Q3 2024 Avery Dennison Corp Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by. During the presentation, all participants will be in a listen-only mode.

Operator: Ladies and gentlemen, thank you for standing by. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question and answer. At that time, if you have a question, please press star followed by the number one on your telephone keypad.

Speaker Change: Ladies and gentlemen, thank you for standing by during the presentation. All participants will be in a listen only mode. Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star followed by the number one on your telephone keypad.

Operator: Afterwork, we will conduct a question in the answer session. At that time, if you have a question, please press star, followed by the number one on your telephone keypad.

Operator: Welcome to Avery Dennison's earnings conference call for the third quarter ended on September 28th, 2024. This call is recorded and will be available for replay after 4 p.m. Eastern time. Today, and until midnight Eastern Time, October 30th, 2024. To access the replay, please dial 1-800-770-2030, or 1-609-800-9909 for international callers.

Operator: Welcome to Avery Dennison's earnings conference call for the third quarter ended on September 28, 2020. This call is being recorded and will be available for replay after 4 p.m. Eastern Time today and until midnight Eastern Time, October 30th, 2020. To access the replay, please dial 1-800-770-2030 or 1-609-800-9909 for international callers. The conference ID number is 5855703.

Speaker Change: Welcome to Avery Dennison earnings conference call for the third quarter ended on September 28, 2024.

Speaker Change: This call Zynga recorded and will be available for replay after four P M eastern time.

Speaker Change: Today until midnight Eastern time October 32024.

Speaker Change: Access the replay please dial one 870 702030 or 1609800 90 909 for international callers The conference I'd number is five eight.

Operator: The conference ID number is 5-8-5706.

Speaker Change: 5706.

John Eble: I'd now like to turn the call over to John Eble. Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, sir.

John Eble: I'd now like to turn the call over to John Eble, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead.

Speaker Change: I'd now like to turn the call over turn the call over to John I believe Avery Dennison, Vice President of Finance and Investor Relations. Please go ahead Sir.

John Eble: Thank you, Jeremy. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled from GAAP on schedules A4 to A9 of the financial statements accompanying today's earnings release.

John Eble: Thank you, Jeremy. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled from GAAP on Schedules A-4 to A-9 of the financial statements accompanying today's earnings report.

John Avery: Thank you Jeremy Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined qualified and reconciled from GAAP on schedules, a four to eight and nine of the financial statements accompanying today's earnings release, we remind you that well.

John Eble: We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance. These forward-looking statements are made subject to the safe harbor statements included in today's earnings release.

John Eble: We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the Safe Harbor Statement included in today's earnings.

John Avery: Make certain predictive statements that reflect our current views and estimates about our future performance and financial results.

Speaker Change: These forward looking statements are made subject to the safe Harbor statements included in today's earnings release on the call today are Dr Standard President and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer, I will now turn the call over to Dion.

John Eble: On the call today are Deon Stander, President and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer.

John Eble: On the call today are Deon Stander, President and Chief Executive Officer, and Greg Loven, Senior Vice President and Chief Financial Officer.

Deon Stander: I'll now turn the call over to Deon. Thanks, John, and hello, everyone. We delivered another strong quarter with earnings per share of $2.33, above our expectations, and we are raising our full-year guidance. We now expect earnings of $9.35 to $9.50 per share for the year and are targeting roughly 20% earnings growth compared to the prior year. Both Materials Group and Solutions Group delivered strong bottom-line growth in the quarter, and in intelligent labels, we are delivering another year of strong top-line growth and continue to see significant opportunity ahead. Materials Group continued to demonstrate its resilience in the third quarter, again delivering solid volume growth and strong margins.

Deon Stander: I'll now turn the call over to Deon. Thanks, John, and hello, everyone. We delivered another strong quarter with earnings per share of $2.33 above our expectations and are raising our full year guidance. We now expect earnings of $9.35 to $9.50 per share for the year and are targeting roughly 20% earnings growth compared to prior year. Both Materials Group and Solutions Group delivered strong bottom-line growth in the quarter. And in Intelligent Labels, we are delivering another year of strong top-line growth and continue to see significant opportunity ahead. Materials Group continued to demonstrate its resilience in the third quarter, again delivering solid volume growth and strong margins.

Dion: Thanks, John and Hello, everyone.

Dion Standard: We delivered another strong quarter with earnings per share of $2 33.

Dion Standard: Above our expectations and are raising our full year guidance, we now expect earnings of $9 35.

Dion Standard: To $9 50 per share for the year and are targeting roughly 20% earnings growth compared to prior year.

Dion Standard: Both materials group and solutions group delivered strong bottom line growth in the quarter.

