Q3 2020 CCL Industries Inc Earnings Call
Please note that there will be a question and answer session. After the call the.
The moderator for today, Mr., Jeff Martin President and Chief Executive Officer, and joining him is Mr., Sean Wash up senior Vice President and Chief Financial Officer. Please go ahead gentlemen.
Thank you Crystal.
Just before we get began the old draw everyone's attention to page two of our presentation. Our disclaimer regarding forward looking statements I'll remind everyone that our business faces known and unknown risks and opportunities for further details of these key risks. Please take a look at our 2019 annual mdna or in our quarterly EPS.
And the dnase for updates.
Particularly the section risks and uncertainties, our annual and quarterly reports can be found online of the company's website CCL I N. The dot com or on the seed our dot com Jeff.
Thank you show the and good morning, everybody from very happy to be here. This morning reporting record quarterly results for the company. So not the situation we expect it to be in the.
That's the standard we were all day in and April of May This year in the middle of the worst of the pandemic for we all know where we are.
So I'd like to take this opportunity to Frank Oh, CCL employees throughout the world for the monumental that's what's the put onto the place these numbers.
The other shown for going to take you through from the point by point.
Thank you Jeff moving.
Moving to slide three.
For the third quarter of 2020 sales increased 1.2 per cent, including the 1.5 per cent positive impact of currency translation too.
2.2 per cent acquisition related sales growth.
Partially offset by a consolidated organic ganic decline of 2.5 per se right.
The resulting in sales of $1.37 billion compared to 1.36 billion in.
In the third quarter of 2019.
Operating income increased 16% excluding currency translation.
$246.3 million for the 2023rd quarter compared to $209.8 million for the third quarter of 2019.
Importantly, operating income increased almost 51% sequentially from the second quarter of this year when the full impact of the COVID-19, initially took hold gold.
Jeff will expand on the segment it operating results of our CCL Avery checkpoint in Innovia segments momentarily.
Included in the third quarter results was the 5.8 million reduction in corporate expenses due to decreases in short term and long term variable compensation expenses for the comparable periods.
Consolidated EBITDA for the 2023rd quarter excluded the impact of foreign currency translation increased approximately 16% compared to the same period in 2019.
Net finance expense was $60.4 million for the third quarter of 2020 compared to $19.5 million for the 2019 third quarter of the.
The decrease in net finance costs is attributed to lower average interest rates and lower average debt outstanding for the comparable periods.
The overall the effective tax rate was 25.1 per cent for the two.
2023rd quarter less less than the 25.7 per cent effective tax rate recorded in the third quarter of 2019 the.
Effective tax rate may change in future periods, depending on where the taxable income is earned.
Net or net earnings for the 2023rd quarter was $153.3 million up 17.6% exclude excluding foreign currency translation compared to $127.7 million for the 2019 for Florida.
For the nine months period sales declined 4.1% of.
Operating income declined 0.8% and net earnings increased 2.5 per cent compared to the nine months period and 2019.
2020 included results from 13 acquisitions completed since January 1st 2090 debt.
During the acquisition related sales growth for the period of 1.8%.
Organic sales decline of 5.9%.
Foreign currency translation tailwind of 0.3% to sales.
Moving to slide for earnings per share.
Basic earnings per class B share increased 21.1% to 86 cents for the third quarter of 2020 compared to 71 cents for the third quarter of 2019.
Net loss from restructuring and other items amounted to seven cents for the 2023rd quarter compared to one cents in the 2019 the quarter I'll get into these details momentarily.
Adjusted basic earnings per class B share.
For a record 93 cents up 29.2 per cent compared to adjusted basic earnings per class B share 72 cents for the third quarter of 2019.
This record adjusted basic earnings per class B share of 93 cents exceeds the previous record of 83 cents posted in the fourth quarter of 2017.
The increase in adjusted basic keep B S to 93 cents is primarily attributable to an increase in the operating income of 13 cents a.
The decline in corporate and interest expenses et cetera for two cents.
Equity earnings and tax changes each accounted for one cents.
The 2029 month period.
Four cents improvement and adjusted basic earnings per class B share was principally attributable to the decrease in corporate expenses net.
Net interest expense of Mt, partially offset by a reduction in operating income segment.
Resulted in adjusted basic earnings per share of $2.24 for.
The 29 months period compared to $2.12 for the 2019 nine months period.
Moving to slide five the restructuring and other items.
These included an additional accrual of 9.4 million.
