would have the ability to restrict and significantly reduce our capital expenditure levels and share repurchases, as well as evaluate our acquisition strategy.
In the event that customer demand decreases significantly for a prolonged period of time and adversely impacts our cash flows from operations, we would have the ability to restrict and significantly reduce our capital expenditure levels and share repurchases, as well as evaluate our acquisition strategy.
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.
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.
Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures." 22/ATR 2022 Form 10-K Table of Contents Reported net sales grew slightly in 2022 to $1.44 billion compared to $1.43 billion in 2021. Changes in currency rates negatively impacted net sales by 7%.
Adjusted EBITDA margins are calculated as Adjusted EBITDA divided by Reported Net Sales. See the reconciliation under "Non-U.S. GAAP Measures." 23/ATR 2023 Form 10-K Table of Contents Reported net sales increased approximately 12% in 2023 to $1.52 billion compared to $1.36 billion in 2022.
SG&A as a percentage of net sales decreased to 16.4% in 2022 compared to 17.1% in the prior year. DEPRECIATION AND AMORTIZATION Reported depreciation and amortization expense decreased less than 1% or $1.1 million to $233.7 million in 2022 compared to $234.9 million in 2021.
SG&A as a percentage of net sales, however, decreased to 16.2% in 2023 compared to 16.4% in the prior year. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense increased approximately 6% or $14.9 million to $248.6 million in 2023 compared to $233.7 million in 2022.
We reported net income of $239.3 million in 2022 compared to $244.1 million reported in 2021. 21/ATR 2022 Form 10-K Table of Contents PHARMA SEGMENT Year Ended December 31, 2022 2021 % Change 2022 vs. 2021 Net Sales $ 1,361,256 $ 1,284,624 6.0 % Adjusted EBITDA (1) 441,622 425,714 3.7 Adjusted EBITDA margin (1) 32.4 % 33.1 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
In thousands, except percentages APTAR PHARMA SEGMENT Year Ended December 31, 2023 2022 % Change 2023 vs. 2022 Net Sales $ 1,520,993 $ 1,361,256 11.7 % Adjusted EBITDA (1) 502,633 441,622 13.8 Adjusted EBITDA margin (1) 33.0 % 32.4 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
Net Debt to Net Capital Reconciliation December 31, 2022 December 31, 2021 Revolving credit facility and overdrafts $ 3,810 $ 147,276 Current maturities of long-term obligations, net of unamortized debt issuance costs 118,981 142,351 Long-Term Obligations, net of unamortized debt issuance costs 1,052,597 907,024 Total Debt $ 1,175,388 $ 1,196,651 Less: Cash and equivalents $ 141,732 $ 122,925 Short-term investments — 740 Net Debt $ 1,033,656 $ 1,072,986 Total Stockholders' Equity $ 2,068,204 $ 1,984,600 Net Debt 1,033,656 1,072,986 Net Capital $ 3,101,860 $ 3,057,586 Net Debt to Net Capital 33.3 % 35.1 % 26/ATR 2022 Form 10-K Table of Contents Free Cash Flow Reconciliation December 31, 2022 December 31, 2021 Net Cash Provided by Operations $ 478,617 $ 363,443 Capital Expenditures (310,427) (307,935) Proceeds from Government Grants 27,795 2,003 Free Cash Flow $ 195,985 $ 57,511 LIQUIDITY AND CAPITAL RESOURCES Given our current low level of leverage relative to others in our industry and our ability to generate strong levels of cash flow from operations, we believe we are in a strong financial position to meet our business requirements in the foreseeable future.
Net Debt to Net Capital Reconciliation December 31, 2023 December 31, 2022 Revolving credit facility and overdrafts $ 81,794 $ 3,810 Current maturities of long-term obligations, net of unamortized debt issuance costs 376,426 118,981 Long-Term Obligations, net of unamortized debt issuance costs 681,188 1,052,597 Total Debt $ 1,139,408 $ 1,175,388 Less: Cash and equivalents $ 223,643 $ 141,732 Net Debt $ 915,765 $ 1,033,656 Total Stockholders' Equity $ 2,321,298 $ 2,068,204 Net Debt 915,765 1,033,656 Net Capital $ 3,237,063 $ 3,101,860 Net Debt to Net Capital 28.3 % 33.3 % 28/ATR 2023 Form 10-K Table of Contents Free Cash Flow Reconciliation December 31, 2023 December 31, 2022 Net Cash Provided by Operations $ 575,239 $ 478,617 Capital Expenditures (312,342) (310,427) Proceeds from Government Grants — 27,795 Free Cash Flow $ 262,897 $ 195,985 LIQUIDITY AND CAPITAL RESOURCES Given our current level of leverage relative to others in our industry and our ability to consistently generate significant cash flow from operations, we believe we are in a strong financial position to meet our business requirements in the foreseeable future.
