Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup’s 2018 Fourth Quarter and Year End Conference Call. [Operator Instructions] Introducing today’s conference call is Mr. Matt DellaMaria, Senior Vice President, Investor Relations and Communications. Please go ahead, sir.

Thank you, Howard and welcome everyone. Participating on the call today are Stephan Tanda, President and Chief Executive Officer and Bob Kuhn, Executive Vice President, Chief Financial Officer and Secretary. You can find a copy of our press release as well as a slide presentation that summarizes our results on our website. We will also post a replay of this conference call on the website. Lastly, today’s call includes some forward-looking statements. Please refer to our SEC filings to review factors that could cause actual results to differ materially from those projected or contained in the forward-looking statements. Aptar undertakes no obligation to update the forward-looking information contained therein. I would now like to turn the conference call over to Stephan.

Thank you, Matt and good morning everyone and thanks for joining us. As you saw yesterday, we reported fourth quarter results that included very robust core sales growth across 7 of our 8 end markets and in each geographic region. Bob will share some details regarding our financial results, and afterwards, I will briefly recap the year. But first, I would like to comment on a few important topics that are an inherent part of our strategy. If you’re following along with the presentation that accompanies our press release and is posted to our website, I’m referring now to Slide 4. The first topic is sustainability. The increased level of interest in this topic by our customers is driving new innovation projects that will drive future growth. You may also have seen that Aptar has signed the Ellen MacArthur New Plastics Economy Global Commitment and we have joined the World Business Council for Sustainable Development. Joining these important organizations further underscores our efforts to work closely with customers and industry stakeholders to accelerate progress towards a circular economy. Some of our closures and pumps that feature post-consumer recycled resin, or PCR, can already be found on products in the market today. For example, most recently, we announced the launch of a dispensing closure that uses 50% PCR for Ecover’s brand of liquid soap called Washing Up. We are also actively collaborating with our customers on refillable products. We are supporting our customers’ participation in the circular e-commerce platform called Loop by providing lotion pumps to key customers Unilever and Procter & Gamble. Finally, Aptar was recently named by Barron’s one of the Top 100 Most Sustainable Companies in the U.S. as part of their 2019 sustainability rankings. Another important topic is innovation. As you know from our prior discussions about…

Thank you, Stephan and good morning everyone. I’ll briefly walk through some of the details concerning our fourth quarter results. If you are following the slides we published with the press release, you can refer to Slide 6. We reported sales growth of 9%. That was comprised of core sales growth of 7%, with a positive impact from acquisitions of 6% and a negative impact from currency rates of minus 4%. Sales increased across each geographic region and in all end markets other than beverage. As you saw on our press release, Beauty + Home core sales, excluding acquisitions and keeping currencies constant, increased 4%. Looking at sales growth by market on a core basis, core sales to the beauty market increased 3%. This was mostly due to strong demand for facial skin care and color cosmetic products. Core sales for the personal care market increased 4% due to an increased demand for dispensing pumps for body care and baby care. Core sales to the home care market increased 10% due primarily to increased demand for dispensing solutions for household cleaners and air fresheners. When we look at profitability, our Beauty + Home segment had an adjusted EBITDA margin of 13%. Margins were negatively impacted by headwinds from the timing of passing through rising raw material costs, start-up losses at Reboul and some isolated operational challenges at other facilities. Our Pharma segment achieved the core sales growth of 15% and an adjusted EBITDA margin of 36%. The strong sales volumes, along with the gain recognized on the sale of an equity investment, contributed to strong pharma margins. Core sales to the prescription market increased 17%, primarily due to increased demand of our metered dose inhalers and nasal spray systems used with allergy and central nervous system treatments. Core sales to…

