Ladies and gentlemen, thank you for standing by. Welcome to AptarGroup's 2019 Third Quarter Conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Introducing today's conference call is Mr. Matt Dellamaria, Senior Vice President, Investor Relations and Communications. Please go ahead, sir.

Thank you, Howard, and welcome, everyone. Participating on our 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 the slide presentation that summarizes our results on our website. We will also post a replay of this conference call on our 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'd now like to turn the conference call over to Stephan.

Thank you, Matt, and good morning, everyone, and thanks for joining us. Yesterday we reported core sales growth of 4% and adjusted EBITDA growth of 9% for the third quarter. Before I go into the quarterly segment results in more detail, let me start by sharing an update on our most recent acquisition of Noble and the announced segment leadership appointments. Then I will speak to each of the segments before turning it over to Bob for some more details. You can refer to slide 4 of the presentation that is featured on our website. As we announced in our press release, we have acquired Noble International, a leader in drug delivery training devices, including auto injectors, prefilled syringes, on-body and respiratory devices and patient on-boarding programs. Noble's training devices, which mimic the feel activation forces and functions of the actual drug delivery device, are designed to reduce error and increase device familiarity, both are key to ultimately improving health care adherence and outcomes especially in settings where patients self-administer the treatment. This acquisition is another step in our strategy to build out our pharma service business serving this attractive and rapidly growing market. On next slide 5, you can see how we are expanding our offering from drug delivery devices and components to being a full-service provider for our customers, from product development through the post-launch stage. Our pharma clients, who increasingly are smaller innovative companies, procure more and more of these services to increase the likelihood of success of their innovations to shorten the time to launch and to do improved performance in the market post launch. Now shifting topics as shown on slide 6, we have announced new segment leadership appointments. Marc Prieur will assume leadership of our Beauty + Home segment, as Eldon Schaffer will be…

Thank you, Stephan and good morning, everyone. I'll briefly walk through some of the details concerning our third quarter results. If you are following the slides we published with the press release, you can refer to Slide 10. We reported sales growth of 5% that was comprised of core sales growth of 4% with a positive impact from acquisitions of 4% and a negative impact from currency rates of 3%. Our pharma segment achieved a core sales growth of 13% and an adjusted EBITDA margin of 36%. The strong sales volumes, particularly in the prescription division, drove margins to the high end of our long-term range. Core sales to the prescription market increased 17%, driven by increased demand for our innovative drug delivery systems for allergic rhinitis, central nervous system treatments and asthma. Core sales to the consumer healthcare market increased 3%, due to increased demand for our products used on nasal saline and eye care treatments. Lastly, core sales to the injectables market increased 12%, due to increased demand for our plungers and stoppers. Turning to our Beauty + Home segment. Core sales decreased 1%, primarily due to the significant weakness in demand from the personal care market compared to a year ago. Beauty + Home's adjusted EBITDA margin of 13% was slightly above the prior year level. The positive effects of our transformation efforts and lower raw material costs were offset by the negative effects related to the decrease in volumes. Looking at sales growth by market on a core basis. Core sales to the beauty market increased 5% due to strong growth in skin care and fragrance products primarily driven by the China luxury market and travel retail. Core sales to the personal care market decreased 8%, due to the weak demand that I previously mentioned that…

Thanks, Bob. In closing, I'd like to leave you with a few key takeaways as also shown on Slide 16. The diversity of our portfolio continues to allow us to grow even if there's weakness in some of our markets or regions. We posted 5% core sales growth through the first nine months of the year with double-digit adjusted EBITDA growth. We continue to innovate vigorously and had several new dispensing drug delivery and active packaging product launches this year. We're building out our pharma service offerings with three acquisitions to date that are greatly enhancing the value we bring to our customers. We continue to add capabilities and scale in Asia to better serve the more rapidly growing markets there, especially for our beauty business with the addition of our new partnership with BTY. While we are positioning the company for long-term growth, we are also facing some near-term challenges. As we look to the fourth quarter, we anticipate that the above normal growth we have seen in parts of our pharma business will revert to a more normalized growth rate. Several Beauty + Home customers have indicated that they are reducing inventory levels in reaction to uncertainty around the impact of political and economic developments and consumer demand for their products. In closing, we are managing this business for the long term and we'll continue to focus on our customers and consumers and provide tangible value for many of the world's leading brands. We will bring to life dispensing solutions that transform and enhance everyday users experience around the world. With that I 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. How are you?

