Avery Dennison (AVY) 23 Jul 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. [Operator Instructions]. Welcome to Avery Dennison's earnings conference call for the second quarter ended on June 29, 2024. This call is being recorded and will be available for replay after 4:00 p.m. Eastern Time today and until midnight Eastern Time, July 30, 2024. please international (XXX) callers. replay, (XXX) or the for XXX-XXXX access dial XXX-XXXX +X +X To Avery of The like call Eble, to ID turn Vice conference number the over is to Relations. and Investor Finance XXXXXXX. I'd now Dennison's President John Please go ahead, sir.

today's that note A-X financial The making reconciled measures. today's discussion, measures from qualified to and that the we GAAP Please references Angela. we'll accompanying non-GAAP schedules to A-X you, of statements throughout Thank defined, on financial non-GAAP be release. use that views statements estimates and earnings you the that statement in reflect statements about performance safe predictive remind make certain to included forward-looking today's We we'll future made These our and financial earnings subject harbor are release. current results. our are

today Officer; Deon Chief turn President are Senior Vice the and President and Deon. Chief to Lovins, call Financial I'll Executive and Stander, call On Officer. now Greg the over

another in expectations with raising expect not hello, John, to in of of to quarter with guidance. We to $X.XX EPS We soft earnings half our the above relative strong continue quarter, year this while volume now Label of impact $X.XX expectations delivered downstream the to cumulative remained below effects business. and the of and in volumes are change are inflation, as full we and $X.XX Broadly, in long-term for second our year slightly the the Thanks, inventory high everyone. second America. our of resilience deal across and are demonstrate Europe expectations, second Group delivering year. growth trends lap consumers were drive continued prior we destocking as last the expansion for and per to productivity its year retail earnings and targeting roughly again the quarter, and Asia volumes anticipating compared North share margin to significant XX% year. Materials the above

base and both has upcoming logistics a met despite season. Year-to-date, and and we near-term delivered inventory and than was margins. expanded levels retailers targeted high-value enterprise-wide was more quarter, continued, The In top brands volume driven apparel Intelligent of back-to-school destocking, for the channel rollouts mid- as in categories to teens. now retail order expected the the quicker Labels volumes anticipated while growth normalized line general the cautious second in in strong we strong customers normalized continued. have apparel quarter, their than their and most remaining and retail grew year also Group Solutions by than following plans, sourcing strong high growth new stronger second

For the growth growth anticipate rebound in in the our first mid-teens the sales the will in now are we sales to volume apparel in rates we more in targeting deliver new half. XX% driven platform by and Labels quarter growth be year, third adoption Intelligent similar categories. We a to and than delivered

for timing As likely a anticipated rollouts. revenue to of previously while will in lower customer growth due primarily than expect quarter record the quarter, we the the be fourth quarter,

Key significant resonating waste, and in as are points consumer solution uneven, particularly transparency Intelligent in near verticals with conviction be labor adoption new is items as proof segment volume food the and accelerating pilots in have food initial inventory value comparison volume adoption. I we retail are large and efficiency, past, in rollouts connection by broader our with digital compelling prior for growth address can program in as we ability on logistics. Overall, challenges new to focused new the of have significant shared platform physical for identities. customer as the As categories, categories long-term such delivering we high adoption and of help key rollouts very to increasingly like the customers. and such connect term, as our years. in well builds Labels logistics, In

We continue physical are significant the and overall the size ahead underlying fundamentals digital. Stepping opportunity strong. our catalysts leadership back, to invest industry, and of the growth. grow further of the the we as position We're to with the business diverse of clear growing at capture for exposed long-term intersection to markets advancing our

We industry scale advantages businesses leaders are innovation. our primary competitive in with and in clear

the continued top to nearly I our I'll we GDP-plus their team summary, strong and degree the a with in clear long challenges our commitment and evolve and to returns we in balance lead quartile along allocate are for socially focus relentlessly our strategies, the uncertain remains confident to growth and warrants responsible success for move set our with a focus growth want that in to We XXXX. over continue outsized and have we our hand. And of caution digital, a deliver in the cycles. another key for of on businesses, raised lead To unique superior the at year term drive Those to through business base in growth term. In value time excellence categories, to to effectively the earnings Greg. ability are hand strategies will the grow of and across environment that, us outlook through and profitably remain that an environmentally and some and the delivered year, entire and execute team's environments wide capital enable the guidance creation of dynamic over increasing continue our as XX% call we quarter thank range generate resilience, to over long half. while intersection at addressing on physical And of are: to productivity, the second our strategies manner. We over high-value