Dion Standard: And in intelligent labels, we are delivering another year of strong topline growth and continued to see significant opportunity ahead.

Dion Standard: Materials group continued to demonstrate its resilience in the third quarter again, delivering solid volume growth and strong margins.

Deon Stander: In North American Asia, volume increased compared to prior year and sequentially in line with expectations. In Europe, volume was slightly below expectations, increasing compared to prior year and down sequentially, largely driven by normal volume seasonality. Broadly, macro retail volumes remain soft relative to long-term trends, particularly in developed regions, as the cumulative effects of inflation continue to earn consumers, and we do not anticipate this will change in the near term. Solutions Group delivered strong sales growth and margins in the third quarter, driven by strong growth in the base and continued growth in high-value solutions. Overall, the apparel category was strong after normalizing media, as we expected, providing further evidence that retail and brands are largely through destructs.

Deon Stander: in North America and Asia, volume increased compared to prior year and sequentially in line with expectations. In Europe, volume was slightly below expectations, increasing compared to prior year and down sequentially, largely driven by normal volume seasonality. Broadly, macro retail volumes remain soft relative to long term trends, particularly in developed regions. as the cumulative effects of inflation continue to weigh on consumers. And we do not anticipate this will change in the near term. Solutions Group delivered strong sales growth and margins in the third quarter, driven by strong growth in the base and continued growth in high-value solutions.

Dion Standard: In North America, and Asia volume increased compared to prior year and sequentially in line with expectations in Europe volume was slightly below expectations, increasing compared to prior year and down sequentially largely driven by normal volume seasonality.

Dion Standard: Broadly macro retail volumes remained soft relative to long term trends, particularly in developed regions as the cumulative effects of inflation continue to end consumers.

Dion Standard: And we do not anticipate this will change in the near term.

Dion Standard: Solutions group delivered strong sales growth and margins in the third quarter driven by strong growth in the base and continued growth in high value solutions.

Deon Stander: Overall, the apparel category was strong after normalizing mid-year as we expected, providing further evidence that retailers and brands are largely through de-stocking. In the quarter, we were able to largely overcome some interruption in the apparel industry due to the unrest in Bangladesh, a key apparel sourcing country. Within high-value solutions, strong growth in apparel and general retail categories was partially offset by logistics and drugstore channel software. Focusing on our intelligent labels platform, as we continue to connect billions of physical items with digital identities, I have high conviction in delivering against our target of roughly 15% plus sales growth over the long term.

Dion Standard: Overall, the apparel category was strong after normalizing midyear as we expected providing further evidence that retailers and brands are largely through destocking.

Deon Stander: In the quarter, we were able to largely overcome some interruption in the parallel industry due to the unrest in Bangladesh, a key apparel sourcing country. Within high-value solutions, strong growth in apparel and general retail categories was partially offset by logistics and drugstore channel softness. Focusing our intelligent labels platform as we continue to connect billions of physical items with digital identities, I have high conviction in delivering against our target of roughly 15% plus sales growth over the long term. This multi-decade growth opportunity will be driven by continued adoption in the parallel and accelerated adoption in new segments such as food, logistics, and general retail, a key focus for us in the near term.

Dion Standard: In the quarter, we were able to largely overcome some interruption in the apparel industry due to the unrest in Bangladesh, a key apparel sourcing country.

Dion Standard: Within our high value solutions strong growth in apparel and general retail categories was partially offset by logistics and drugstore channel softness.

Dion Standard: Focusing on our intelligent labels platform as we continue to connect billions of physical items with digital identities I have high conviction in delivering against our target of roughly 15% plus sales growth over the long term.

Deon Stander: This multi-decade growth opportunity will be driven by continued adoption in apparel and accelerated adoption in new segments such as food, logistics and general retail, a key focus for us in the near term. As the market leader, we are extremely well positioned to capitalize on this opportunity. In food, we announced a strategic collaboration with Kroger focused on building a better customer and associate experience through RFID technology. This collaboration makes item-level digital identification possible, enabling more frequent and accurate inventory information to maximize freshness, reduce waste, and improve the associate experience. The collaboration will begin in the Bakery Department across the Kroger network.

Dion Standard: This multi decade growth opportunity will be driven by continued adoption in apparel and accelerates adoption in new segments, such as food logistics in general retail a key focus for us in the near term as.

Deon Stander: As the market leader, we are extremely well positioned to capitalize on this opportunity. In food, we announced a strategic collaboration with Kroger focused on building a better customer and a social experience through RFID technology. This collaboration makes item-level digital identification possible, enabling more frequent and accurate inventory information to maximize freshness, reduce waste, and improve the associated experience. This collaboration will begin in the Bakery department across the Kroger network. This is the first growth that moving to Roland for item-level RFID tagging and represents a significant step forward for our intelligent labels business and the industry overall in a very large addressable market with significant opportunity for growth in the years to come.