BEAUTY + HOME SEGMENT Year Ended December 31, 2022 2021 % Change 2022 vs. 2021 Net Sales $ 1,438,534 $ 1,434,022 0.3 % Adjusted EBITDA (1) 166,465 154,689 7.6 Adjusted EBITDA margin (1) 11.6 % 10.8 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
In thousands, except percentages APTAR BEAUTY SEGMENT Year Ended December 31, 2023 2022 % Change 2023 vs. 2022 Net Sales $ 1,267,697 $ 1,222,535 3.7 % Adjusted EBITDA (1) 163,716 151,887 7.8 Adjusted EBITDA margin (1) 12.9 % 12.4 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
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.
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.
This investment is recorded at fair value based on observable market prices for identical assets with the change in fair value being recorded as a net investment gain or loss in the Consolidated Statements of Income. During 2022, we recognized a $2.1 million loss on this investment while we reported a $4.7 million gain during 2021.
As discussed in Note 20 – Investment in Equity Securities of the Consolidated Financial Statements, this investment is recorded at fair value based on observable market prices for identical assets with the change in fair value being recorded as a net investment gain or loss in our Consolidated Statements of Income.
GAAP measure, can be found under "Net Sales" below. 2022 HIGHLIGHTS • Each segment achieved top line growth with annual sales of $3.3 billion • Reported sales grew 3% and core sales increased 9% • Reported earnings per share decreased 1% to $3.59 • Reported net income decreased 2% to $239 million • Adjusted EBITDA increased 2% to $617 million • 29th consecutive year of paying an increased annual dividend 18/ATR 2022 Form 10-K Table of Contents RESULTS OF OPERATIONS The following table sets forth the consolidated statements of income and the related percentages of net sales for the periods indicated.
GAAP measure, can be found under "Net Sales" below. 2023 HIGHLIGHTS • First full year following segment re-alignment: Aptar Pharma, Aptar Beauty and Aptar Closures • Reported sales grew 5% and core sales increased 3% • Reported earnings per share increased 18% to $4.25 • Reported net income increased 19% to $284 million • Adjusted EBITDA increased 15% to $708 million • 30th consecutive year of paying an increased annual dividend 20/ATR 2023 Form 10-K Table of Contents RESULTS OF OPERATIONS The following table sets forth the Consolidated Statements of Income and the related percentages of net sales for the periods indicated.
Cash flow from operations was primarily derived from earnings before depreciation and amortization. The increase in 2022 cash flow from operations compared to 2021 is primarily attributable to improved working capital management and lower restructuring costs.
In 2023, our operations provided approximately $575.2 million in net cash flow compared to $478.6 million in 2022. Cash flow from operations is primarily derived from earnings before depreciation and amortization. The increase in 2023 cash flow from operations compared to 2022 is primarily attributable to improved earnings and better working capital management.
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.
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.
FOOD + BEVERAGE SEGMENT Year Ended December 31, 2022 2021 % Change 2022 vs. 2021 Net Sales $ 522,459 $ 508,575 2.7 % Adjusted EBITDA (1) 71,531 79,377 (9.9) Adjusted EBITDA margin (1) 13.7 % 15.6 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, restructuring initiatives, acquisition-related costs, net unrealized investment gains and losses related to observable market price changes on equity securities and other special items.