Thanks Bob. So, a few key takeaways. It was clearly a good quarter and a good year. In 2018, we made significant progress on our strategic priorities. I would like to leave you with a few key takeaways as shown on Slide 10. We achieved excellent organic growth with our Beauty + Home business reporting strong top line improvement, helped in part by our transformation initiatives and also remarkably strong end-market demand. Our business segments grew nicely in Beauty + Home and Pharma finished well ahead of their long-term targets and Food + Beverage slightly below their target range for core sales growth. We also finished the year with a strong EBITDA improvement when we exclude costs related to our acquisitions and restructuring initiatives. As highlighted last quarter, we continue to add key external talent to our executive ranks and accelerate and strengthen our internal leadership development activities. As part of our balanced capital allocation, we completed strategic acquisitions and equity investments. We also increased our dividend and 2018 was our 25th consecutive year of paying an increased dividend. Furthermore, we invested in our business in 2018 and will continue to do so in 2019. About half of the expected capital expenditures for 2019 will be related to additional capacity and to new products, including those related to our recently acquired businesses. In closing, Aptar is a company with a very resilient business model with the industry’s broadest portfolio of differentiated solutions. Our business is diversified across attractive end markets, across geographic regions and across thousands of high-quality customers. There is a lot of discussion these days about a potential economic slowdown. While we are not recession-proof, we are able to leverage our great diversity and along with our strong balance sheet, we can withstand economic slowdowns should they occur. We only need to look to the last great recession to understand that even with the decline in sales, our margins were very stable. And post-recession, we had back-to-back record sales growth and our portfolio has become even more resilient since then. So just to be clear, while we read the same headlines as you do, we do not see a slowdown in our business at this time, and our customers see robust demand. Aptar is a unique company with a tremendous long-term track record that we tend to protect. With that, we would like to open it up for your questions.

[Operator Instructions] Our first question or comment comes from the line of Daniel Rizzo from Jefferies. Your line is open.

Good morning, guys. Just a quick question on costs what you are seeing, I mean, I assume that this kind of leveled off now. I was wondering how long it takes for you guys to pass price increase or cost increase through to your customers and what’s the lag?

Thanks, Daniel. Usually anywhere between 30 to 90 days a quarter to make the adjustment, now realize when you get to the end of that period, by the time you see the effect, that can be up to 6 months because you have the trailing effect.

So Daniel, just to put some context around it, we did have pass-throughs in the quarter, which positively impacted the top line by between that and general price increase about 1.5%. But when we look at the EBITDA impact, it was about a $3 million negative, primarily in Beauty + Home and predominantly from raw material or input costs other than resin.

And what are we seeing with those costs now?

Well, I mean in the first quarter, we are seeing continued reduction in the resin costs. And so we’re anticipating a modest positive to EBITDA in the first quarter projection.

And then it looks like your CapEx is stepping up a bit in 2019, I was wondering if you could provide some color on that and what was it relating to?

Sure. I mean, when you step back, we really after an extended period of slow or no growth, we have now experienced some six quarters of brisk growth and expect that growth to continue. So, we are starting to experience shortages in several areas of our business that is not only causing service issues to clients, but also contributes to some of our operational challenges. So, we need to ramp up capacity to ensure we meet the customer demand to take advantage of the growth opportunities in an efficient manner. I mean remember these organic investments provide some of the best returns that we can generate, but maybe Bob can add some more color to the investments.

Yes. I mean, I think Stephan mentioned in his opening remarks as well, about half of the expected cash outlays next year are going to be coming from these capacity growth initiatives, including capital for the newly acquired CSP and Reboul in 2018. We do have some additional cash outlays for transformation that we have highlighted earlier in 2018 where the cash is expected to be spent in 2019. And then really everything else is, I would call more in line normally with maintenance and systems type investments.

And final question to alleviate the operational issues you just pointed to, how long is it going to take? Are you going to be able to, I mean, will take mostly a year to kind of catch up to get your utilization where you want it to be?

Well, I mean, let’s put it in the context of the transformation. If you remember this transformation really has four elements, the first and the biggest impact is top line growth and the second was to significantly improve operations in the factories, the third one was around G&A reductions, and then the fourth one was all about streamlining the support infrastructure. You can almost also look at it this from a time point of view. If you are focused on accelerating the top line first, this year will be all about improving operations. Some of those things do need investments and the G&A reductions will come towards the end of the transformation program.

Thank you very much.

Thank you. Our next question or comment comes from the line of Ghansham Panjabi from Baird. Your line is open.

Hi, good morning. This is actually Matt Krueger sitting in for Ghansham. How are you doing today?

Good, Matt. How are you?