Dion Standard: As the market leader, we are extremely well positioned to capitalize on this opportunity.

In food, we announced a strategic collaboration with Kroger focused on building, a better customer and associate experience through RFID technology.

Dion Standard: This collaboration makes item level digital identification possible, enabling more frequent inaccurate inventory information to maximize freshness reduce waste and improve the associate experience.

Collaboration will begin in the bakery department across the Kroger network.

Deon Stander: This is the first grocer moving to rollout for item level RFID tagging and represents a significant step forward for our intelligence labels business and the industry overall in a very large addressable market with significant opportunity for growth in the years to come.

Dion Standard: This is the first gross and moving to rollout for item level RFID tagging and represents a significant step forward for our intelligent label's business and the industry overall and a <unk>.

Dion Standard: A very large addressable market with significant opportunity for growth in the years to come.

Deon Stander: Turning to results, enterprise-wide intelligent label sales were up mid-teens year to date. New customer roll-ups will be uneven, particularly due to the pace of deployment, as well as by comparison to initial volume builds for new program adoption in prior years. In this context, we now expect double-digit growth for the full year on softer logistics volume. Overall, the ability of our solutions to help address industry challenges such as labor efficiency, waste, transparency, and consumer connection in very large volume categories like logistics, retail, and food is increasingly resonating with customers. Key pilots and roll-ups are delivering significant value and compelling proof points for broader segment adoption.

Deon Stander: Turning to results. Enterprise-wide Intelligent Label Sales were up mid-teens year to date. As we shared during our investor day, new customer rollouts will be uneven, particularly due to the pace of deployment, as well as by comparison to initial volume builds for new program adoption in prior years. In this context, we now expect double-digit growth for the full year on softer logistics volume. Overall, the ability of our solutions to help address industry challenges, such as labor efficiency, waste, transparency, and consumer connection, in very large volume categories like logistics, retail, and food, is increasingly resonating with customers.

Dion Standard: Turning to results.

Dion Standard: Enterprise wide intelligent label sales were up mid teens year to date.

Dion Standard: As we shared during our Investor day, new customer Rollouts will be uneven, particularly due to the pace of deployment.

Dion Standard: As well as by comparison to initial volume builds for new program adoption in prior years.

In this context, we now expect double digit growth for the full year on softer logistics volume.

Dion Standard: Overall, the ability of our solutions to help address industry challenges such as labor efficiency waste transparency and consumer connection in very large volume categories like logistics retail and food is increasingly resonating with customers.

Deon Stander: Key pilots and rollouts are delivering significant value and compelling proof points for broader segment adoption. We continue to invest to capture the significant opportunity ahead as we grow the size of the overall industry, further advancing our leadership position at the intersection of the physical and digital. Stepping back, the underlying fundamentals of our business are strong. We're exposed to diverse and growing markets with clear catalysts for long-term growth. We are industry leaders in our primary businesses with clear competitive advantages in scale and innovation. And we have a clear set of strategies that we continue to evolve over time and are key to our success over the long term and across a wide range of business.

Dion Standard: Key pilots and Rollouts are delivering significant value and compelling proof points for broader segment adoption.

Deon Stander: We continue to invest to capture the significant opportunity ahead as we grow the size of the overall industry, further advancing our leadership position at the intersection of the physical and digital. Stepping back, the underlying fundamentals of our business are strong. We're exposed to diverse and grain markets with clear catalysts for long-term growth. We are industry leaders in our primary businesses with clear competitive advantages in scale and innovation. And we have a clear set of strategy that we continue to evolve over time and are key to our success over the long term and across a wide range of business cycles.

We continue to invest to capture the significant opportunity ahead as we grow the size of the overall industry further advancing our leadership position at the intersection of the physical and digital.

Stepping back the underlying fundamentals of our business are strong we're exposed to diverse and growing markets with clear catalyst for long term growth.

Dion Standard: Our industry leaders in our primary businesses with clear competitive advantages in scale and innovation.

Dion Standard: And we have a clear set of strategy that we continue to evolve over time and are key to our success over the long term and across a wide range of business cycles, we remain confident that our strategies along with our team's ability to execute in dynamic environments will enable us to continue to generate superior value.