In thousands, except percentages APTAR CLOSURES SEGMENT Year Ended December 31, 2023 2022 % Change 2023 vs. 2022 Net Sales $ 698,760 $ 738,458 (5.4) % Adjusted EBITDA (1) 103,693 86,109 20.4 Adjusted EBITDA margin (1) 14.8 % 11.7 % (1) Adjusted EBITDA is calculated as earnings before net interest, taxes, depreciation, amortization, unallocated corporate expenses, 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 3% in 2022 to $522.5 million compared to $508.6 million in 2021. Changes in currency rates negatively impacted net sales by 2%. Therefore, core sales increased 5% in 2022 compared to the prior year.
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 decreased approximately 5% in 2023 to $698.8 million compared to $738.5 million in 2022.
The remaining half of our core sales increase is due to volume growth mainly in our Pharma segment. 19/ATR 2022 Form 10-K Table of Contents Year Ended December 31, 2022 Pharma Beauty +Home Food + Beverage Total Core Sales Growth 13 % 7 % 5 % 9 % Acquisitions 1 % — % — % — % Currency Effects (1) (8) % (7) % (2) % (6) % Total Reported Net Sales Growth 6 % — % 3 % 3 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Core sales to the home care markets decreased 22% over 2022 mainly due to lower demand from our air care and surface cleaner customers. 24/ATR 2023 Form 10-K Table of Contents Year Ended December 31, 2023 Personal Care Beauty Home Care Total Reported Net Sales Growth (5) % 12 % (21) % 4 % Currency Effects (1) (2) % (2) % (1) % (2) % Acquisitions — % — % — % — % Core Sales Growth (7) % 10 % (22) % 2 % (1) Currency effects are calculated by translating last year’s amounts at this year’s foreign exchange rates.
Excluding changes in foreign currency rates, depreciation and amortization expense increased by approximately $12.9 million compared to the prior year.
Excluding changes in foreign currency rates, depreciation and amortization expense increased by approximately $11.4 million compared to the prior year. Approximately $0.9 million of this increase is due to our acquisitions of Metaphase, iD SCENT, and Gulf Closures.
As of December 31, 2022, there were no borrowings under the revolving credit facility in the U.S. or by our wholly-owned UK subsidiary.
As of December 31, 2023, $36.5 million and €40.0 million ($44.2 million) was utilized under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary. As of December 31, 2022, no balance was utilized under the revolving credit facility in the U.S. and no balance was utilized by our wholly-owned UK subsidiary.
At December 31, 2022 and 2021, we had $114.8 million and $130.2 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.
Resolution of these uncertainties in a manner inconsistent with management's expectations could have a material impact on our financial condition and operating results. 31/ATR 2023 Form 10-K Table of Contents At December 31, 2023 and 2022, we had $133.4 million and $114.8 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.
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 6% in 2022 to $1.36 billion compared to $1.28 billion in 2021. Changes in currencies negatively affected net sales by 8%, while the acquisitions of Voluntis, Hengyu and Metaphase had a positive impact of 1%.
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 4% in 2023 to $1.27 billion compared to $1.22 billion in 2022.
A reconciliation of core sales growth to reported net sales growth, the most directly comparable U.S.
Core sales, excluding the positive impact from changes in currency exchange rates and acquisition effects, increased 3% from 2022. A reconciliation of core sales growth to reported net sales growth, the most directly comparable U.S.
Core sales of our products to the prescription drug market increased 11% on strong demand for our allergic rhinitis and asthma devices as a result of the destocking effect during 2021.
Core sales of our proprietary drug delivery systems to the prescription drug market increased 26% on continued strong demand for our allergic rhinitis, asthma and emergency medicines and central nervous system devices.
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. 29/ATR 2022 Form 10-K Table of Contents ACQUISITIONS We account for business combinations using the acquisition method, which requires management to estimate the fair value of identifiable assets acquired and liabilities assumed, and to properly allocate purchase price consideration to the individual assets acquired and liabilities assumed.
ACQUISITIONS We account for business combinations using the acquisition method, which requires management to estimate the fair value of identifiable assets acquired and liabilities assumed, and to properly allocate purchase price consideration to the individual assets acquired and liabilities assumed.
The following table sets forth, for the periods indicated, net sales by geographic location: Years Ended December 31, 2022 % of Total 2021 % of Total Domestic $ 1,100,159 33 % $ 1,081,823 34 % Europe 1,773,395 53 % 1,725,182 53 % Other Foreign 448,695 14 % 420,216 13 % COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW) Our cost of sales (“COS”) as a percent of net sales increased to 65.0% in 2022 compared to 64.1% in 2021.