Good morning, Dan.

Just with the Noble acquisition, are there any synergies? Or does it just kind of expand the product platform?

When you look at how our customers -- our mix of customers is changing, it's the new product development, especially in biotech are increasingly done by smaller customers. So these smaller customers require services to get their products to market faster deal with all the FDA approvals and that provides an additional revenue opportunity for us. And of course ,we also benefit from the increased device sale as the product is launched. So it is really a synergistic effect with everything we do. We provide these services I think almost exclusively when one of our devices or injectable delivery solution is involved at the tail end.

And maybe I could add just a couple other small points. Typically, the sales cycle for Noble is later on in the process. And if you look at where we get involved with our customers on the device, it's very early on. So clearly we can provide a window of opportunities to Noble much sooner on pipeline projects than they've seen in the past. I think the other important thing is, since they are really dealing with the patient on-boarding they have great patient feedback on what patients like and dislike about various devices. And we think that that's a benefit for us moving forward in developing some new pharmaceutical device applications.

All right. Thank you for the color. And then mentioned that you were looking for towards like more normal growth in allergies, I was wondering how we should think about what that means in terms of -- I don't know yes just in terms of percentages. Or how we should think about it going forward?

Well we've been clear that our long-term growth rate for the pharma business is in the 6% to 10% range. This business in particular has been well above that. So it will revert back to that kind of range.

Okay. And then finally you mentioned -- the aforementioned nasal spray. What phase is that in, in terms of -- with the FDA? In terms of...

It's still in clinical trials. I don't have with me whether it's Phase II or Phase III.

Thanks very much.

Thank you. Our next question or comment comes from the line of John Kreger from William Blair. Your line is open.

Hi, thanks very much. Just to expand on the question about normalization within the pharma business. From your perspective is that a new longer-term trend or just something that you think will be realized in Q4?

Well the long-term trend is 6% to 10%. Now we've been for I think almost 18 months well above that in the teens for that particular segment and 6% to 10% is much more reasonable. And we see that materializing.

Okay, great. Thanks and then maybe just digging into the Slide five that you walked us through during the prepared remarks. How much of your pharma business currently would be for commercialized products versus products that are in clinical trials or earlier stages of development?

Yes. By far the vast majority is in commercialized products, I realize because most of our revenue is from device revenue. So the quantity of devices used to clinical trials compared to the commercial is much lower. Now having said that, we have for quite some time provide services through an express unit for the nasal delivery route. And now with Noble and Nanopharm and Gateway, we all can also offer services for the injectable side of the house and as Bob already mentioned for the patient on-boarding the human factor side.

Great. Thank you.

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

Good morning. We're going to try to revisit Noble a little bit. Unless, I missed it I didn't see much in the way in terms of I guess financial profile. Is there any way to give us a perspective as to what you might expect from, I guess EBITDA contribution or even revenue? I mean what I saw it looked like revenue might be around $20 million although it looked a little choppy. So hoping you can help us in that regard?

Sure. Yes Gabe you're spot on in that $20 million estimate that you've got and it is a bit choppy. It's very highly dependent on new device introductions into the market. And from an EBITDA perspective, we're not going to comment specifically on that. I will tell you from an EPS perspective; it's not going to have an impact on the fourth quarter results. It will be slightly dilutive $0.01 or $0.02 in 2020 and then we would expect it to ramp up 2021 and beyond. So this is really a growth platform for us and we see some nice upside in the near future.