and strong the X.Xx the the acquisitions driven ratio million XX% everybody. while compared volume return And compared currency ex X% strategy, hello, to first productivity. year, to share Thanks, of EBITDA the to and we per shareholders on to dividends. were now up announced prior Compared In to prior months repurchases Deon, capital price decade. the adjusted half up year the In was up generated margin quarter and deflation-related up dollars as prior basis flow in increase dividend adjusted is returned share. X% quarter, compared of up partially earnings XX% continue year an continuing we through combination EBITDA and higher reductions. Adjusted million X% at disciplined we million X% $X.XX, compared In in debt per the prior A quarter, company's $XXX including benefits year, adjusted sheet a $X.XX annually growth in EBITDA organic year, to free we end balance dividend allocation past and second we and basis, $XXX offset sequentially we've prior strong of organic from grown higher points year shareholders. up a strong by investing sales to XX% with to adjusted our execute over up quarterly and X% to XXX share to net with and the first delivered X $XXX to sequentially. the our And at of of of cash April, year. cash XX.X% to volume was by

volume ex deflation-related an results segment in X% pull reductions. for currency by growth the year, a basis on Materials offset compared up and forward organic sales Asia, customer to including the Group Europe were low partially prior driven Turning to slight quarter. and price double-digit by

you America, single than organically Looking as as Graphics and that strong a up single North as larger strong expectations, growth particular to and America versus inventory digits. Emerging markets digits year, last rebound higher were points employee-related low categories of to downstream Compared Tapes low expectations, Reflective at year single regions by And more Label in delivered quarter, up strength than significantly delivered was in was will resulting our volume by Asia ASEAN mid-single and year. was sales place than margin partially prior driven a above up compared higher of a categories. Materials slightly Materials our offset and EBITDA organically, high medical Medical care, in in digits and this customer more year. Performance was offset in lap personal mature more and and destocking decline those Europe down organic exaggerated industrial the a strength continue in were Latin ahead more prior volume Europe destocking America by in up costs. X driven second volume year, by took than with partially trends quarter, up destocking up bit to the up XX% we prior India Group XX.X% productivity, in inventory and digits adjusted from North and with in mid-teens. was benefits recall,

increase was in by globally, inflation costs, material sequentially the paper in second The single-digit prices, saw Europe. Regarding low raw quarter. higher we primarily driven

quarter. combination the see We cost product the quarter. we've pricing as of reengineering discussed as are a have and been in last increase expecting and continued actions second paper modest And through prices we move addressing sequentially inflation quarter the to third through increases we

closely, back are through this monitoring the we are further and to continue appropriate dynamic as we'll We if actions evaluate pricing half. move

Label volume particularly Group Given this normalized sequentially the dynamic organic up and up solutions up were with categories Group. on Sales moderate ex expectations. QX margins general currency, ahead digits in to mid- third sales high an with as double now enterprise-wide mid- base and seasonality high-value basis in we expect of teens, XX% quarter. Shifting teens, and were and will strong QX, logistics Year-to-date, non-apparel low Solutions and Intelligent from XX% to apparel the Materials up growth typical retail. high volume solutions apparel to to

continued half, employee-related Solutions higher by productivity, largely to basis higher sequentially, XXX points Group points investments. driven prior from volume we adjusted further driven and initiatives growth by higher anticipate sequential was productivity Margin by basis of and and offset year, costs partially XX.X% margin in and second the XX volume. EBITDA margin improvement compared improved up benefits

outlook to per second we for half. the outlook year. to our midpoint, is $X.XX, share for a $X.XX largely This our a range quarter increase versus of which increase the the translation, our earnings modest between our despite and our the outlook to midpoint second a growth shifting in reflects At roughly and increase for have guidance $X.XX prior headwind be XX% adjusted $X.XX raised second operational XXXX, currency the reflects from strong to Now half.