For a long standing legal matter that was settled during the quarter.
It also included $6.8 million of restructuring.
That is expected to generate 18 million annually. This is largely at the Avery and checkpoint segments.
These two items amounted to the seven cents adjustments earnings per share class ship B share.
It will be modest restructuring of the upcoming fourth quarter.
[noise] moving to slide six free cash flow from operations.
For the third quarter of 2020 free cash flow from operations improved $45.1 million compared to the third quarter of 2019.
The improvement can be primarily attributed to improved operating income.
The decline in capital spending for the comparative quarters.
For the last 12 months ended September Thirtyth 2020, free cash flow from operations improved $140.3 million.
Compared to the last 12 months ended September 30 of 2019.
This compared of improvement is attributable to a change of working capital and reduce capital spending for the comparable periods.
Moving to slide seven.
Net debt as of September Thirtyth, 2020 was 1.65 billion.
The decrease of approximately $65 million compared to December 31st 2090.
This decrease is primarily due to an increase in cash and cash cash equivalents and.
Which is attributable to the improvement in free cash flow.
The company's balance sheet closed the quarter in a strong position of Don.
And she leverage ratio was approximately 1.51 times declining from 1.9 times at the end of the first quarter 2020.
Liquidity was robust for $760.2 million of cash on hand.
And then the additional U.S. 1.2 billion of available and Undrawn capacity on our revolving credit facility.
Furthermore, the company does not have any significant debt maturities until its term loan comes due in 2022.
The company's overall average finance rate was 2.1% at September Thirtyth 2020, lower than the 2.3% average finance rate at December 31st 2019, due to the decrease in interest rates on the company's variable drawn debt.
In absence of any significant acquisitions.
Management expects to continue de leveraging the companys balance sheet through the final quarter of 2020.
Jeff over to you.
Thank you shown on the the now on page eight the highlights of capital spending of.
We look like coming in about 290 million for the year slightly below the new depreciation and amortization from the about 60 million under our original 350 million budget for the year.
Moving to slide nine results for the CCL.
It's called the reported in this part of the company for quite some time the.
4.2% organic sales growth.
Very good to see the.
Regionally that was up in the low single digits in North America mid single digits in Europe.
Latin America was up double digit a low a lot of that was leading the way by inflation. The modest decline in Asia Pacific, which was really driven by Australia, and South Africa or Asia itself.
The up like Europe, the mid single digits.
The profit gains really would net CCL secure and home and personal care. The CCL secure we have the we benefited from the run on cash and many central banks around the world during the pandemic the slightly counterintuitive I know of it. It is the case. So that's the benefit of those for sure. When we had the very good results in the with all the.
Moves in the HPC companies to add the claims isn't the hand sanitizers to the product range of health care and specialty business continues to do well as did CCL design not improved significantly on automotive rebound, which was much past the a much quicker than we expected it to be so we're very pleased to see the food and beverage for.
Office were also up modestly but on premise demand for a lot of our customers remains curtailed.
Moving on to slide 10 results of our two joint ventures bounce to label business is not in the slide on the piano one in Russia, one of the middle East the both.
Both had exceptional coal sales in Q3, despite many challenges in Russia was the for the devaluation of the day, but we still had excellent results flow.
Slide 11, our results the Avery.
Mixed story here [noise] direct to consumer business was strong in labels.
Well that was more than offset by very steep declines in in batches, a little bit about just the business. We do in this part of Avery is driven by if that slows sports events business conventions rock concerts underlying so the it all down pretty significantly the back.
The school setting was good but the consumer pull through faded out of the quarter progressed from the Catholic School return in North America. The workplace related demand remains down we did have solid results internationally, which from an offset the cost savings globally boosted profitability.
Moving on to slide 12 results for checkpoint.
Another good quarter here too.
Merchandise the viability of business faced very tough comps this quarter, we other a record quarter in the in the U.S. This this quarter last year.
So we are considering the other thing, we did pretty well and b sequentially improved quite significantly from the downs of Q2 out of private label business was up Inc.
On the demand rebound on the strong growth in RF, I'd and cost savings everywhere boosted the results.
Moving on to the page 13 result for an idea of volume.
Volume it did soften the health of the Q2, the pet pantry lot of country hike. The we experienced the benefit of the previous quarter, but it was still reasonable and the profitability, but it was really driven by much improved mix. So that's the.