So I would add though that the service business itself is a high-growth part of the pharma segment especially given that more and more of the clients requiring those services are smaller. They're not the big pharma houses and therefore they have the need for these services. So we see this as a good growth opportunity.

Understood, Stephan. Is it something that you have to maybe go out and acquire another business to offer another product or service? Or is this something that can I guess grow at the rates that you expect on a stand-alone basis?

No. As you see in slide 5, we got this space pretty nicely filled out. And not ruling out anything, but I think we have a pretty big part of what we need.

Okay. And as a follow-up in the Food and bev segment, can you comment at all about you mentioned I think in prepared remarks the China beverage issue coming back to haunt you a little bit, and thanks -- or excuse me on Halloween. Is that something you have any visibility in terms of -- is it more of a dual source issue how long it might persist?

I think you characterized it well. I'm not sure that I can add anything to it. This customer growth never give us perfect visibility. It is now more of a -- a little bit but still an impact. It's not comparable to the impact we had in prior years.

Thank you.

Thank you. Our next question or comment comes from the line of Jason Rodgers from Great Lakes Review. Your line is open.

Yes. Just in the pharma segment, can you give us a better idea of what percent of your revenues in the prescription area are generated from the allergy side versus central nervous and other areas?

Sure. So it's roughly about 2/3 of the prescription division's revenues are generated from allergy related products and then about less than 10% of the prescription division sales are coming today for central nervous system.

And I think prescription is about half of our pharma business.

And would you expect the allergy side to come in somewhere in line with your long-term pharma growth rates? Or is that an area that's -- because it's so strong could potentially fall below that?

It's hard to say. I mean we've been surprised on the upside before. I mean it's going to be highly dependent on any new product entries into this category and growth geographically as well. But certainly it's going to taper off more closer to the long-term target. Really multiple trends happening at the same time, on the one hand allergy continues to be an expanding category through -- I'm not a expert, but everything I read is the warming climate certainly increases the allergen loads in the environment. And for whatever reason all of us become more prone to allergies year-round – certainly -- around allergies. And so that is a growth driver and is -- that affects more and more parts of the world that can afford allergy medications that will continue to grow. On overlays on top of that we had this conversion in the U.S. where more and more went over-the-counter with broader distribution, including club stores e-commerce. We think that has kind of run its course. But to pick apart those two trends is not easy. But certainly we see a slowdown from the mid-teen rates to something that's more reasonable at the 6% to 10% range. And yes in some quarters, it's going to be at the low end. In some quarters it's going to be mid-range. We don't have a crystal ball like that.

And there's nothing to do with like a new competitor or any situation like that correct?

Not really. I mean certainly we have competition. I mean our market share is high but not 100% and there will always be some competitive activities in a competitive market.

Okay. Thank you.

Our next question or comment comes from the line of Mark Wilde from BMO Capital Markets. Your line is open.

Good morning Bob.

Good morning.

I wanted to just dig in on the fourth quarter outlook. You talked about beauty and home customers destocking. I'm curious is this a separate and more recent phenomenon than the sort of third quarter weakness that you pointed out in personal care?

In short, absolutely. I mean we pretty much in almost uniform chorus get that back from not only our personal care customers, but also our beauty customers that their degree of uncertainty about demand is ratcheted up and they are throttling back their inventories quite a bit. So, that is different than the personal care weakness that we are additional to the personal care weaknesses that we pointed out before. Now, historically, these destocking movements have gone on two to three quarters. We started already seeing that in quarter three. We certainly see it in full force in quarter four. Our history indicates probably will be with us part of Q1. And as Bob pointed out, we saw a particular weakness in North America and in Latin America which is a big part of our Beauty + Home business, but it's certainly not that quarter four is in all of a steady state picture here.

And Stephan does that tend to hit Prestige harder than say mass market or is it pretty much across the Board?