Deon Stander: We remain confident that our strategies, along with our team's ability to execute in dynamic environments, will enable us to continue to generate superior value creation through a balance of GDP plus growth and top portal returns over the long term. In summary, we delivered another strong quarter and raised our guidance for the year to deliver nearly 20% earnings growth in 2024. While we are increasing our art look for the year, the environment remains uncertain, and we're in some degree of portion. We remain confident in delivering 10% earnings growth across a range of scenarios over the cycle recently laid out in our Investor Day.

Deon Stander: We remain confident that our strategies, along with our team's ability to execute in dynamic environments, will enable us to continue to generate superior value creation through a balance of GDP plus growth and top quartile returns over the long term. In summary, we delivered another strong quarter and raised our guidance for the year to deliver nearly 20% earnings growth in 2024. While we are increasing our output for the year, the environment remains uncertain and warrants some degree of caution. We remain confident in delivering 10% earnings growth across a range of scenarios over the cycle recently laid out in our investor day.

Dion Standard: New creation through balance of GDP, plus growth and top quartile returns over the long term.

Dion Standard: In summary, we.

Dion Standard: We delivered another strong quarter and raised our guidance for the year to deliver nearly 20% earnings growth in 2024.

Dion Standard: While we are increasing our outlook for the year the environment remains uncertain and Werent. Some degree of caution we remain confident in delivering 10% earnings growth across a range of scenarios over the cycle recently laid out in our Investor day.

Deon Stander: I want to thank our entire team for their continued resilience, focus on excellence, and commitment to addressing the challenges at hand.

Deon Stander: I want to thank our entire team for their continued resilience, focus on excellence, and commitment to addressing the challenges at hand.

Dion Standard: I want to thank our entire team for their continued resilience focus on excellence and commitment to addressing the challenges at hand, and with that I'll hand, the call over to Greg.

Greg Loven: With that, I'll hand the call over to Greg. Thanks, Deon, and hello everybody. In the third quarter, we delivered adjusted earnings per share of $2.33, up 9% compared to prior year, driven largely by benefits from higher volume and productivity. Compared to prior year, sales were 5% ex-currency in 4% on an organic basis, as higher volume was partially offset by deflation-related price reductions. Adjusted EBITDA margin was strong at 16.4% in the quarter, up 40 basis points compared to prior year, with strong margins in both segments. And we continue to generate strong free cash flow, with $420 million generated through the first three quarters, up nearly $50 million compared to the prior year.

Greg Lovins: With that, I'll hand the call over to Greg. Thank you, Deon, and hello, everybody. In the third quarter, we delivered adjusted earnings per share of $2.33, up 9% compared to prior year, driven largely by benefits from higher volume and productivity. Compared to prior year, sales were up 5% ex-currency and 4% on an organic basis, as higher volume was partially offset by deflation-related price reduction. Adjusted EBITDA margin was strong, at 16.4% in the quarter, up 40 basis points compared to prior year, with strong margins in both segments. And we continue to generate strong free cash flow, with $420 million generated through the first three quarters, up nearly $50 million compared to prior year.

Greg Lovins: Thanks, Dion and Hello, everybody.

Greg Lovins: In the third quarter, we delivered adjusted earnings per share of $2 33.

Greg Lovins: Up 9% compared to prior year, driven largely by benefits from higher volume and productivity.

Greg Lovins: Compared to prior year sales were up 5% ex currency and 4% on an organic basis.

Greg Lovins: As higher volume was partially offset by deflation related price reductions.

Greg Lovins: Adjusted EBITDA margin was strong at 16, 4% in the quarter up 40 basis points compared to prior year with strong margins in both segments.

Greg Lovins: And we continued to generate strong free cash flow was $420 million generated through the first three quarters up nearly $50 million compared to prior year.

Greg Loven: Our balance sheet remains strong, with a net debt to adjusted EBITDA ratio at quarter end of 2.1, which includes paying down 300 million of debt, which matured in August. We continue to execute our disciplined capital allocation strategy, including investing in organic growth and acquisitions, while continuing to return cash to shareholders. In the first nine months of the year, we return $315 million to shareholders through the combination of share repurchases and dividends. And in the third quarter, we repurchased 300,000 shares and distributed $71 million in dividends.

Greg Lovins: Our balance sheet remains strong, with a net debt to adjusted EBITDA ratio at quarter end of 2.1. which includes paying down $300 million of debt which matured in August. We continue to execute our disciplined capital allocation strategy. including investing in organic growth and acquisitions while continuing to return cash to shareholders. In the first nine months of the year, we returned $315 million to shareholders through the combination of share repurchases and dividends. And in the third quarter, we repurchased 300,000 shares and distributed $71 million in dividends.

Greg Lovins: Our balance sheet remains strong with a net debt to adjusted EBITDA ratio at quarter end of two one.