The following table sets forth, for the periods indicated, net sales by geographic location: Years Ended December 31, 2023 % of Total 2022 % of Total Domestic $ 1,001,087 29 % $ 1,100,159 33 % Europe 2,001,779 57 % 1,773,395 53 % Other Foreign 484,584 14 % 448,695 14 % 21/ATR 2023 Form 10-K Table of Contents COST OF SALES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION SHOWN BELOW) Our cost of sales (“COS”) as a percent of net sales decreased to 63.8% in 2023 compared to 65.0% in 2022, in spite of approximately $16 million additional costs related to the validation of the new injectables expansion capacity as well as inefficiencies in the first part of the year due to the Enterprise Resource Planning ("ERP") system implementation.
The estimated impact of the changes to the assumptions as noted in the table above on our 2023 net periodic benefit cost is expected to be a decrease of approxi mately $20.1 million.
The estimated impact of the changes to the assumptions as noted in the table above on our 2024 net periodic benefit cost is expected to be an increase of approxi mately $1.5 million . OPERATIONS OUTLOOK Looking to the first quarter, we intend to build on our positive momentum from the previous year and anticipate starting the year off strong.
This change in sales mix, along with some operational inefficiencies in North America drove our lower Adjusted EBITDA for 2022. 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.
Together, these changes led to our Adjusted EBITDA margin improving from 11.7% in 2022 to 14.8% during 2023. 25/ATR 2023 Form 10-K Table of Contents 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.
The ultimate realization of these deferred tax assets is dependent upon the amount, source, and timing of future taxable income.
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.
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.
Of foreign plan assets, approximately 94% was invested in investment funds, 3% was invested in equity securities, 1% was invested in corporate debt securities, 1% was invested in fixed income securities and 1% was invested in money market funds at December 31, 2023. 32/ATR 2023 Form 10-K Table of Contents 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.
Restructuring costs for the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, 2022 2021 Restructuring Initiatives by Segment Pharma $ — $ 76 Beauty + Home 6,460 10,447 Food + Beverage 137 404 Corporate & Other — 12,313 Total Restructuring Initiatives $ 6,597 $ 23,240 OPERATING INCOME Reported operating income increased approximately $31.9 million or 9% to $379.3 million in 2022 compared to $347.3 million in 2021.
Restructuring costs for the years ended December 31, 2023 and 2022 are as follows: Year Ended December 31, 2023 2022 Restructuring Initiatives by Plan: Optimization initiative $ 45,445 $ 6,224 Prior year initiatives (441) 373 Total Restructuring Initiatives $ 45,004 $ 6,597 Restructuring Initiatives by Segment Aptar Pharma $ 4,852 $ — Aptar Beauty 20,683 5,539 Aptar Closures 17,927 1,058 Corporate & Other 1,542 — Total Restructuring Initiatives $ 45,004 $ 6,597 OPERATING INCOME Operating income increased approximately $24.7 million or 7% to $404.0 million in 2023 compared to $379.3 million in 2022.
In particular, judgment was applied with respect to determining the fair value of acquired technology and customer relationships intangible assets, which involved the use of significant estimates and assumptions with respect to the timing and amounts of cash flow projections, the revenue growth rates, the customer attrition rates, the technology obsolescence rate, the EBITDA margins and the discount rate.
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 benchmarking to prior deals to assess the reasonableness of allocation of excess purchase price to goodwill and intangibles.
Core sales of our active material science solutions increased 21% mainly on strong demand for our oral solid dose solutions and Activ-Film products used with at-home COVID-19 test kits.
Similarly, core sales of our active material science solutions decreased 22% mainly on strong prior year period demand for our active film products used with at-home COVID-19 antigen test kits and tooling sales that did not repeat during 2023. Digital Health currently does not represent a significant percentage of the total Pharma sales.
Excluding changes in foreign currency rates, operating income increased by approximately $60.3 million in 2022 compared to 2021. Strong sales growth, along with lower restructuring costs, during 2022 drove this improvement. Operating income as a percentage of net sales increased to 11.4% in 2022 compared to 10.8% for the prior year.