Actually Prestige is the one part of the market of luxury the one part of the market that's still doing well. It's really the broader Prestige Masstige that's being impacted here.

Okay. Though the other question I had is just can you update us on sort of your cost reduction efforts the efforts to kind of improve manufacturing excellence? And I think you've even been looking at kind of footprint over in Europe having some conversations with works councils. So, if I can get kind of an update on that side of things?

Sure. So, you're really talking about our Beauty + Home transformation. And just as a backdrop as a reminder for everybody, we set out to do three things; one is to reaccelerate the topline which notwithstanding what we just discussed was actually quite successful by -- after several years of flat to declining sales. We're able to reaccelerate the topline grow above market. We gained some share and a much stronger commercial excellence activity sales activities and so on. The second part is to address our underperforming sites where we had operational issues, the custom beauty sites in France, anodizing site, and a couple sites in the U.S. And then the third one is headcount reduction and SG&A streamlining all the corporate support functions. That is quite a bit also in Europe including the installation of the shared service center, which requires all work council approval also in France and that is a longer drawn out process. Now, we are executing and have been successful in doing what we set out to do. And actually just a couple of weeks ago was it looks back in Monaco very heartened by the feedback we're getting from customers about our increased service levels, our proactiveness the feeling of the pipeline is good. Also our sites are performing much better and we are successfully addressing most of the trouble spots. Now, having said that, if your revenue hits New York parcel like we're doing now you have future unabsorbed fixed cost which is eating up those gains, nevertheless, we are executing and performing much better. Now, looking at the demand scenario, of course, we are taking additional measures in the short-term. Anything you can imagine reducing people who have temporary contracts which we have quite a few in Europe eliminating over time subcontracting work where it makes sense to variablize costs actually doing the opposite. In other cases, in-sourcing to leverage our own fixed cost, and of course, further working on purchasing. Now, if -- we're also looking at scenarios to further streamline our footprint. Some of those we've already discussed. We also recently announced that -- internally that we are consolidating facilities in Argentina based on the weakness there. And we will continue to look whether we need to make additional structural changes. This probably as much as I can cover.

Okay, very good. I'll turn it over

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

Thanks. Good morning everyone.

Good morning Adam.

Stephan or Bob -- Stephan I think you just commented that you don't think Q4 is a steady state situation in terms of the guidance just given the Beauty + Home customer destocking. Can -- I know you said it would you would expect it to last into Q1. But can you give us a sense of how much of a hit you're expecting from this destocking to the extent again you consider it kind of a nonrecurring situation?

Yes, Adam. It's hard to tweeze that apart. Clearly, we would expect this segment to grow in the 3% to 6% range. We certainly expect it to decline in quarter four. Actually the underlying beauty business and all the trends we see in beauty continue to look very favorable. Personal Care is a larger challenge. I think there we see some trends of the changes in usage patterns, particularly in hair care that need a closer look. But overall, the beauty side of it I remain very bullish about this destocking notwithstanding.

Sure. Just two others. One on also on Beauty + Home. So, you talked at length about the restructurings Stephan just now. Do you think there's any relationship between this restructuring program you're doing and the sales weakness you're seeing in that segment to the extent reducing employees might be having an impact on your core sales there?

None whatsoever. In fact customers are as happy as the business and certainly I've been here. And the pipeline still looks good. So, I don't see any relationships there.

And just one last one again on Beauty + Home. So, the restructuring was intended was focused primarily on Beauty + Home and you had that $80 million EBITDA target. Now, you're changing the leadership of that segment. Can you just update us on kind of where you are in terms of the $80 million of EBITDA -- incremental EBITDA to which you guided by the end of next year and why the leadership change now as opposed to I don't know two quarters ago or two quarters from now?