Greg Lovins: Which includes paying down $300 million of debt, which matured in August.

Greg Lovins: We continue to execute our disciplined capital allocation strategy.

Greg Lovins: Including investing in organic growth and acquisitions, while continuing to return cash to shareholders.

Greg Lovins: In the first nine months of the year, we returned $315 million to shareholders through the combination of share repurchases and dividends.

Greg Lovins: And in the third quarter, we repurchased 300000 shares and distributed $71 million in dividends.

Greg Loven: Starting to segment results for the quarter, material scoop sales were up 4% ex-currency and on an organic basis compared to prior year, driven by mid-single-digit volume growth, partially offset by deflation-related price reductions. Looking at label materials organic volume trends versus prior year in the quarter, North America was up mid-to-high single digits. Europe was up mid-single digits, including the impact of the slight volume pool forward in the Q2 that we noted last quarter. As a Pacific was up low single digits, and Latin America was up mid-to-high single digits. High value segment growth was also strong, with graphics and reflective sales up mid-single digits organically and tapes up low single digits organically, with particular strengths in industrial categories.

Greg Lovins: Turning to segment results for the quarter. Materials Group sales were up 4% ex-currency and on an organic basis compared to prior year. driven by mid-single-digit volume growth partially offset by deflation-related price reduction. Looking at labeled materials organic volume trends versus prior year in the quarter, North America was up mid to high single digit. Europe was up mid-single digits, including the impact of the slight volume pull-forward into Q2 that we noted last quarter. Asia Pacific was up low single digits and Latin America was up mid to high single digits. High-value segment growth was also strong, with graphics and reflective sales up mid-single digits organically and tapes up low-single digits organically, with particular strength in industrial categories.

Greg Lovins: Turning to segment results for the quarter.

Greg Lovins: <unk> group sales were up 4% ex currency and on an organic basis compared to prior year.

Greg Lovins: Driven by mid single digit volume growth, partially offset by deflation related price reductions.

Greg Lovins: Sure.

Looking at labor materials organic volume trends versus prior year in the quarter.

Greg Lovins: North America was up mid to high single digits.

Greg Lovins: Europe was up mid single digits, including the impact of the slight volume pull forward into Q2 that we noted last quarter.

Greg Lovins: Asia Pacific was up low single digits, and Latin America was up mid to high single digits.

Greg Lovins: High value segment growth was also strong with graphics and reflective sales up mid single digits organically and tapes up low single digits organically with particular strength in industrial category.

Greg Loven: Material scoop delivered a strong adjusted EBITDA margin of 17% in the third quarter, moderating sequentially as expected due to typical volume seasonality in comparable to prior year. As higher volume and benefits from productivity were offset by higher employee related costs and the net impact of pricing in raw material costs. Regarding raw material cost in the third quarter, globally, we saw low single-digit inflation sequentially, as expected. The increase was driven by higher paper prices, primarily in Europe. We've addressed the cost increases through a combination of product re-engineering and pricing actions, as we discussed last quarter. As we move through the third quarter, paper prices began to stabilize.

Greg Lovins: Materials Group delivered a strong adjusted EBITDA margin of 17% in the third quarter, moderating sequentially as expected due to typical volume seasonality, and comparable to prior year, as higher volume and benefits from productivity were offset by higher employee-related costs and the net impact of pricing and raw material costs. Regarding raw material costs in the third quarter, globally, we saw low single-digit inflation sequentially, as expected. The increase was driven by higher paper prices, primarily in Europe. We've addressed the cost increases through a combination of product re-engineering and pricing actions, as we discussed last quarter. As we move through the third quarter, paper prices began to stabilize.

Greg Lovins: Materials group delivered a strong adjusted EBITDA margin of 17% in the third quarter.

Greg Lovins: Moderating sequentially as expected due to typical volume seasonality and comparable to prior year as higher volume and benefits from productivity were offset by higher employee related costs and the net impact of pricing and raw material costs.

Greg Lovins: Regarding raw material costs in the third quarter globally, we saw low single digit inflation sequentially as expected.

Greg Lovins: The increase was driven by higher paper prices primarily in Europe.

Greg Lovins: We've addressed the cost increases through a combination of product reengineering and pricing actions as we discussed last quarter.

Greg Lovins: As we move through the third quarter paper prices began to stabilize overall, we expect our raw material cost to be fairly stable in the fourth quarter.

Greg Loven: Overall, we expect a raw material cost to be fairly stable in the fourth quarter.

Greg Lovins: Overall, we expect our raw material costs to be fairly stable in the fourth quarter.