Good, good. So I was hoping that you could provide a further breakdown of core sales in terms of volume contributions versus pricing contributions for your segments? And then could you provide some added detail on kind of the strict volume outlook for 2019 as it relates to your segments or even by region would be helpful?

Sure. So, on the top line when I mentioned we had about positive 1% to 1.5% of pass-through, about 3% of that is impacting the Food + Beverage side, and then 1% is for Beauty + Home.

Okay, that’s helpful. And then just in terms of the outlook?

Well, I mean we don’t really provide guidance for top line. As you know, we gave a target range for our top line growth for the company of 4% to 7% and then that splits into Beauty + Home, 3% to 6% and then Pharma, 6% to 10% and Food + Beverage, 6% to 10%. Clearly, Pharma has done significantly better with growth in the teens now for quite a few quarters, which is also driving some of the need to expand capacity in Pharma, and it’s certainly a place where we don’t want to shortchange customers. And yes, we are committed to these guided ranges, but not every quarter, yes. So there will be differences by quarter.

Okay, understood. And then my next question is can you provide some added detail on your outlook for margin recovery, specifically across the Home and Beauty and Food + Beverage segments as we progress through 2019? Just trying to get a sense as to when you guys could be kind of turning the corner to margin positive for year-over-year?

Yes. We certainly expect the transformation to continue to impact us positively, not only on the top line but also the margin improvement. So we would expect margin expansion both for Beauty + Home and Food + Beverage to gradually come in over the year.

Yes. One thing I would like to point out is that, I think in Q1 last year, Beauty + Home margin was about 14%. And I mentioned in my comments the startup losses at Reboul. Reboul didn’t come in to the Beauty + Home results until sometime in the second quarter. So we will have a little bit of overhang on those startup losses in Q1, but we should be pretty close relatively speaking to where the first quarter was last year. And then we should see a gradual increase, as Stephan mentioned, moving through the rest of ‘19.

Great. And then my last question relates to the business transformation, I was hoping we could just dig a little further into what savings you have already achieved from the transformation initiatives and where those savings can be attributed. I know it’s focused on corporate and Home + Beauty segment, what’s the spending that’s been required to achieve these savings and then what’s your outlook for 2019 for both of those factors as well?

Yes. So let’s break it up again. So the fundamental numbers are $90 million of one-time costs to achieve a $80 million EBITDA improvement over a 3-year period, plus capital expenditures. And the 3-year program, biggest impact is from top line growth, I think you have seen that. We have achieved quite a few also cost improvements last year, but they are obscured and partially offset by the operational challenges that we’ve been very transparent about. Nevertheless, those are occurring. And as I said this year, we will be all about improving the factories addressing more of these operational issues so that the obscuration of those transformation savings goes away. And then towards the end of the transformation will be some of the G&A reductions that we are working and detailing now specifically.

Okay, great. Thank you very much.

Thank you. Our next question or comment comes from the line of George Staphos from Bank of America. Your line is open.

Thank you. Hi, everyone. Good morning. Thanks for all the details and congratulations on the year. I guess the first question I had was on beverage trends and kind of a two-part. One, in China, you have been managing against this issue now for probably, I don’t know, 1.5 years, when should we, if it’s possible to discern anniversary that beverage closure issue in China? When will the comps turn flat to positive at least in terms of that issue? And relatedly, what are your customers saying more broadly about their use of plastic for beverages, from water in everything else, energy drinks etcetera?

On the first topic or question, you’re being very kind with the term managing. That’s the reality.

That’s how we are, Stephan.

Yes. The China beverage customer constitutes a very good business, but we have very limited visibility both on the end-user demand as well as on the customer orders. So I’ve called the anniversary before, so I am not going to do it, again, since I’ve been wrong. I’ll bet that this business, it will continue to surprise both on the upside and on the downside, and it just depends which quarters you compare. And the fourth quarter was kind of a perfect storm next quarter might be the opposite. And I cannot give you a better answer, unfortunately. Now on your second question, the big debate or the big question with bottled water is really the flat top caps, how can you eliminate the screwing off the caps throwing away, because those single caps are one of the highest volume items that ends up in the sea. So that drives people more to the sports cap closures, that drives more to the solutions where the cap stays with the bottle and, hopefully, also the Flip Lid product that we are discussing with customers and our technology is already in the market that in some countries with that, again where the lid stays with the bottle and gets recycled with the bottle. I mean, the overall theme here is really all about circularity. Plastic is a very good energy-efficient product, but it needs to come back it can’t be a one-way street.