The the CCL secure impact of it was something to do with that but across the board right across the business. We had much and proved the mix cost savings in the business better productivity and ask the utilization definitely helped resin was not a friend it's called the Red was stable in Europe, but they did increase actually quite significantly in North America from June.
The lows the.
Out of the expected contribution from the Polish acquisition continues so we're very pleased for the performance of that acquisition.
Page 14, just a few outlook comments from Q4. The October results came in consistent with the results we've seen in the during the summer months and one that's work day in October the than we had this time last year, the pretty reasonable month overall, we do expect Adrian checkpoint still to be down in Q4 will be also expense.
CCL and the Navy the segments to progress.
Commodities all beginning to rise we do have a modest FX tailwinds of today's rates.
Now expecting fiscal year 2020 of free cash flow to exceed $500 million.
So with that operator, we'd like to open up the call for questions.
Thank you.
Ladies and gentlemen, if you have a question at this time for press the star followed by the number one key on your Touchtone telephone. If your question has been answered when he was the removed himself from the queue. Please press the pound key once again the half. The question. Please press Star and then one now.
And our first question comes from Adam Josephson from Keybanc. Your line is open.
Jeff and Sean Good morning, and congrats on a really nice quarter.
The good.
Jeff you mentioned that the run on cash during the pandemic as well as auto having been much better than you expected was that principle for those factors principally why see.
Ill segment results were so much better than what youre expecting just three months ago or where there are a number of other factors as well.
Well they the the businesses of did really well in the quarter were a in price and older of price of how.
How well they did.
The the best performing businesses the sales secured by fall or the next best performing businesses have been both from cash. So that's very good results of the label the cheap businesses of not part of the company average.
For the sold for the negative but the light was the choose the strong.
And then then the health care of specialty sales kind of specialty. The did also continued to do well in the coal to the.
And ER and then the CCL design also how the good quarter of the automotive rebound was the main reason so automotive was actually up from prior year of which surprised the UK back very very thoughtful.
Got it I appreciate that you mentioned in the release of that respective I I don't it's the.
It's the automotive is 300 million out of the 5 billion the change revenue for sure yes.
Yes, the in your commentary in the release, Jeff you talked about.
The second wave of the virus has the reason for some caution regarding November and December just wondering if it's possible or probable that the locked down into the the related changes in behavior are in fact benefiting many parts of your business and that they're leading to exceptionally strong demand for.
All manner of at home goods I, just ask obviously 'cause your your organic sales growth and CCL was the best you've had.
Since one Q 19, which is obviously well before the pandemic cash and amid what was the reasonable economy the topline.
Yeah, well the the organic sales growth was very was heavily driven by CCL secure.
The heavily driven by health care, so that I can see him of package because the business was okay I wouldn't certainly well below the average.
So are we just started the the problem with telling you about the queue for its all of the difficult calls the with the two short months in November and December.
So and who knows I mean, it's the it's in the U.S. I think we haven't seen much change so far but if you talk about people in Europe, it's very different environment, though for the.
Yep, Yep and Relatedly, Jeff on the pandemic hit you saw your earnings wouldn't exceed 2019 levels until 2022 now you just reported a record quarter or your earnings are actually up nicely year to date.
So obviously the year is played out as being dramatically better than what your worst fears were not in April may so given that what lessons if any do you draw for next year.
Well I I think is still uncertain.
I think what we know is the is very difficult to predict anything.
No no one would have predicted in December what happened then in the March April of by the no one and not say from the May would have predicted what's happened in the.
For Q3, so how are we supposed to predict what's going to happen next year on the French I think it's very hard to say yes.
Yeah understood. Thank you.
Thank you.
Our next question comes from Walter Spracklin from RBC capital markets. Your line is open.
Thanks, very much in the yeah, great quarter everyone.
Well one of the focus on on your margins here and I know, Jeff when I asked you last time about operating leverage your job shop comment sort of suggested that there wasn't any but the okay.
Clearly margins are going up is this really a mix.
They are growing up in areas that tend to just be higher merging or are you. Indeed, now seeing a new ways to operate or or efficiencies to two to two to take care of take advantage of that's allowing your margins to go up.
Total mix.
Yep Yep.
Oh I'm sorry.
It's the in other the the businesses the did well is called for a high margin businesses.
It was the very mixed driven result of.
Okay that makes sense.
When you look at your your your acquisition pipeline and you see the.
The divisions and what COVID-19 did to the the the divisions.
That are doing well and those are the doing more doing.