anticipated. factors drivers of our higher growth better our all are than growth of X significant materials. XX outlook previous organic supplemental Labels apparel our track. volume In label key earnings previously recall, changes and guidance contributing and year, key focusing sales outlined the slightly for volume a roughly Slide you'll from actions. We've basis of due in on the estimate which XXXX, on outlook The in early productivity April, of presentation Intelligent includes normalization midyear, additional ongoing As points and the X.X% to we on XX our particular, mix growth, volume than to normalization

continue expect partially single-digit reductions. related growth, by high volume offset We to deflation price

of incremental the year to from $XX our roughly And of anticipate from roughly savings actions in previous up a income million, translation of than million for expect We $X $X we restructuring more operating million headwind previous now million outlook $XX a from outlook. compared our currency headwind.

deliver you may a holiday we've August the Europe sequential be delivered historically of in that and we the there. And anticipate EPS look at timing value in third another volume about year forward from EPS the lower As our to the long-term our seen growth outlook has growth, And for seasonally back-to-school objectives increased profitable continue strategies in see open September to of call allocation. apparel, disciplined in long-term in we mid-single-digit which resulted strong sharing capital you to and will by all our period for shipments questions. Day recall, historically in exceptional earnings in we'll and more of Investor confident with up historical And driven ability quarter, summary, you pattern. In to your for this quarter, through remain our QX. hope sequential QX and decline strategies with we our and consistent now QX

from the comes of with McNulty, BMO John question first Markets. Your Instructions] Capital line [Operator

in to and question the I on guess, Intelligent the be business Label guess I particular, side. tied Solutions would

tied down, the like, the for be looks of sounds So it just and year, rollout. it to lot or contribution pulled to of this is it like timing you a obviously, revenue going

beginning are just programs you that year? move does necessarily to next seeing something thinking. as pilot not the So next step quickly out the got mean to Or just you the as were pushed of

little around a us other then to give can you that. And guess maybe on So would of tied that the the margin. color question just bit Solutions I be

the in margin pre So go XX% range. XX%, markets, you if we kind the apparel destocking to were saw that of of in EBITDA we and back the kind the change

below some plus XX looks we reason think to You're now. that next Any it obviously out get you able that is over back look like of now be that range the over to of shouldn't into destocking as XX% coming months? in that that right kind

IL, John, now ask seen we volume second. see this to in the Greg growth. question. quarter and that points shortages, customer anticipated, there growth called rollout a different first are business, to targeting, previously Thanks I growth average. similar on a this. lower which during pieces, typically they relates revenue use outlook that when profile, segments if will revenue you'll for just mid-teens see I'll the year, growth QX have the growth and largely segment I and customer say recall, in now will the this and just turn than as same finally, XX% small handle the you different year, across we 'XX be remind revenue be impacts. And volume you will is for I'll cases, I'll price for of we with did fourth few some growth we comment above our I changes notes, across then here. If X the that addressing going part, Deon. to planned. my -- deflation-related we the the in over to we also say that is We year first point, on of on the there margin supply the including are inflation all last mix. the lower in John, in everyone during are chain in specifically recall but still we're relative that the to pricing And which the for And I we planned also now to expect anticipate quarters 'XX as the volume half revenue rate elements And we've element, that the have to rollout said products year. timing. There's that original

sometimes new that inventory slightly their of in pipeline value leveraging -- also across now is and in also X to And readiness, we where having is prior ready customers, existing with and And general the journey the their next issue continuing have we're adoptions things about you John, is see on that's I mostly opportunity ongoing of would adoption underpinning, And continue whether platform this customers. of when in they the timing our and strength taking returns logistics. customers even significant. conviction account technology. it to have our elements technology unusual. the timing our issue category they're with rollout We've will them this secondly, as moved say, with in this additionally, in higher. phase impacts in and my elements some trial real pilots move in intra-quarter. On One rollouts spoken growth mostly conviction spoken adoptions that this existing the to kind that is to categories, timing. X, past largely on logistics. I from be take investment segments, seeing just anticipated So argue, in to in not again, customers in there's relates rollout, significant as And through into their can tend is then that's existing then see this adoption all in And in years. rollouts. customers, new that uneven journey, our retail volume all long-term move they're pilot, quarter a be existing builds new the to their or comparison It's of fourth infrastructure are like launch a with on our