So, that’s helpful, Stephan. So from your customer standpoint and from what they are hearing from the consumer, the bigger issue is on the cap on the one hand, which presumably that’s an opportunity and you can solve that and less on the actual use of plastic as long as it’s recyclable and returnable and your customers are comfortable that, that will be resolved?

Yes. And you see initiatives around having them to pay a fee that you get returned when you return the bottle, as has been standard in places like Germany for a long time.

Okay. My last two questions and I will turn it over. Can you talk us about – this is because of the real good comparison the other segments within Pharma, it kind of stands out, but injectables, was the 5% core growth, which would be better than most of the other sectors that I look at period and packaging, but was it in line with what you were expecting? How were trends in injectables playing out relative your expectations? And then I am not sure I heard and perhaps you are not in a position to provide, but did you comment on how much cash outlay there will be this year for the transformation both in terms of cash cost for redundancies and capital?

On the injectable market, this is certainly in line though with market demand, market demand is even a little bit higher to be perfectly honest. That’s one of the areas where we have service issues from a capacity point of view. But that certainly continues to be a very interesting area with good growth prospects. Now, I’ll turn it to Bob.

And George, you were looking at 2019 for the cash outlays for transformation?

Yes, both. If you can, redundancy and other costs and then capital associated with it. Thank you.

Sure. So in total, it’s around $40 million is what we are anticipating for 2019.

Okay. Thank you, Bob.

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

Hi, good morning. I wanted to go back to the volume growth you are calling out in Beauty + Home. I know some of this on the core sales side is raw materials, but it does seem like it’s been a little better than expected in the last couple of quarters. And I’m just trying to get a sense of how sustainable the growth you are seeing in this segment is? And specifically, are you – is the growth you are seeing in line with what your customers are doing or are you benefiting from winning more new product developments or other types of ways and how should we think about that in 2019?

Yes, it’s really both. If you remember, when we kicked off the transformation, we were very transparent that in some areas, we had lost some market share and we’re being much more proactive with customers, tracking things like win rates and customer projects on a weekly basis. That certainly has allowed us to regain some of the lost business. That is a contributor. Secondly, of course, the market demand is strong. And when you read the earnings announcement of some of our customers, whether it’s L’Oreal or Estée Lauder or LVMH, you will find them pointing to very robust consumer growth, particular in the Asia luxury and Asia premium consumer. And while we all read the headlines about China slowing down with respect to automobile sales, maybe mobile phone sales, we don’t see that. We don’t hear that from our customers in the Beauty segment.

Okay, thank you. My second question, I was just noting that your cash balance is a lot lower that it normally is. If I just look historically, I think it was the same level kind of in Q3, as well, but I tend to be it could be running around $400 million. So I was just wondering if there was anything there to note and if we should expect that to kind of change over time?

No. I mean, the cash balance was clearly we had a big outflow for the CSP transaction, but I mean, we had peaked out around $700 million prior to that and we’re running around $300 million roughly in Q3 and a little bit below that in Q4. That’s really just some of the cash outlays we have had for the transformation and for the increase in CapEx that we had in the fourth quarter.

Okay, thanks. I will turn it over.

Thank you. Our next question or comment comes from the line of Edlain Rodriguez from UBS. Your line is open.

Thank you. Good morning, guys.

Good morning.

Just one quick one on the guidance for 1Q, I mean, clearly, a little lower than most of us have expected, but outside of currency, like anything else that we should be thinking of that’s kind of the cause in the shortfall and is that related to the share repurchase? And again, like what’s your thinking of what should we think in terms of like the cadence for sale repurchase and pace?

So one of the things that I mean I hesitate to kind of look into what was in your model going forward. But I mean, if we just first look at acquisitions, CSP is performing as we expected, adding between $0.02 and $0.03 per share in Q4. What’s offsetting that a little bit is the Reboul startup losses, which were about $0.02. So maybe there is some of that. As well, we expect that startup loss to continue to go into Q1 as I mentioned earlier and then slowly abate as the year goes on. I am sorry, what was the other question?