Doing less well are you are you changing at all your focus on where you want to build up scale when you're looking at acquisitions and are those acquisition opportunities.
Becoming more plentiful because of COVID-19, I know you of gradually gotten warmer and warmer to the idea.
As the quarters of unfolded, just love to get your take there on on on the on the pipeline the up for acquisition, Yeah, Yeah, well we've done of the.
You know 100, and some of the other $90 million the deal the so called this year.
And you know the.
The multiples we wanted to pay.
And the Golden bolt ons, but the most of the move worked out.
No we haven't changed our approach in any shape oil for we're still looking in the areas. We've talked about in the power of direct to consumer day vary from small bolt ons and checkpoint the.
CCL design of the CCL space, So <unk> looking at anything and everything but there's been no change in approach as the result of coated.
Alright, Thank you very much for for my question.
From.
Thank you.
Our next question comes from Stephen Macleod from BMO capital markets. Your line is open.
Thank you good morning, guys.
Well the big.
Moving.
Oh, just the you know you get some good color on the CCL outlooks I was just wondering if the you know would you characterize the talking about October of being Okay would you characterize the the movements being similar to how the word Q3 by segment.
In terms of what kind of.
Net income.
Just after.
After the combing. The total was one book day shy of last year, the anything out of it I would.
At this point out some of the the calendar. This year is net of replica of the calendar the last year.
The the overall trends in October were broadly similar we don't expect to repeat the goal do we how didn't see sales secure in Q4 so the.
That will have an impact for the appeal by the wouldn't know anything about.
Okay. That's the that's helpful.
In the past you you've been able to quantify kind of the once you see always lumpy in the middle of quantified what the impact has been within the quarter are you able to do that for Q3.
And most of spec.
In respect to the dollar contribution on the relative year over year basis since the Watson strong in Q3, well the the the big driver of it when the seed sales secure so I'd say.
The close to half of the for profit improvement and the goal of the came from CCL skill.
In the CCL segment.
Okay. Okay. Thank you.
On the maybe just finally, you made the interest and comment on checkpoint with respect to growth in RF I'd and I know, that's the smaller business that you've always sort of driven.
On R&D engine where are.
Are you seeing more RF idea adoption.
Independent like or do you think you'll see more adoption coming out of the pandemic.
I I don't know B, we do get one you rollout with the large customer in China.
So that had an impact but.
I think what we saw in apparel labeling the school, who is just the big bounce back so right off the off the the Oh, you know what happened between February and the buy in China or in the South Asia, you know for the <unk> impact on the just being able to get supply to retire that some of the it was the big.
Bounced back in the in the total amount. So I think we felt some benefit from that and then b.
All right for the in light of factory in China is not running football for the getting the benefit of Insulates. The all of the leads we used the bar on the outside.
Moving the combination of those two things.
You know just the keeping in perspective of power labeling is less than 200 million for us it's not the it's all the huge business, but it's for the well we're quite optimistic now about the continuing to improve the for the for the coming pool to the.
Okay, that's great Thanks, Jeff and congratulations thank you.
Thank you for our next question comes from Mark level from Scotiabank. Your line is open.
Hey, good morning, guys a.
Great quarter, great quarter, Oh, I'm impressed upon the put up a record quarter arms of the said the true I sort of fall off or I guess some of the questions. I. Appreciate the again October sounds like it was trending well and appreciate or other I guess im just trying to get a sense of real time like there's a lot of operating thinking about Europe sort of lock in.
The other hobbies raising since we do again.
It's only a few weeks in the November but anything sort of the speak to materially it sort of just like operating business.
Anything on the other said something markets share I mean in Europe now we've got so these are the of goes all of the UK lock down many other countries in some form of locked down so.
Oh well.
The impact of that for US is not clear you know happened in April the by the is.
The same all the way around the world at this time it.
It's much more prevalent in Europe. So.
Well the impact of about so far is not very clear Sunny Roddy five six weeks into it and we're integrating the in a very difficult time to be the existence coming out of the holiday season.
For the Thanksgiving holiday in the U.S. b of the though the shutdown in December.
So well how customers are going to behave in the next six weeks period before the one of the south side.
It's all of the typical and volatile called the to protect them.
The she is hoping to help other pandemic share.
Sure sure did I appreciate that.
Just for one or two Walter's question just on the again the costs and the efficiencies is or is there anything the sort of speak to in terms of structural cost for renewals or the no no I'd say the idea of mix. So it's really a mixed story. So the the area, where we've been doing some work on the cost.