Greg Loven: Shifting out a solutions group, sales were up 6% on an organic basis, and 7% ex-currency. With base solutions up mid-teens, as the peril volume remained normalized, in high-value solutions were up low single digits. Within a high-value solutions, strong growth in intelligent labels of peril and general retail categories was partially offset by logistics and software volumes. As Deon mentioned, enterprise-wide intelligent label sales grew mid-teens through the first three quarters of the year, as apparel volume normalizes in new categories, adopt. While the third quarter was lower than expectations, we delivered more than 20% growth in apparel and general retail categories, which was partially offset by logistics.

Greg Lovins: Shifting now to Solutions Group, sales were up 6% on an organic basis and 7% ex-currency. with base solutions up mid-teens as apparel volume remained normalized. And high-value solutions were up low single digits. Within a high-value solutions, strong growth in intelligent labels, apparel, and general retail categories was partially offset by logistics and softer volumes in our drugstore channel in Vescom. As Deon mentioned, enterprise-wide intelligent label sales grew mid-teens through the first three quarters of the year, as apparel volume normalizes and new categories adopt. While the third quarter was below our expectations, we delivered more than 20% growth in apparel and general retail categories, which was partially offset by logistics.

Greg Lovins: Shifting now to solutions group sales were up 6% on an organic basis and 7% ex currency.

Greg Lovins: With base solutions up mid teens as apparel volume remain normalized.

Greg Lovins: And high value solutions were up low single digits.

Greg Lovins: Within our high value solutions strong growth in intelligent labels apparel and general retail categories was partially offset by logistics and softer volumes in our drugstore channel invest com.

As Ian mentioned enterprise wide intelligent label sales grew mid teens through the first three quarters of the year as apparel volume normalizes and new categories adopt.

Greg Lovins: While the third quarter was below our expectations, we delivered more than 20% growth in apparel and general retail categories, which was partially offset by logistics.

Greg Loven: Large A due to prior year customer inventory builds and a customer transition that reduced some RFID personal volume in the third quarter. That transition is now largely complete. Despite uneven growth this year, as Deon mentioned, the CROGRA collaboration we announced yesterday is another proof point of our industry leadership and builds on our confidence in delivering on the significant opportunity ahead. Solutions Group delivered strong-adjusted EBITDA margin of 17.9%, off 110 basis points sequentially and 150 basis points compared to prior year. To run by benefits from higher volume and productivity, portioned offset by higher employee-related costs and investments.

Greg Lovins: largely due to prior year customer inventory builds and a customer transition that reduced some RFID parcel volume in the third quarter. That transition is now largely complete. Despite uneven growth this year, as Deon mentioned, the Kroger collaboration we announced yesterday is another proof point of our industry leadership and builds on our confidence in delivering on the significant opportunity ahead. Solutions Group delivered strong adjusted EBITDA margin of 17.9%, up 110 basis points sequentially and 150 basis points compared to prior year. driven by benefits from higher volume and productivity, partially offset by higher employee-related costs and investment.

Greg Lovins: Largely due to prior year customer inventory builds and a customer transition that reduced some RFID personal volume in the third quarter.

Greg Lovins: Transition is now largely complete.

Speaker Change: Despite uneven growth this year as Dion mentioned, the Kroger collaboration we announced yesterday is another proof point of our industry leadership and builds on our confidence in delivering on the significant opportunity ahead.

Greg Lovins: Okay.

Greg Lovins: Solutions group delivered strong adjusted EBITDA margin of 17, 9% up 110 basis points sequentially, and 150 basis points compared to prior year drew.

Driven by benefits from higher volume and productivity.

Greg Lovins: Partially offset by higher employee related costs and investments.

Greg Loven: Now shifting to our outlook for 2024, we have raised our guidance for adjusted earnings per share to be between $9.35 and $9.50, with the mid-point reflecting nearly 20% growth versus prior year. As you recall, our outlook includes our four key drivers of earnings growth in 2024, which are on track. The normalization of label volumes early in the year, the normalization of apparel volume mid-year, strong growth in intelligent labels as apparel rebounds and new programs roll out, and ongoing productivity actions. We've outlined additional key contributing factors to our guidance on slide 12 of our supplemental presentation materials.

Greg Lovins: Now shifting to our outlook for 2024. We have raised our guidance for adjusted earnings per share to be between $9.35 and $9.50. with the midpoint reflecting nearly 20% growth versus prior year. As you'll recall, our outlook includes our four key drivers of earnings growth in 2024, which are on track. The normalization of label volumes early in the year, the normalization of apparel volume mid-year, Strong growth in intelligent labels as apparel rebounds and new programs roll out, and ongoing productivity action. We've outlined additional key contributing factors to our guidance on slide 12 of our supplemental presentation material.