Sure. I would say we're about halfway through. And obviously some of that has been eaten up with the current demand picture. Eldon has done a good job in particular on the front end of the business. We feel that a very good team now a different mix of skills and experience is required. And certainly Marc brings those experiences and skills. And frankly, we need Eldon elsewhere on some topics that need attention and that leverage his commercial excellence expertise more.

Thanks Stephan.

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

Hey guys. Good morning. I guess following up on the last two questions on Beauty + Home and Personal Care in particular for North America. That category seems particularly weak just relative to what your customers have been saying over the last couple of weeks as they reported earnings. Can you just give us some more color as to what's going on there? I mean that's a pretty significant number in terms of a 9% decline from North America.

Hi Ghansham. Yes, let me provide a bit more transparency. Certainly some of our customers -- and frankly, we are growing with them, but others are not. And I think we highlighted previously that in particular one product launch -- that pretty big last year. The sell-through is actually not great. And I think J&J has been public about their disappointment in the performance of their product in [Technical Difficulty]

Ladies and gentlemen please stand by. Speaker line dropped. We'll get connect -- reconnect, please hold. Okay you're reconnected. Let me put Mr. Ghansham back up.

Yes please. And everybody.

Okay.

Sorry Ghansham where did we lose you?

I think you mentioned J&J and the disappointment with that product and then I couldn't hear anything after that.

Right. Yes. Our line dropped. Bob was adding something.

Yes. I was saying that, if I'm not mistaken, I think, some of the customer announcements were talking more about their core sales gains were coming from pricing than volume. And, obviously, we're going to be very volume-dependent. So that's also part of the equation.

Okay. That's helpful. And then just in terms of pharma, the strategy in terms of broadening out your relevance, how much of this is customer pull-driven? And also can you just give us a sense as to the profit pools of the various nodes that you sort of highlighted on slide five, as you kind of build out your service capabilities, et cetera?

Yes. I mean, clearly, today the vast majority of our revenue is downstream. The service part of it is more rapidly growing and profitability frankly is very good. So certainly in line with pharma profitability. And we see that -- really two opportunities. One is, just participate in that higher service revenue, but two also increase the odds of our devices being in a successful launch at the back end. And the strength of the pharma model is that unlike in some other markets, we actually can charge for the services good money and at the same time, the benefit from the success through the device sales. And in between there are also milestone payments that we refer to, exclusivity payment, these kind of things along the pipeline. So it's really building out the ecosystem and dipping more into the whole profit pool of the whole chain that we show there on slide five.

Okay. Thanks. And just one final one, maybe for Bob. Hey, just in terms of the tax rate, you guys are one of the few companies that we follow that's seen a year-over-year increase in the tax rate, especially one that's a substantial. Is this a new baseline for tax rate going forward? Or is 2019 sort of an anomaly? Thanks.

Yes, sure. Good question Ghansham. So when the tax reformat came out, we had mentioned that about 70% of our business is outside of the U.S. So we've got a little bit more of a disproportionate share of our business outside the U.S. and the tax changes were meant to really bring more of that manufacturing to the U.S. Our fluctuation in the past and our lower tax rate has been predominantly from option exercises and the tax -- the increased tax deductibility on that. So our normal run rate absent any of those discrete items and tax benefits from stock option exercises, is more in that 30% to 32% range.

Got it. Thanks so much.

Our next question or comment comes from the line of George Staphos from BOA Merrill Lynch. Your line is open.

This is Molly Baum sitting in for George. He had a conflicting conference call today. The first question I wanted to ask, you guys talked a lot about sustainability at your Capital Markets Day. So in the better space in particular I wanted to ask if you've seen any impact, be it positive or negative, from this increased focus we've seen on sustainability. And then, just in general, if you've seen any impact or see opportunities or risks in any of the other segments and categories. Thank you.