QX. of apparel normalizing, the And shown saw XX-basis your the improve. margins, QX We improvement Yes. over John, seen we've in segment I as or here are Thanks, last we've Deon. on versus answer couple as margins categories to about a think question point quarters

it and improving that my our prepared even, we as talked continue slides the I half. through in think, about expect we remarks to that move I back in

We So plus that's said. And we've had, an like expect able that answer to, ago. expect would those we get years to we and a mentioned, yes. back XX% short as is to X to the year like to deliver, area be we'd you've back get or to

Baird. of Panjabi next Your line question with the Ghansham from comes

shipping I second the guess and was better? And on the as that to between recently that a about some some Europe headlines as simple just bit on in the improvement, sort improvement. maybe apparel out disaggregating the I'm the going that forwards are real previous your guidance. any in the Can variances context have the pull the was quarter showing upside of of how signs challenges to read just of little of -- and back some you just of it you not we and relative apparel apparel of the side, drove earnings been retailer

off. me year that think seen of This high Yes, remains the there recently now we've is level, where customers continuous play is is Europe would to not volume uncertain, second then destocking. with true by from a let perspective, they where normalization. at are be at still what there's that. them more environment our their driven largely from apparel of is apparel apparel that which of are and sentiment, macro a and here. variances It's robust. the Certainly, sooner-than-expected the seen need levels also continue very inventory consumer after That discussions in the a labels largely the half in over largely also year. On during deal will dynamics still couple business Ghansham, we've our I at specifically, in

starting of we're see volumes now in to import and volumes some our those. typically, And uptick precede degree

QX, see suggests So slightly volumes North forward. America in which performance uptick our more import is across in of and which the move as expectation, segments we across Europe ahead we'd X

call you how a I get is think in vast other as apparel, I'd that, do. piece of out only of always, in customers the range variances terms

Some that so not in of that's well, reflected well, recently. earnings are are and some the very more doing releases of doing some them you've seen of probably them

were of as big QX the just yes, to explained. Materials think, Ghansham, just of Europe the well I in the part as question, first Deon in better the apparel as your drivers beat performance answer X the

next from Bank America. comes question with George of Your the line Staphos of

X-parter, question my one So on Solutions.

First question of on all, teed that just Ghansham the up. piggybacking

from issues? your quarter? related if ahead customers of had was the what a any that provide there could So any seeing, now, said, kind If forward Or think color there. And did, just any you for and the of were improved was that do you on as you're you you tariff in nuances potential pull much missed really ASPs. the growth nonevent discussion from curve, had actually you're is of versus just and up implied economics. the Deon, coming there. learning you've had coming revenue manufacturing just, we've that, How seeing And sort -- well that in hey, I volume of reduction

be how year us supply along You're of that's the the parse deflation or that ago. might that from you versus issues help passing X a occurring chain because other that adoption, off get

I to that it George. IL, second the Sure, so address relates And and assume way. I'll question more

Yes. exactly.

necessarily seen forward any apparel of result of we've pull one, the a signs first tariffs. not visible On as

discussion lot turns not to the at retailers a as will the what the amongst we've that case. anything. moment, out clearly of But more to seen is be there a be if of likely future think outcome tariff-intensive I

there's Red some having more what happening of was quarter across goods tiny forward. Cape anything crisis Canal. of Hope some pull the the There Suez the Good go in quarter, it was with as There's degree look shipping pull recall tend third from You'll of Sea did degree be been forward around to don't in bits may rather to that than see it, second as see go related of element the we but that through the an that when generally, to we well. suggests we

earlier year, been anticipated. second that. said think quicker -- the in in just I would it slightly quarter the as been than we'd start normalization -- release that apparel from is of We our half than it the we've seen second observation and we where a of slightly the of it's little clearly a more volume bit

IL. to As for revenue it relates and passing volume

I not over range. in digits characterize actually, unlock new more back X I'd also think last come curve the up as ASPs in has kind that's the if George, helped time new adoptions have technology actually you mid-single typically seen of segment those that play. that declines look volume in into declined has we've unexpected And opportunities. have and and past ramped And years, always the that accelerate

and we'll I some been forward, I to moderation have in continuing at manufacturing into of we over continue as we bigger lean think period, a level, made. advantage, gains to type scale because competitive and believe will fundamentally particularly in innovation our competitive underpinned where moving largely of declines, this our our And product we're believe moving see think innovation already underpin the see advantage forward. some which those our has advantage we're we process

that high. is we the are regard. And so enabling solution ROI value each that a the more kind the we the to for with move that bigger one forward the very creating, ecosystem, to node which to are having is choke end customers that And they that think of of that throat which now to customers is customers being we're is pertinent across the I that value looking element a capture I seeing, likely element has more creation at value broader come market. discussion move as is of bear are day, we pricing one in more in why the that what is the think

the of Truist from with Securities. line Roxland, comes question Mike next Your

good Congrats on quarter. a

you get regarding to wanted -- delay Deon, XQ. color Just from deployment in more in more that customer