Greg Lovins: Now shifting to our outlook for 2024.

Greg Lovins: We have raised our guidance for adjusted earnings per share to be between $9 35, and $9 50.

Greg Lovins: With the midpoint, reflecting nearly 20% growth versus prior year.

Greg Lovins: As Youll recall, our outlook includes our four key drivers of earnings growth in 2024, which are on track.

Greg Lovins: The normalization of label volumes early in the year.

Greg Lovins: The normalization of apparel volume mid year.

Greg Lovins: Strong growth in intelligent labels as apparel rebounds, and new program Rollouts.

Greg Lovins: And ongoing productivity actions.

Greg Lovins: We've outlined additional key contributing factors to our guidance on slide 12 of our supplemental presentation materials.

Greg Loven: In particular, and focusing on the changes from July, we estimate 4.5% to 5% organic sales growth, now targeting the high end of our previous outlook. For the year, we continue to expect high single-digit volume growth, partially offset by deflation-related price reductions. We expect incremental savings from restructuring actions of more than $55 million. Up 5 million from our previous outlook, some of which was delivered in Q3. and we now anticipate a headwind from currency translation of roughly $5 million in operating income for the year, slightly better than our previous outlook for both the third and fourth quarters.

Greg Lovins: In particular, in focusing on the changes from July, we estimate 4.5% to 5% organic sales growth, now targeting the high end of our previous outlook. For the year, we continue to expect high single-digit volume growth, partially offset by deflation-related price reduction. We expect incremental savings from restructuring actions of more than $55 million, up $5 million from our previous outlook, some of which was delivered in Q3. And we now anticipate a headwind from currency translation of roughly $5 million in operating income for the year, slightly better than our previous outlook for both the third and fourth quarters.

Greg Lovins: In particular and focusing on the changes from July we estimate four 5% to 5% organic sales growth now targeting the high end of our previous outlook.

Greg Lovins: For the year, we continue to expect high single digit volume growth, partially offset by deflation related price reductions.

Greg Lovins: We expect incremental savings from restructuring actions that more than $55 million up $5 million from our previous outlook some of which was delivered in Q3.

Greg Lovins: And we now anticipate a headwind from currency translation of roughly $5 million and operating income for the year slightly better than our previous outlook for both the third and fourth quarters.

Greg Loven: Then we continue to target roughly 100% adjusted free cash flow conversion.

Greg Lovins: and we continue to target roughly 100% adjusted free cash flow conversion.

Greg Lovins: And we continue to target roughly 100% adjusted free cash flow conversion.

Greg Loven: In summary, we delivered another strong quarter. Increased our outlook for earnings growth. We remain confident in our ability to continue to deliver exceptional value through our strategies for long-term profitable growth and discipline capital allocation.

Greg Lovins: In summary, we delivered another strong quarter, increased our outlook for earnings growth, remained confident in our ability to continue to deliver exceptional value through our strategies for long-term profitable growth and disciplined capital allocation.

Greg Lovins: In summary, we delivered another strong quarter increase.

<unk> increased our outlook for earnings growth remain confident in our ability to continue to deliver exceptional value through our strategies for long term profitable growth and disciplined capital allocation.

Operator: And now we'll open up the call for your questions. Ladies and gentlemen, if you would like to register a question, press star followed by the number one on your telephone key path. You will hear a confirmation of your request. If your question has been answered and you would like to withdraw your registration, please press star one again. And to accommodate all participants, we ask that you please limit yourself to one question and then return to the key if you have additional questions. One moment while I get the first question running.

Operator: Now we'll open up the call for your questions. Ladies and gentlemen, if you would like to register a question, press star followed by the number one on your telephone keypad. You will hear a confirmation of your request. If your question has been answered and you would like to withdraw your registration. please press star one again.

Greg Lovins: And now we will open up the call for your questions.

Greg Lovins: Okay.

Speaker Change: Ladies and gentlemen, if you would like to register a question Press Star followed by the number one on your telephone keypad.

Speaker Change: You will hear a confirmation of your request.

Question has been answered and we would like to withdraw your registration. Please press star one again and then to accommodate all participants we ask that you. Please limit yourself to one question and then return to the queue. If you have additional questions.

Operator: And then to accommodate all participants, we ask that you please limit yourself to one question and then return to the queue if you have. One moment while I get the first question.

Speaker Change: One moment, while I get the first question.

Ghansham Panjabi: Our first question comes to the line of Hauncham Panjabi from Bard. Please go ahead. Hello everyone. Hope you're doing well. Thank you. Yeah, thanks, Deon.