Hi, Molly. Thanks for the question. I would say, we have gotten very high marks from customers for our proactive engagement with the topic and not just in words but also in deeds. As you know, our participation in the Loop pilot and also being on the Board of Loop, our investment in pure cycle to help bring about food grade polypropylene 100% recycled. And we start to see more projects in the pipeline with higher or 100% PCR content and customers are really wanting to get the hands-on those products. Recently, I also saw a very good interview from the CEO of Coke, who said, look, this is not about getting rid of plastics. This is about making one of the lowest carbon footprint products, fully recyclable and taking advantage of it, because the carbon footprint of plastic is of course much lower than that of glass and aluminum. So it's really customers engaging with us on how to solve this issue, which is primarily a waste issue in Asian countries who don't have good waste management situations and then it ends up in the ocean and gave rise to this whole topic. And as we engage with customers and also at the more senior levels, we get more projects and certainly you will see some shifts, I'm sure, from things that are more multiple material to unique material to make them more recyclable. You may see shifts of products that are one-time use to products that can be reused and we are engaged in many of those projects.

Got it. Thank you for the additional details. And my second question goes back to the Noble acquisition and just really pharma services more broadly. Really, the question is, how much further do you want to expand the business? And then, if you look at slide five do you -- what stages along the, I guess, product life cycle do you see gaps that you could potentially fill through further bolt-on acquisitions? Thank you.

Yes. Let me not speculate here. Of course, it is an active M&A environment, but we're quite happy with how we filled out this slide, if you want. If you saw our internal strategy slides from a couple of years ago, very happy with the progress. These things also go in stages. We need to digest what we have. These are all successful business in their own right. But we of course want to lift the synergies, which are mainly top line synergies. And, yes, we may add to that down the road, but we're quite happy with what we have here.

All right. Thanks again.

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

Hi. Good morning. Thanks for taking my questions. My first question is, you highlighted the role I think that was created for Eldon here. And so there are some things you needed to do. Really, if you could just talk about that a bit, what kind of strategic projects if possible? And very least, kind of, the commercial excellence focus that he's going to be having?

Yes. I mean by the very nature, strategic projects are not something that we can talk publicly about, but I think you have noticed maybe over the last few years that our level of activity has increased and we're not done in terms of positioning the company and future proofing the company in the right areas. So there are quite a few projects that need more attention. And Eldon's towering strength is in commercial excellence and certainly the rest of the company can benefit more from his guidance there.

Okay. I'm sorry my line is cutting in and out during the call and I'm not sure if anyone asked about kind of the uptick in CapEx, that you were calling for and just kind of the working cap move that Bob highlighted earlier. I was just wondering if we could get some more color on that.

Yes. I mean, Debbie, the working capital, we've picked it up a little bit, just based on where we finished, Q2 -- Q3 actuals on capital. I don't think there's really much to read into that. On the working capital, we are starting to see some benefits of some extending of payment terms with our suppliers. We've made some progress in the inventory area as well, but we still have a long way to go. And we haven't seen any real further degradation on the receivables side. So, all-in-all, it was a good quarter from working capital and the businesses are refocused on this topic. And like I said, we still got -- while we've made some good progress, we've still got some work left in front of us.

Okay, great. Thank you. I'll turn it over.

Thank you. Our next question or comment comes from the line of Neel Kumar from Morgan Stanley. Your line is open.

Great. Thanks. In terms of the growth normalization in pharma, is that mainly just limited to the OTC allergy market? Or is it also impacting the prescription allergy market? And then also margins have been trending towards the higher end of your target range as well. Can you maybe just talk about whether you expect margins to normalize in near-term or stay at current levels?

Yes. On the first question, you are right that it's primarily about the OTC market. I need to handicap that a little bit because OTC in one country might be prescription in another country. But given the dominance of the U.S. here, I think your comment is right. The margin is really largely dependent also on the mix of businesses. So we've been very open that our injectable business has a lower margin than the average. So if our injectable business grows faster for a couple of quarters than the other part of the portfolio you will see that impact the margin. Bob?