-- retail, for you the in productivity in improve because delays, when XXXX? And the to of just you to maybe and that's any various deferrals flows reduce greater the longer the general bit offset amount can you're lastly, just involve to vertical logistics. costs, well, experiencing? mentioned you just and as to comment deflation, maybe given a SKUs, general on do deploy? And little it approaches you [indiscernible] SKUs I retail, Does on can other deflation taking defer think likes the comment using hit on material the you're expect them any

Sure, Mike.

on rolled the large lower was quarter Let exactly then servicing that, -- end quarter -- both and gone This to at in is year. rollout. has across not parcel parcel impact albeit fourth logistics largely our The has and on the last we least basically this we've softer been the demands clarify through like me which biggest an is out through The customer for year back -- deployed for logistics. overall -- market. this of say rollout done as went we half of

typically that As in the new We we the the rollout segments. of it variance and of we our greatest saying newer in relates happens specifically question pilots saw timing, the timing that I see moving first started. often point same relative made Mike, expectations, to and in to apparel, these the what when around to are

that, proved which a play at into supply also You culturally the estimated timing they how to or have both. in to the not be the number see, very, far but stores or adopt either so just that very the returns good, the then chain that of factors point, is customer timing. come in going an that There's of

to change are their within typical a specific that sometimes intra-quarter own see basis. typically according dynamics. can movements and XX-month year on a And The we

to quarter the afterwards. third that see slightly or we in to be forward may that one anything typically So there move delayed second tends quarter

part your significantly company our earlier on a that question been is prepared of touched Labels And well. platform. taken to deflation, strength As as Intelligent relentlessly in on my we've driving I core that approach as productivity. our it's in remarks

able we bring I to it's unique one think piece to are bear. that

within we've If Materials the that new to able manufacturing been growth world our potential you that is capability to a and capability enormous that, apply think and that goes roll-to-roll segment IL leverage our about leader to the business has process platform. in in volume

create capability to as being move on. us And our significant manufacturing forward, something It's a items. material function science continue to the our comes cost and able has competitive to provide we we're of apply further in a the value further so And focused we're innovation or with of process our when we'll innovation, change given the our innovation, differentiation step -- to it change, that augment then of change innovation market. advantage solutions to further constantly how leverage our going our rest

comes UBS. question Spector with line Josh the from of Next

ask similar to about wanted a I RFID in vein.

now we to consider. we're now little the and -- greater where there's within actions? we Just that volume require dynamics RFID phase on need talking of Has Or anything competitive are about changed downs pricing a bit at pricing a more. to where rollout price any

raised and more from in need about that more you as So growth said think think about to talked historically you volume Or and bar you XX% that? when organic? do RFID, the about that we separate when is price

last more your Thanks, in question, Josh. To your -- change to volume. the is

of competitive customer to those As timing is related volume. the sorry, rollouts to it the I'm -- and relates dynamics

like curve at product this to industry. of level competitive growth seen we It's clearly the and level, way the share process dynamics, market. going touched food. the relates it always on in that. more do expanding couple I least which to see that activate in dynamics can our a the As helping in competitive It's on, but solution ensure we we that logistics our and also focus the in and activate capital. a we're of on the not of at that investing to level, this. And innovation IL like around has Josh, a industries, maintaining elements ways, is ahead to industries But And been a attract outcome you've we've leadership our been

people the in leading the whether doing we're and into we're food, or in a QSR it's that logistics as are some similar grocery it's well. segment with We industry, whether process the looking pilots of

very have managing high node overall the think way actually Labels all each manufacturing forward, and through uniquely that that way data of ecosystem we that conviction I the and inlay a from Intelligent of somewhat role across capability us our it's than and about if gives decision to that, able a they a look reach services, I particularly the for play position for which being whether the credibility, with anybody position I to customers come to do board new somebody or looking to when significant and and be us better technology their it C-suite, in experience scale they're adopting think else. on tends global providing