Share buyback.

Share buyback, so yes. So we were on the sidelines in Q3 and Q4 because of the CSP acquisition, and we’ll continue to be in the market from time to time. We’ve got about $80 million remaining on our existing authorization, and then we’ll continue to evaluate. We’ve had our 25th consecutive year of paying an increased dividend. We’ve talked a little bit about slightly higher spending on CapEx and then we will continue to evaluate M&A opportunities as they present themselves.

Okay. And one last one, on the whole sustainability issue. I mean, do you see it as a positive or negative for Aptar, especially if there’s a shift away from plastics, you know, to metals and paper? So at the end of the day, is that how do you see Aptar positioned now...

Thanks. We actually see this as a tremendous opportunity because it accelerates customer dialogue around creating new solutions, creating recyclable versions of products. And at the end of the day, whenever you innovate, have a new customer projects then, when we can bring all our assets and all our differentiation to bear. So we actually are encouraged by the pickup in our customer project pipeline that’s driven by sustainability. A lot of our customers have made significant commitments around either full recyclability of their packaging or high PCR contents. And they need companies like Aptar to help them fulfill their commitment. Of course, in the pharma world, this is almost a non-topic to be honest in the in that luxury beauty world, it’s also not a big topic where it is the biggest topic as we discussed earlier in some of the beverage markets. And we are not a player in the large bottled water market today. We are a player more in the specialty sports drink market. And we offer solutions as we discussed earlier for the flat cap problem. Now, if I put my engineering hat on, plastic by far is the most sustainable product from an LCA footprint, but it has to be recycled. This if you recycle plastic, there is nothing that can come even close to it from an environmental footprint. I realize that it has the marketing problem. But in the end, I think the fundamental economics and including all the environmental footprint, I think will rule the day.

Okay thank you very much.

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

Stephan, Bob, Matt good morning.

Good morning Adam.

Good morning Adam.

Good morning Adam.

Bob just a couple on cash flow, your cash in ‘18, your free cash of $102 million, was there any working capital drag in there? And was the cash flow performance as you expected?

I would say, there the working capital wasn’t a big drag, we’re starting to see some pick-up on the on our payables initiatives and increasing terms on suppliers that’s going to gradually ramp-up as we move forward. Yes, the cash flow is where we expected it to be. We knew we had all the transformation costs to pay for. We had the acquisition costs in the year. And what we’re reporting to you is a reported free cash flow number rather than an adjusted number taking those things out. CapEx, we view based on the project pipeline in Q4 would be a little bit higher than it was in the prior year. But then I would say overall, it didn’t really shock us. It’s where we it came in where we expected it to be.

Okay. And then Bob, just on the restructuring costs, so I think you said you had $64 million in ‘18. I think in response to a question, you said you expect another $40 million in ‘19, so that totals to about $100 million. And when I go back to the...

Yes. The $40 million included also capital outlays.

Right. So, when you made the announcement, you said I think $90 million of cost and then $45 million of CapEx associated with the restructuring, so call it $135 million total, assuming that the $90 million of costs were all cash, right?

That’s correct. And then we also said that the capital would be funded through working capital initiatives and improvements, which we’re kind of there now.

So, the cost you the additional cost you’ll incur in ‘19, would that be how much left would you have post ‘19 related to the restructuring in terms of cash costs?

Well, we have a $58 million, if my memory serves me right, on cash outlays of the $64 million. So, I mean, we’ve got that delta. So, I mean, you’re looking at probably $30 million-something then on cash outlays.

I think that the bulk of the $90 million will be done by the end of the year with some playing into 2020.

Okay. And on the CapEx, Bob, the $240 million, I know you said you have some growth projects in there, presumably you have growth projects every year. So, I’m just trying to understand, is it would you see that $240 million is a normal-ish number, given that you have growth projects every year or would you say that’s an unusually high number for Aptar, given that you have it on just more growth projects than normal coming up in ‘19?