Yes. No I would say also you guys you can throw active packaging into that mix as well. I mean, it's closer to the injectable margin and that's also been performing very, very well. So I think in the past, we've come off a very robust prescription growth in the pharma business overall. So the mix tempering -- the mix is really what's tempering that margin and impacting that margin.

Okay. And then also just talking about CSP performance in the quarter, any progress on how it's performing with some of the newer applications?

Sure. So it's actually been doing quite well. So we've lapped the one-year anniversary. And like-for-like on the one month. In September, we were up mid-teens in terms of growth, which is good. So I would say it's performing as we had expected. We're starting to gain some new traction on some new application. Stephan mentioned, the Activ-Blister project and we have some others in the pipeline. We're starting to see more activity jointly with our legacy business, the application on the epinephrine that Stephan mentioned, also will contain a CSP vial as well to protect the integrity of the package. So we are starting to see some synergies from both the device and the secondary packaging side of things. So we're very pleased with the developments of CSP and see a lot more on the horizon.

Very helpful.

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

Thanks, everyone for taking my follow ups. Bob, would you mind just talking about the cadence of sales growth through the quarter to the extent there was a notable slowdown toward the end of the quarter and then because of the Beauty + Home inventory destocking? And then relatedly, how would you compare this customer destocking you're seeing to previous cycles whether 2008, 2009, 2010 when you saw the bounce back? Can you just talk about how this feels compared to those previous periods in that regard?

Sure. So I don't have the figures in front of me in terms of month-to-month. But typically in normal cycle September tends to be one of our stronger months and we didn't really see that this time. So that's one indication if you want to look at the month-to-month progress throughout the quarter. I would say, at least from my experience and for what I've seen, this is very normal. Typically, we've seen for whatever reason personal care, oftentimes be first into a slow down economic cycle. And then typically the first out as Stephan mentioned, can last anywhere between two and three quarters. Looking back in 2008, 2009, we first saw the dip in the fourth quarter in personal care. And then we started to see it in the first quarter of 2009 on the beauty side. But then in the back half of the year, personal care was the first to come out of this cycle followed by beauty. So I would say, it's very typical for us. I can't explain why that phenomenon is there but it's definitely something that seems normal.

I appreciate that. And just back to I think Mark's question earlier about how the personal care weakness you called out last quarter was different than this, can you just again help me understand the difference between the two issues?

Well, personal care it's really a mix of end-user demand and change also in usage pattern. And I mentioned the hair care and grooming, shifts of one example more dry shampoo being used by millennials. And the particular exposure we have to the J&J product with the launch not repeating and the product not doing as well. That is different than the beauty customers all of sudden, hey we're spooked and we're going to run our inventories down.

Sure. Thanks, Stephan.

Thank you. We have time for one more final question. Our last question is from Salvator Tiano from Vertical Research Partners. Your line is open.

Hi, good morning, Stephan and Bob. So just to talk a little bit about 2020, if you can provide some early moving pieces that you see with regard to CapEx direction and a meaningful change in your volume trends besides what you already discussed about the short-term implications in Pharma and Beauty + Home or margins. How should we think about next year's earnings and cash flow?

Hi, Salvator. We really don't give guidance at this stage for 2020. We just gave the Q4 guidance. We stand by our long-term targets for the three segments. I think clearly we are entering the year in a destocking mode with the challenges we've discussed in the Beauty + Home side. And we'll have to see how long into the year that takes. And I think beyond that we really can't give you 2020 guidance at this stage.

Yes and I'll touch on your question on free cash flow. I mean, it's the month that we're very early -- not early but we haven't finished our complete review of the capital requirements for next year. And certainly that will be scrubbed and reviewed and will be highly dependent on projects that are in the pipeline and ready to execute. We are going to continue to focus on working capital improvements. So that's certainly going to be an area of focus in 2020 as well. And that's about really all I can give you from a cash flow guidance perspective.

Great. Thank you very much.

Thank you everybody. Thanks for joining us and we look forward to seeing you on the road.

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