Excluding changes in foreign currency rates, operating income increased by approximately $14.7 million in 2023 compared to 2022. Strong Aptar Pharma segment sales growth along with our lower COS percentage and SG&A leverage discussed above more than compensated for our higher restructuring costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeYear Ended December 31, 2022 Buy/Sell Contract Amount (in thousands) Average Contractual Exchange Rate Min / Max Notional Volumes EUR / USD $ 17,388 1.0254 12,000 - 17,388 EUR / BRL 11,096 5.3830 11,046 - 11,096 EUR / THB 4,911 37.8142 4,477 - 4,911 CNY / EUR 4,638 0.1346 0 - 4,638 MXN / USD 4,000 0.0498 4,000 - 6,500 CZK / EUR 3,245 0.0406 509 - 3,245 USD / CNY 2,000 6.9694 2,000 - 2,000 USD / EUR 1,082 0.9779 1,082 - 6,613 EUR / MXN 1,068 20.2073 1,068 - 2,990 EUR / CNY 1,068 7.3377 1,068 - 2,691 GBP / EUR 802 1.1434 422 - 802 CHF / EUR 356 1.0206 356 - 2,402 EUR / GBP 262 0.8809 0 - 262 CHF / USD 162 1.0495 150 - 162 USD / GBP 155 0.8452 0 - 155 Total $ 52,233 As of December 31, 2022, we have recorded the fair value of foreign currency forward exchange contracts of $1.1 million in prepaid and other and $0.3 million in Accounts payable, accrued and other liabilities in the Consolidated Balance Sheets.
Biggest changeYear Ended December 31, 2023 Buy/Sell Contract Amount (in thousands) Average Contractual Exchange Rate Min / Max Notional Volumes EUR / USD $ 13,024 1.0798 13,024 - 20,581 EUR / BRL 12,302 5.3469 11,751 - 12,302 USD / EUR 5,187 0.9253 1,417 - 5,187 EUR / THB 4,915 37.8869 4,734 - 4,915 CHF / EUR 4,491 1.0487 2,294 - 4,491 USD / CNY 3,600 7.1337 2,100 - 3,980 CZK / EUR 2,771 0.0408 2,771 - 6,959 MXN / USD 2,000 0.0569 2,000 - 3,500 THB / EUR 1,012 0.0264 0 - 1,012 GBP / EUR 704 1.1516 407 - 1,071 EUR / MXN 664 19.0128 664 - 1,318 CHF / USD 179 1.1226 166 - 179 Total $ 50,849 As of December 31, 2023, we have recorded the fair value of foreign currency forward exchange contracts of $0.4 million in prepaid and other and $0.2 million in accounts payable, accrued and other liabilities in the Consolidated Balance Sheets.
The table below provides information as of December 31, 2022 about our forward currency exchange contracts. The majority of the contracts expire before the end of the first quarter of 2023.
The table below provides information as of December 31, 2023 about our forward currency exchange contracts. The majority of the contracts expire before the end of the first quarter of 2024.
This USD/EUR swap agreement exchanged $203 million of fixed-rate 3.60% USD debt to €200 million of fixed-rate 2.5224% EUR debt. The fair value of this net investment hedge is $8.8 million and is reported in accrued and other liabilities on the Consolidated Balance Sheets. 33/ATR 2022 Form 10-K Table of Contents
This USD/EUR swap agreement exchanged $203 million of fixed-rate 3.60% USD debt to €200 million of fixed-rate 2.5224% EUR debt. The fair value of this net investment hedge is $22.2 million and is reported in accounts payable, accrued and other liabilities in the Consolidated Balance Sheets. 35/ATR 2023 Form 10-K Table of Contents
Our primary foreign exchange exposure is to the euro, but we also have foreign exchange exposure to the Chinese yuan, Brazilian real, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations.
Our primary foreign exchange exposure is to the euro, but we have foreign exchange exposure to the Chinese yuan, Brazilian real, Argentine peso, Mexican peso, Swiss franc and other Asian, European and Latin American currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements.
Conversely, a weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.
Conversely, a strengthening U.S. dollar has a dilutive effect. Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.

Other ATR 10-K year-over-year comparisons