experience has we this shown year, to expand. our even maintain, disproportionate we not overall, Our in to continue in are that something that we're going then if a over think time leader share

comes Your next Roberts from with James. question Matt Raymond of the line

RFID. I ask surprise, will Surprise, about

So QSR And XXXX, envision that bit the like of examples than should issue timing magnitude or with of in further. now food little XX% about growth timing or rollouts a timing any that in or more if could given XXXX? could we you maybe or those initial you provide think how

think helpful. certainly I be that could

Matt. Sure,

reason we just long-term saying Let by the why have this the such I of potential growth think start in me conviction platform.

billion Logistics roughly we're now say, by about a and XX% penetrated XX being, contrast XX think XX If to through billion billion apparel let's units. is units with that. IL you

has have comparison now stage. by ] at just billion just over industry units, where And food, [ that we're nascent adopt. that customer XXX one in to the its We started is then to

we of in instances, both all physical think of items well. is pilots. on food to that those as of one with service I that are for about drive doing and digital each engaged some years ability this identities the continuing to we across things, now over in come So platform The way and are the segments substantial connecting grocery. is pilots many runway productive side right logistics discussions trials quick very restaurants In with and we're And providers. our

on As longer-term our Day up be and the we'll where the coming to for at outlooks, focusing going years, we X are outlooks more point. Investor our September, in that give have volume what color an plans and strategic next to we're

line comes JPMorgan. question from of next Zekauskas Your the with Jeffrey

for And that SG&A years, a goes basis on bit up if year-over-year going of the expense quarter on past year. XX% at I was in second describe you $XX expense. and was look every in down Avery a the expense million you hoping little SG&A or the what's X sequential about SG&A would

did So is how materials quarter? change the the year-over-year unusual in quarter? there And second that's in second something raw

Jeff. Yes,

did So biggest versus line year, the in XXXX, the we expectations for I driver year. results obviously, in last mean, not with our deliver initial

or compensation XXXX year. This outlook in were accruals of about, down the accruals corporate initial above at so are that a expectation -- raising of matter comp for course, raising our talked end we're for incentive the incentive we to higher. as our X expectations, our year, quite low, our So bit

So there's pretty from a sizable a that year-over-year on perspective. swing

versus prior What it? second would the question? So year. And main that was driver be

Inflation, deflation.

digits Inflation versus and single-digit versus paper prior Overall, last about year-over-year sequentially inflation said, single driven very was the prior year, year. in year, really chemical high low as rest and I deflation versus from half film.

deflation. still Europe, year-over-year, sequential a paper, bit from little high largely So single-digit in of

on volume some in, addition seen, we as also is returned in in I'd last going well. in and what particularly recall, thing that as which our only is year, period, temporary do, did we're on factor see the costs we've temporary the as add when to costs well, challenging Jeffrey, always to significantly you'll our through that improve and the some said normalized to you has comp quarter and And strengthen more dramatically what we that contrast of second incentive management, those of basis. And have recovered as cost Greg

comes question Citi. the from next Your Pettinari of with Anthony line

about a then but in if way. year, organic in this your growth terms just I from wondering performing how volume what's Obviously, business retailers Vestcom. talk coming was or maybe part a of biggest and that of has bit little shelf of price? And stories we've not big business, the digital potentially you been adopting could large seen

Just is digital a set kind towards wondering of environment? in up a move Vestcom how bigger potentially shelf

Anthony. Sure,

talk bit your second just little me Let I'll point a address Vestcom about afterwards. and

in so drug, it's the overall, food contributes never well food fact in number in not our forth. than also with fact that value Intelligent access the and also do Labels, has had us reach a Our margins business the the but dimensions, dollar and continues to segment customers greater business lot helped which access initiatives segment a -- the of to and not a that has of across past, we hardly -- the least business the it around into that Vestcom but average high Vestcom different