On the spend the checkpoint and eight rigs moving the t. business instead of being most challenged.
You know in the CCL business, which is doing well. There's really is very doesn't know help narrow the cost for the total so.
If anything we've had to spend more money than we wanted to just the deal with the pandemic in the from absenteeism in certain places, where you've had the branches of the b affected but yeah, I'm free temporary shortages and stuff like that so so I think a very different we can really tell you the the story.
In the CCL segment is really about mix.
Okay.
Maybe just one last one of this one or maybe it's more difficult, but there's lot of different moving parts of the business and just like the holistically like would there still be sort of 2025 ish percent your business sort of still down materially because of the pad that becomes the sort of trying to think about it next year, a little bit sort of what might come back and sort of as well the.
Yeah, the the business with the focus on that Oh kind of ran checkpoint. So yeah. The acreage you've seen it's still you know the still impacted the than we expected the continued to be impacted for another two or three calls because I don't think that situation is low range.
Any time soon.
So just to give you know just to give you one frame of reference for a batch of business, which I talked about the little bit of the opening remarks. So one of our operations lost you.
And it's in Madison, Wisconsin had sales in the third quarter of $13 million. This quarter had sales of less from 500000.
So you.
The though when you go.
The fly back going all the new business and there's no sports events noted in the convention the.
Rocco.
It's not like the could change the anytime soon but when they all come back.
As I'm sure they will at some point, maybe even next year the back end of the next year.
The mild day will come back with the and little bit the same of checkpoint side of the mass business. The checkpoint is not as badly affected as Avery is but.
But the certainly some impact there and again I think we've seen it in jurisdictions, where things have been more normal we've seen more normal levels of demand, but the.
So then the two tree would expect to.
See some improved the amount of than when the the you know when the next year unfolds.
No think of little while.
The next or understood again, thanks, a lot of and again, a very impressive core class.
From.
Thank you and our next question comes from Michael Glen from Raymond James Your line is open.
Hey, good morning.
Jeff just wondering on CCL secure.
Good results house, the new customer pipeline there evolving.
Well, we have a long pipeline of customers that who.
Overall pretty sensitive about the.
Or the the.
Security sales.
The big and never really comment on anything that's going on in the space. The this actually happened.
But the this is a very good point, there's a lot of interest and pull them and I haven't said the it's accelerated during the pandemic because people the worried about the cleanliness of currency as well as the cost efficiency and all the other aspects of it. So we've got a lot of interest in the in the field, but it does remain the business is volatile in terms of.
Cost of the call it the demand as well.
We've seen the positive signs of the school to the so the that's just the feed.
Feature of the business.
Okay, and then you touched on the Emmy EPS part of checkpoint before you do have the pretty broad customer mix in that in that business. So I mean is that do you see big variances between.
Different groups of customers, taking place Oh sure yeah absolutely.
If you look at supermarkets me the business is strong.
If you look at Oh drug store of the down a bit but not much.
When you go to a power always down the law, you know any anything which is discretionary retail.
Well I think we have them and of course, that's why you see the the impact so moles in the U.S. sort of a real problem.
Okay, and you probably don't want to give me a clarification, but it's the is it kind of like a 50 50 type of good.
The things are okay, and then 50 per cent is down sort of dynamic or is it some of it.
Viewed as you can imagine what the rate the <unk> what are the what town you live in the the drawn around the retail environment in your own time business looks like about the way the stole the busy were busy in one of the shop in shop.
Okay, and then you know the circling back to M&A.
The call me look at checkpoint in the Nokia and you know what you've been able to accomplish with those with those two segment in terms of integrating integrating these acquisitions. The how do you. When you when we look of five years in terms of what those two segments of might look like do you see what type of growth opportunity.
From an M&A perspective.
Do you see in front of the where they are the meaningful or or is it just a function of tuck ins primarily.
Well the there are meaningful opportunities in both of the so but I think we.
No. We're looking at the we've looked at deals in both but both spaces all looking at deals in both the spaces, but the they are they are more of the tuck in nature of the momentum just the very difficult to do the deal with anything more than that right now the they both they both have opportunities to growth, but acquisition I think across the company you take the flow.
The segments of the CCL Avery checkpoint in the Navy they all have opportunities to grow through every day.
Okay.
Thanks for taking the questions no problem.
Thank you.