Maybe I just want to remind back, when you talk normally, we have changed the growth trajectory quite a bit. So, what was normal in the kind of a flattish environment is not normal in the growth environment, when you need to add capacity to meet demand and add capacity already, I mean, it pains me not to be able to supply customers. So.

Yes. I mean, and then included in that growth is also the additional amount of capital that we’ve got for both the CSP and the Reboul acquisitions as well. So, we’re lumping that into the capacity and upside.

Thanks Bob. And just my last one, just back to sustainability for a moment, Stephan and you talked about sustainability being a big opportunity for Aptar, appreciating that you’re not much in just water bottles, so you wouldn’t get hurt to the extent that water bottles go out of favor. But we’re hearing from other packaging companies, most notably those that make aluminum beverage cans, that the sustainability is a massive opportunity for them, not only in bottled water but other forms of beverage. And you’re saying, you don’t expect any pain associated with sustainability. So, can you just help us square why seemingly, every purveyor of packaging is saying this is an opportunity because presumably someone would get hurt in all of this?

Well, look, I mean, once we peel back the onion, I don’t want this to make aluminum versus plastics. But if you run the LCA numbers, the answers are pretty stark. But even if you take the Loop example that we participate in, so some customers say, okay, we’re going to switch a shampoo bottle from plastic to aluminum and then we’ll recycle or wash the aluminum bottle. It still needs to a dispenser. It still needs a pump on top. And then you have a solution, either you have a recyclable pump so when it comes back, you recycle the pump. So, customer needs a recyclable pump that will not be an aluminum pump I can guarantee you. That will be a plastic pump or it is a multiuse pump that needs very different engineering. In both cases, we are one of the go-to partners in developing that, either a fully recyclable pump or one that has a multi-use solution.

Thank you, Stephan.

Thank you. Our next question or comment comes from the line of Anojja Shah from BMO Capital. Your line is open.

Hi good morning. I just wanted to get some clarity. Is China still a target region for you for M&A? I’m only asking, because given the current trade climate and your experience in beverages there, is that still an area you’re targeting? And if so, are you seeing what kinds of valuations are you seeing and have they come down any with recent market volatility?

Yes. Look, I mean, China is a peer economy to the U.S. and to the Europe. So, we’re not going to take an economy that size off the table on anything. And we have significant customer challenge in each region at one point in time. So, this one happens to be in China but it’s not with that paint the whole country with that brush. Now on the valuation question, it really depends on the target, on the specific situation, attractiveness. We have walked away from a target 18 months ago, I think we’ve been quite transparent on that where it became too pricey, but other targets might be interesting. So that’s like with any other M&A, you look at the target, you make your own judgment and then if you can make it work, you get the deal and if not, you walk away. And again, there is no difference in any other situation. The most important thing is that you have good people on the ground locally. You cannot manage China from the U.S. and you cannot manage the U.S. from China. You need to have good people and we’re strengthening our people. You’ve seen we’ve added Jesse Wu to our Board. We’ve added Xiangwei Gong to our ex com. We’ve added a senior leader to run China. If you have good people, you will have good results in the end.

Okay thank you. And then just switching over, you mentioned in your prepared comments I believe that all these, a lot of independent beauty brands are actually reaching out to you, the smaller beauty brands. What do you think that you’re doing or how do you think you’ve successfully worked with these smaller brands? Because traditionally, I think it’s been quite difficult for packaging companies to serve small-run-customers?

Yes. You may remember that early on, when we started to kick off our commercial excellence efforts, we started to sub-segment our sales force that we had different people dealing with the small brands then, but the big brands and frankly, different people dealing with fragrance than with the large shampoo customers, so that we have our go-to-market force to be more tailored to the needs of the individual customers or the segments. The second one is of course we can provide local solutions around the world so we can be very responsive no matter where that indie brand player comes from. And in some cases, or in many cases, we’re able to take what we call stock products and slightly customize them or not at all customize them. And that is something that the indie brand can run and go with, which significantly shortens their time-to-market.

Okay thank you. That does it for me.

Thank you. Our next question or comment comes from the line of Chip Dillon from Vertical Research. Your line is open.