part to customer well. I retail year as When part is and company of think a just tailwind well. business, that's it for collective it, becoming the say get shelf-edge I this terms shelf-edge the does has its at actually that productivity about I -- significant digitization it again. second deal a our as data reaffirmation moment. label, the an note Solutions anticipating sequence shelf-edge walk digitized, a its But multiyear of in is a re-signed while a kind the solutions, think portfolio more of in and that of you're provide a will a will is was let's actually of business the I how retailer for we're that outlet, that, you also in market year, of of talk a us it's the more inevitable U.S. it media also to engine. actually analog, particularly both quarter, strength drug moving Vestcom our technology the large see as shelf challenges as but analog -- value and that promotions. We've a of end seeing kind in openly banner there that specifically we to the sequence, also part in our -- the that U.S. new composition degree labeling consumer call an leverage media trend And of you in related a providing currently large store of when business by softness

an Our business outputs and that And planogram takes pricing advertising data composition both point-of-sale a of label. information. currently huge analog data, data, through to data amount data,

currently electronic ubiquitous across in the part to that the be also become that certain that as of digital. edge outputs trials bigger all -- not and may the engine be retail, an this It are is or moving of going And to also to analog is will so will that start the think I increasingly electronic either targeted be stores. of one strengths involved shelf-edge shelf of segments. labels We most forward shelf with an electronic label, business it as shelf

placed And people so with you'll still be And I estate, dealing best with estate. a to is mixed our that deal Vestcom business. believe, the mixed

Your of Bank the with Staphos America. comes from line of question George next

if our how would -- it quarter? Again, much XX XXX model operating we leverage? were round least of to Deon How like How at relative your your some seemed getting, for as Greg, How your and much mean, basis expected. points higher be initial it out Any the margins of did I fare So Materials, initial program? much of would cost to versus we in for than of have reduction margins year. the project the was the was effects helpful color pricing? anything, of was rest there expectations

for Thanks, question. George, Yes. the

mentioned. buckets that the think those a is all you of answer I little bit

stronger leverage perspective. anticipated. in slides. course, line that largest from Europe said, the business than quarter the We charts the of have And top we Materials and can a had And helped a did see overall So that, as region is we our from business. pie

also, restructuring this talked year. savings for as I expectation raised We about earlier, our

Materials of in business. Some is that coming our

strong So that productivity of that type bit. as a well. ELS ongoing business little helped And continues to drive

are that into a overall, quarter. factors So playing number of the

that shown over of margins long-term this EBITDA X and our I've we efficiency us we're Materials and balance our we'll is that, And XXXX, of -- it's think the as balance expectation said, for line and to drive the you the we you've the targeting the say forward. And margins that I And we our delivering around targets little clearly, just but but recipe that's we of those our think about really we'll with ultimately growth part business know, over and heard a above a we're And focusing deliver levers. XX% that we last with or for how right quarters, bit as really or why growth we focusing a segment. to go we've is on EVA track talked when on top that's total lot, of driving drive really continue last really focused shareholder return, couple capital better. drive it quarters, continue of on capital. through the at strong X all to don't set target that focus is on as target

Jeffrey with Our final Zekauskas question JPMorgan. comes line of from the

and for you it had of price of And would the in to SG&A, cost allocate Solutions, about If million allocate $XX you sold the negative look mix if to savings the half it? price Materials? in goods you mix your quarter, how in was negative cost at

last it's in of the in bit a of Yes. talked Materials as On Europe to I I have top business. driven year, actions cost even Jeff, little sales continuing a of your guess, relatively it's think head, a we question, -- first about more, off I don't probably that number we've my a probably the initiative drive probably in We're split. large

of last time. volumes of same the productivity drive in to the lower due we advantage side some at the took destocking Solutions as, to that year well the As course, we had further

the a as line with side. Price in on X%. top Materials, of probably quarter combination, think, cost-of-sales in talked little a about we heavily mix, growth had it's more I we double-digit growth about weighted So the volume

So in price as close single in you year-over-year, high a to to Materials double-digit we asked earlier, had business. that the digit, deflation digits go with mid-single down

volume On growth the growth. Solutions growth relatively side, to similar and price and revenue revenue was volume higher and slightly

now closing question-and-answer will our call the back turn Mr. the you I remarks. concludes to over Stander, session. That for

joining for the all today. call you Thank

our we extremely dynamic, to deliver growth remains top and position environment returns the our the term. and ability While quartile long prospects and confident in remain over GDP-plus

you concludes joining. call for today. Thank our That

disconnect. now may You