Next question comes from Scott from Sen from the RBC Your line of Okay.
Thank you good morning, gentlemen, nice quarter.
So just thinking about market share gains what are you seeing in terms of gains in the CCL consumer business.
Are you seeing increases with the major global customers are they consolidating suppliers.
I guess in other words, taking advantage of the global footprint.
Oh, no I wouldn't say the I wouldn't have said that was the factor in most of the package goods label custom of the school you know the on the on the <unk> protocol to.
So you know maybe long term, we could tell you we've got the bit of a trend that the short term we didn't see any real share gain that was material to the called the <unk>.
The answer your question.
Yes, just the.
Yeah, I guess it does.
Are you seeing any any distressed from your and your some of your larger or smaller.
Smaller class a competitor.
So what's your question Scott what do you.
So ER.
Our competitors the competing suppliers or do you are you seeing any financial distress like are you seeing any pickup of business that the.
No I wouldn't say anything anything out of the mill you know I think the.
The in the label industry in general.
Because its a pandemic who is the.
You know.
Increase the <unk> home purchases, so if you're if you're in the label business I.
The other thing it's been a it's been the stressful time, so the stress points of being more in the businesses of the.
You know the end markets of the <unk> difficulties and leave you with the cycle, it's been the baton to consumer package goods companies.
Okay.
Well the results the show and are you seeing any any inventory building and the customers.
I wouldn't say so.
Okay. A final question on running out of steam there are you seeing any specific benefits from a increased E. Commerce online shopping works from home or is it just a just a moving you know just the a whack a mole.
No I I think he called the since you know, it's changing the the landscape of retail but.
I do think the the the Mega trends there is to move towards the the omni channel World, where you know the best returns and the well will do a bit of bugs the news that they're up brick and motor the stalls to be a lot of all small pick up points.
So that's the Mega trend, we see in the in the in the retail landscape, so and the everyone's everyone's focused on the across the continuum of goods industry.
Okay, great. Thank you.
Thank you our.
Our next question comes from David Mcfadgen from Cormark. Your line is open.
Thank you [laughter] a couple of questions.
Talking about [noise].
You talking about CCL secure.
And it was quite strong in Q.
Q3, bad it you kind of won't repeat in Q4 would it be reasonable to think that Ah teach the unsecured performance in Q4 20 might be something similar to Q for 19.
Well talk about of the next call. The I mean, it's not something we can predict.
Okay, and then just looking at your guidance for Oh, No sorry, we got your guidance for free cash flow.
Moving on greater than 500 million when you look at the LTM free cash flow on six of the three I'm just wondering if there's something unusual or the you expect in Q4 20 that that would lead you to think that'd be more closer to 500 as opposed to 600.
Well, it's a it's a it's it's the show coals that so from the wait and see what we actually well the number of ends up being we'll find that out in the couple of months time, but it is the show called the sort of the.
Q3 is the big cash flow called the for US because of the collect all of that back to school cash for the end of the cold. The key for is never as good as Q3, So we'll have to wait and see what we collect and <unk>.
In the in the coming in the coming weeks.
Okay, and then lastly, just on neighboring checkpoint you know.
Obviously the were down in the third quarter and I don't know I don't know if you can provide any color here, but would it be read from the tech stack that are kind of the fourth quarter, the down and the on the summer range in terms of revenue.
When we still had commented the both of the movie down I've got anything to add to the.
Okay all right. Thank you.
Okay.
Thank you and our next question comes from Adam Josephson from Keybanc. Your line is open.
Thanks, Jeff and trying to appreciate the Jeff perhaps this is stupid question, but the the run on cash that you talked about is that.
Global phenomenon, I mean, where do you see this.
Hey, how significant an impact was it and just the.
Somewhat related question to that business, which is there are number of central banks that have talked about evaluating moving to digital currencies just wondering.
Any thoughts you might have on that and how that could potentially affect your secure business.
Yeah. So you.
You know there's been a run on cash in the every central bank in the world and the pandemic I mean, the there isn't a single bank in the world.
Hasn't had seen increased amounts of cash.
So the lots of theories about why that might be which I think a little over the.
The growth going into the book.
So.
So that's all I can really tell you it.
I don't think digital currencies will have any impact from the on outside of any any time soon it's one of the would replace cash they might come but they certainly will replace cash on the bowls and credit card bid of bank check books, the it'll probably take that the but the the digital digital card into the allied to count them in the.