Good morning Stephan and Bob. Appreciate all the comments. Could you just, I don’t think you gave us this detail, but you mentioned a gain in Pharma and a write-off of some licenses in another segment. Could you give us an idea of the magnitude of those two numbers? And I believe they were included in the adjusted earnings, if I’m not mistaken.

No. Okay, so Chip, let me I’ll take both of those. So, the gain that we referred to is approximately $6 million. That was on an equity investment we made in the connected device company, which was sold in late 2018. So, we recognized an equity gain on that. And then the write-off of the prepaid royalty was related to our bonds, aluminum plastic. We had periods in the contract where we had minimum annual royalty payments, and then those concluded in 2018. The license continues to go on but we had a close out period. And in fact, that our while we remain very optimistic on the pipeline of projects that we have using that technology, we the delay in getting the volume that we thought we’re going to get when we signed a contract, we didn’t get there to eat up all the prepaid royalties by the end of 2018. They were not in our adjusted numbers. I’m sorry, they were included in the $0.92, they weren’t adjusted out.

Okay. And I’m sorry, the prepaid was how much in the quarter?

It was about $2 million.

Okay. And then the second question follow-up is, the it looks like year-to-year, your you looked like you bought about 1% of your stock during the year, 668,000 shares. I think you mentioned you didn’t buy any in the fourth quarter. And the share count, I’m going to guess is up to about $65.5 million. So that would suggest that about 2.5% more shares were issued through options exercises. Is that roughly correct?

Yes. We’re not quite at $65.5 million. My numbers have us about $65.3 million, but we’re close there.

Okay got you thank you.

Thank you. Our next question or comment comes from the line of the Gabe Hajde from Wells Fargo. Your line is open.

Good morning gentlemen. Thanks for taking the question. Stephan, if you can maybe elaborate a little bit on the investments that you’re making specific to the CSP Technologies acquisition. Is this more in the traditional sort of diabetes end market? Or is there a new application that you’re expanding on? And are you targeting any specific geography with that or is it spread across the footprint?

Yes. I don’t think we want to get into that level of detail. I mean, clearly, our first investment priority is to expand capacity in our Pharma business, where we have some places or some areas where we’re supply constrained, which we need to remedy as soon as possible. We see good opportunity in the CSP business to grow it further. We’ve been open with the fact that one of the synergies we see that we have an existing facility that comes online in China in Guangzhou and that will accelerate expansion for CSP there based compared to their plans pre-Aptar. And I think that’s about where I’m going to leave it.

Alright thank you and then, I guess, switching gears to the Pharma segment, just looking at comps, they become a little bit more difficult. And I was curious, if you could help us with either new pipeline of products or how that looks in the 12 to 18-month horizon or something like that, maybe where inventories are. I know it’s, sort of a difficult thing, but any color you could give us would be helpful.

Yes. So, we put quite an emphasis on continuing us to build the pipeline. Where I’m hesitating, a little bit is with your 12 to 18 months pipeline is really built for our 5, 6, 7, 8 years. So, what we’re putting in now is there. Now what’s coming out of the pipeline in the next 12 to 18 months is very good. So, we’re quite encouraged with the pipeline that we have, that or things that we can see. Now you always have FDA approvals that need to happen and sometimes, that’s misjudged. But what we see is very encouraging. We see the allergic rhinitis business to continue to go from strength to strength. Partly that is driven by broader distribution in club stores, online; partly that is driven by increase, such incidence of allergy as a disease. And part of that is driven by switching from pill form to using nasal spray because sometimes the pills increase, decongestions increase blood pressure, for example. And in the more, larger case, we see also some conversion of other drugs specifically in the central nervous system category, from old delivery forms of being injected or being injected in the pill, to being delivered through our nasal device. So, you’ve seen of course, the unfortunate example with Narcan, but we also see other central nervous system drugs like antidepressants and painkillers going that way.

Alright. Thank you very much.

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

Thanks again everyone. Bob, I think you mentioned you’re expecting a modest positive to EBITDA in the first quarter from lower resin. Obviously, polypropylene fell quite substantially in the U.S. in the fourth quarter, I don’t remember Europe offhand. But can you help me with why you’re not, I don’t know, could you help me with what modest means? And why you may not be expecting a bigger benefit than a modest one?

