Todd Wenning: Hi. I'm Todd Wenning, equity analyst at Morningstar, and I'm joined here today by Steve Hagge, CEO of AptarGroup. Steve, welcome. Steve Hagge: Thanks for having me. Wenning: Sure. My first question for you is: I was looking at, before I came down here today, Aptar's performance since you went public. I think the stock's up over 1,000% versus the S&P at about 200%. So you guys have had this real focus on the dispensing part of the packaging industry. Why is that such a profitable part of the industry? Hagge: Well, I think there's two things about dispensing. We feel that dispensing is a critical part of how the product performs--the convenience it provides to the customer--and therefore, when you are making a decision as a consumer about what to buy, if it is easy to dispense has a major impact on your decision. And a lot of our customers--the Procter & Gambles, the Heinzes of the world--absolutely agree with that, and that's been able to come back and they are willing to pay for that dispensing if it's more convenient and helps distinguish their product on the shelf. Wenning: One of the things I find really interesting about Aptar is that a lot of customers maybe never heard of Aptar because they buy the product, not necessarily the package, but they probably have multiple Aptar products in their house, especially inhalers or nasal pump dispensers. Those are really where I think you guys have a strong competitive advantage. How do you expect to enhance that competitive advantage in the coming years? Hagge: It's a good issue. Even before a little bit getting into that, talking about the dispensing side for our pharmaceutical part of the business. There it's not just a nice-to-have, it's actually a critical performance of how the drug performs. So when you look at that, one of the things that a lot of people don't understand about that part of our business--when we start working really at the molecular stage with our customers, and as we work with them, that's a 7- to 10-year sell for us. So, when you talk about how we're going to enhance that, we've been in that business for 20 years; we are the market leader in dispensing nasally and through the lung route. So we're going to continue to work on new therapies. Today we primarily sell through allergies, asthma are our biggest diseases that we help provide dispensing devices for. But over the last several years we've now moved into pain, how quickly you can get pain medication in the body; ophthalmic, eye products, we've not been in those in the past; osteoporosis. There is different avenues with that, and most recently we've acquired a company that is now in the elastomer business, or the rubber part of the business, dealing with basically syringe devices or modifications around syringes, and we think that's going to help us grow with biotech drugs and come back and it has the same FDA requirements as our existing products. Wenning: Excellent. Right now Aptar has a large allocation of its revenue coming from North America, Western Europe. How do you guys plan on moving into emerging markets? What areas of your business do you think will be particularly well received in emerging markets? Hagge: The emerging markets for us have been a focus over the last 15 years, and we've seen that business grow from about 4% of overall Aptar up to today around 17% of overall Aptar, so it's had significant growth. As a matter of fact, in our last quarter, we saw Latin America growing at 14% for us; our Asian products grew over 25% in the quarter. So I think we still have good growth coming in both North America and Europe, but as we look to Asia, we see good growth coming across all three of our product sectors--our food and beverage, beauty and home, and our pharma sectors. Today we're probably bigger in beauty and home in Latin America. So we see growth coming from both pharma and the food and beverage area. In Asia, we're bigger in our food and beverage side and we see more growth coming from both in the pharma and beauty and the home side of the business. Wenning: Great. I think a lot of consumers who have checked the shelves over the past few years have seen that there have been a lot of advancements and innovations in the packaging space. Could you name a few of them and then let us know sort of where you think we are in this product replacement cycle? Do you think it will be ongoing? Are we toward the end? What do you think? Hagge: Well, I think it…you know, somebody asked me this question 25 years ago, and I'll tell you, I still think it goes on. All of us as consumers want things that are easier to use, and our customers want things that we can distinguish on the shelf. Some recent examples of things moving to more convenience--we see sun protection products, for example with Coppertone. Several years ago they came to us and said it's difficult to apply this, to children particularly. You have to take it in a tube or a bottle, put it in your hands, put it on the child. Well, if he's on the beach he's already down the road a little bit. So we came back and we worked with them on a spray mechanism. So today you see a significant amount of sun care that's migrated to spray systems--much more convenient. We're also working today most recently with a couple of food and beverage areas where we've seen with Tropicana coming back on a pourable container, like a carafe, with now a dispensing system so you don't have to unscrew it to take it off. That's a big area and we see continued growth in both of those. Wenning: Excellent. Aptar has been a constant generator free cash flow over many, many years. What are your priorities for free cash flow, and how should investors think about your allocation between dividends and buybacks? Hagge: Well, I think if you looked at it right now in terms of the cash flow, the company has been fortunate that we've had good cash flow. We continue to want to maintain a strong balance sheet, but despite that, today our key areas we're looking at would be in mergers and acquisitions. As I mentioned to you, we recently completed an acquisition in our pharma space, which used some of the cash that we had in Europe. We're going to continue to look for those on a strategic basis. We don't want to be opportunistic, it needs to be strategic. From that, the next area of cash for us needs would be internal expansion. A lot of times, instead of an acquisition we'll go into a new country, whether that's Russia about seven or eight years ago or Brazil, and put up capital to expand our business. Next would be dividends. We have been a dividend payer since we've been public. We'll be continuing with that, and we evaluate the dividends each quarter. The last but still a very significant part for us has been share buybacks. Over the last several years we've been averaging about 2 million shares a year; we're looking to continue to do that and we'll continue to evaluate the level of that based on the cash flows that we have. Wenning: Great. Thanks, Steve. Hagge: Thank you very much. Wenning: Thanks. From Morningstar, I'm Todd Wenning. Thanks for watching.