In the the at some point in the next sort of they tend toward the years he the.
But the yet the thinking about cash is used in all countries in the world for.
The content of Africa, the cause of the South Asia you know so the cash is the global thing of the digital content is when they kind of <unk> likely to kind of initially and then the more sophisticated economies and even then.
Some of the I'd and the bank I know, it's it's talking about replacing currency the digital cash flow.
Got it okay the plane.
Right now thank share on the sustainability front do you signed the new plastics economy global commitment.
And announced the 35 million dollar investment and a sustainable film project in the quarter have your thoughts for approach to the whole sustainability issue of all of our changed the of laid perhaps driven by any recent conversations with customers or announcements from now and I'm. Just wondering if there if they've taken recent actions that are.
Consistent with their 2025 pledges about using all of recycled Rad center or what have you.
Yeah, there's a lot of interest in the Weve had products for for for labels. The the aid recycling for the.
Some time and for there's been a lot more interest in the them in the low.
Five years than we had in the previous 10 before that so.
So the these are not use of these are not new ideas b. They just the interest income is just.
Become a lot more price you did you do what's going on in the <unk> and the consumer.
So sort of the big the big focus in <unk> and I was the focusing on making packaging circular and making packaging easy to recycle and most of the products, we make and.
In the in that investment, but that's what we talk about in the in Europe is really driven around the.
That makes it a lot.
Moving labels the come away from.
Plastic inside of some of the plastic bottom itself is more easy to recycle.
Got it and just last question for me, Jeff that have the respect of performances of every bit of your businesses. This year.
Cause you to think I want to be in the years to come invest more or less the in particular segments than you might have thought free pandemic and other types of and the change the way you think about the attractiveness of each of your segment, yeah, well the the business has done much better than we couldn't imagine this year's innovia.
You didn't get any questions about the out of the cold the but that's the business. The same the the biggest change into the fold ins here on you.
I mean, it's basically made up for the the the downside of avian checkpoint so.
It's sort of showing the value of having a portfolio of so.
We're very pleased with that for you I'm.
So we are more optimistic about making investments in the space than we would have been say the year with two of the guy.
And just drawing out what has fundamentally changed in Innovia. This year, just the high level.
Well.
I think we've got very disciplined on the on pricing. So some of even very disciplined on the on the resin pass through so that's really improved significantly.
Moving much more focused on the value added parts of the of the portfolios as sort of mixed management has been a big factor.
Our success in currencies also a factor I.
I think we did of we've done a very good job with the tree of fun the acquisition, the particularly the plant in Mexico, the really being trans fold.
And the the acquisition in Poland because of the home run for the.
The recent very well out of the.
Thanks, a lot of Jeff.
No problem.
Thank you and again, ladies and gentlemen to ask the question. Please press Star and then one now.
Our next question comes from the Stephen Macleod from BMO capital markets. Your line is open.
Thank you I just had one follow up question for you John.
You talked a lot about the talk a bit about M&A and how you have attractive M&A opportunities across all the portfolios has the M&A backdrop changed at all it sounds as though you're not seeing any distressed sellers certainly on the label side, but I'm. Just curious has has the ability to do M&A improves the with with the economy.
Operating back up the notwithstanding the second wave that we're seeing right now.
I wouldn't the said it's changed a whole lot of the is all of because most of its still very travel restricted and the.
So we can look at things always got people in place to so we announced the deal that you've seen in Malaysia couple of days ago, and so one of a sort of moving you guys is based in Singapore for the he's the label to handle lot of transaction, even though the the business leader who is based in Europe the middle.
For the travel to Asia. So so the ability to travel is still the pretty pretty heavy constraint on of.
And the you know it improved a bit in the some of it now.
It's kind of back to where we were I mean, it's the very very difficult to get around.
Well, that's the constraint where operating out of the minute well.
Well, we've got people in fit you in country in place by the weakened the do the due diligence, we need and get out of the kind of the meetings, we need to have other than we've been able to the well you've been able to say.
Okay, and I guess, it would be safe to assume that until.
Until trouble opens up the <unk>.
Positions would be similar to the ones that you've done more tuck in related correct.
Okay, great. Thanks, Jeff Thanks.
Thank you and that does conclude our question and answer session for today's conference I'll. The turn the call back over to Jeff Martin for any closing remark.
Okay, well, thank you very much for calling in everybody and we'll look for the talking to the next call. The thanks very much of the time and attention.
Yeah.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.
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