Well, it’s a very difficult calculation. I mean, I’m not sitting with a number that I can give you that this is exactly what’s baked in. It depends on the timing of the pass-throughs, the customers, their volumes in the quarter, how much is linked to closure pass-throughs, how much is linked through the raw material that’s in lotion pumps. So, there’s really a lot of factors in there. So, I’d rather stick with modest because directionally, that’s what we’ve got in the quarter rather than try to hang an exact number out there.

And just based on what’s happened thus far, Bob, would you expect further benefits beyond 1Q just based on those pass-throughs?

I mean, it all depends on again it depends on the volatility and what happens beyond Q1, right? I mean, we’ve got lots of data over the years, that depending on, where we can typically catch up is when the resin prices stabilize a little bit. But we’ll have to see where it goes for the remainder of the year.

I appreciate that. And just on Stephan, on Beauty + Home and Food + Beverage, I know you talked about focusing more on operations than perhaps just on top line growth. So, are you expecting slower appreciably slower top line growth in those segments but much better margin improvement? Is that did I infer that from your comments earlier?

No, not really. It’s just, you’ve got to think one thing at a time directionally. And actually, we’ve as a follow-up, it’s going very well. It’s the transformation savings that we’re working on. We are getting those but they’ve been obscured with all this activity, plants are very busy and hit other operational bottlenecks that we are addressing so that’s really what I referred to, when I’m speaking about priorities this year. I don’t see this as a trade-off. We clearly will make investments to expand capacity so that we are able to meet demand and improve operations. So, I don’t see that as a trade-off. We don’t intend to throttle back on the top line. Of course, the markets will do, what the markets will do. But the visibility we have is doesn’t we will not shy away from our guidance or from our external targets for top line growth.

I appreciate that. So, and just forgive me, if I missed this, but I know you’ve said, you expected $80 million of eventual EBITDA total EBITDA cumulative EBITDA benefits from the restructuring. How much of that $80 million have you realized to date?

Well, I mean, it’s a difficult question. I mean, in terms of what’s tracked in our system, we’re probably around the $50 million range and then offset by additional headwinds that weren’t anticipated when we started the project.

Okay. And those were all in Beauty + Home, that $50 million, Bob?

There were some that were across some of the other segments, some of the procurement savings and the G&A savings, but predominantly around Beauty + Home.

Got it. Okay, thank you.

Thank you. Our next question or comment is a follow-up from Mr. George Staphos from Bank of America. Your line is open.

Thanks, hi guys thanks for taking my follow on. Mostly around growth, just to finish up. In fragrance, I don’t recall, Bob, you’re calling out if there was what the growth rate was in the quarter. If you have that handy, I’d be interested. And then more importantly, what kind of market do you see developing in fragrance this year? What’s the backlog on projects in fragrances through the year, to the extent that you can comment? Fragrance has been something of an on-again, off-again business. You used to have a lot larger order size way, way back when. Now it seems like they’ve been smaller. What’s the outlook for this year, number one? And then I had a quick follow-on.

So, George, on the fragrance question, we don’t break out fragrance specifically. But the overall beauty market grew 3% in the quarter. Yes, that also includes skincare and color cosmetics.

So, the more, broad question in terms of how the market is evolving for 2019?

I mean it’s doing well. I mean, we’re seeing good growth. Again, there’s going to be a higher growth rate in there for skincare and cosmetics. And just generally, as Stephan said, we’re in that 3% to 6% range overall for Beauty + Home in total as a segment.

Okay. And then I was just curious, the sale on the equity investment in the active device, what prompted that, because that seems to be a future area of development, certainly one where we would expect Aptar to be innovating as well. Thanks and good luck guys.

Yes. That was really, we had a small share in that company, and the company was sold. The collaboration continues now with the new owners. So, in terms of collaboration, what we do in terms of develop and connect the devices together and the deal we have is continuing under the new owner. It is just the ownership changed.

Okay thank you Stephan.

Thank you. I’m showing no additional questions in the queue at this time. I would like to turn the conference back over to Mr. Tanda for any closing remarks.

Thanks very much for joining us. We’ll look forward to see you on the road and talk to you at the next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.