Ghansham Panjabi: Our first question comes from the line of Ghansham Panjabi from Bard. Please go ahead.

Speaker Change: Our first question comes from the line of Hotshot Panjabi from Baird. Please go ahead.

Deon Stander: Hello, everyone. I guess, um... Yeah, thanks, Deon. So I guess first off on the materials segment, you know, and it's related to the volume rebound in 2020. starting to plateau, in your opinion, you know, in other words, you had a rebound following the destocking impact last year, and now you have a weaker consumer as an offset, which is why you're still below. sort of 2022 levels. And then an intelligent label specific to logistics. It's a lower-than-forecast volume dynamic in 2024. market conditions or just tough comps, what is Yeah, Ghansham, so on the material side, I think when we look at the quarter overall, I think we see as we would have expected, you know, materials volumes, particularly in Europe, sequentially slowing a little bit from seasonality.

Speaker Change: Hello, everyone.

Speaker Change: Doing well.

Speaker Change: Again.

Ghansham Panjabi: So I guess first off on the material segment, and it's related to the volume rebound in 2024. Is that starting to plateau, in your opinion? In other words, you had a rebound following the de-stocking impact last year, and now you have a week of consumers and offset, which is why you're still below 22 levels.

Speaker Change: Yeah. Thanks, Dan So I guess first off on the materials segment.

Speaker Change: And as it relates to the volume rebound in 2024 is that starting to plateau in your opinion in other words, you had a rebound following the destocking impact last year and now you have a weaker consumer as an offset which is why you are still below.

Speaker Change: Sort of 'twenty, two 2022 levels and then in intelligent labels specific to logistics is the lower than forecast volume dynamic in 2024 specific to just end market conditions are just tough comps.

Deon Stander: And then an intelligent label specific to logistics, it's a lower than forecast volume dynamic in 2024 specific to just end-market conditions or just tough comps. What is the issue there? Yeah, guys, on the material side, I think when we look at the quarter overall, I think we see, as we would have expected, you know, materials volumes, particularly in Europe, sequentially slowing a little bit from season out. I guess if you compare over a couple of year period, especially compared to 2022, price is a pretty significant factor there. So, from that perspective, you know, we're in the midst of raising prices in 2022.

Speaker Change: What is the issue there.

Speaker Change: Yes, ghansham so on the materials side I think when we look at the quarter overall I think we see as we as we would've expected.

Speaker Change: <unk> volumes, particularly in Europe sequentially slowing a little bit from seasonality I guess, if you compare over a couple year period, especially compared to 2022 prices are pretty significant factor there. So.

Deon Stander: I guess if you compare over a couple year period, especially comparing to 2022, price is a pretty significant factor there. So from that perspective, you know, we're in the midst of raising prices in 2022. Now we've seen some deflation over the last year and prices have come down. So that's part of it when you look at the sales. From a volume perspective, I don't think we've seen much change in the overall trends. I would say, or as Deon mentioned in the earlier comments, materials Europe was a little bit lighter than we expected and we do continue to see a little bit softer retail volumes in Europe overall, but otherwise not much change from a trend perspective on volumes and materials.

Speaker Change: So from that perspective, we're in the midst of raising prices in 2022 now we've seen some deflation over the last year and prices have come down. So that's part of it when you look at the sales number overall from a volume perspective, I don't think we've seen much change in the overall trends I would say are as Ian mentioned in the earlier earlier comments materials Europe was.

Deon Stander: Now we've seen some deflation over the last year, and prices have come down. So that's part of it when you look at the sales number overall. From a volume perspective, I don't think we've seen much change in the overall trends. I would say, or as Dion mentioned in the earlier comments, materials in Europe were a little bit lighter than we expected, and we do continue to see a little bit softer retail volumes in Europe overall. But otherwise, not much change from a trend perspective on volumes in materials.

Speaker Change: A little bit lighter than we expected and we do continue to see a little bit softer retail volumes in Europe overall, but otherwise not much changed from a trend perspective on volumes and materials.

Deon Stander: Yeah, Gunsmann, I just want to reiterate, you know, I think the broad and macro environment still remains uncertain, and we're seeing that even in feedback from our customers. We talked about particularly in Europe; our customers in Europe and their end customers are reflecting kind of the more muted sentiment we're seeing over there, and that's confirmed by macro retail volume data that we see in Europe.

Deon Stander: Yeah, Ghansham and I, just let me reiterate, you know, I think the broader macro environment still remains uncertain. We're seeing that even in feedback from our customers, we talked about particularly in Europe, our customers in Europe and their end customers are reflecting kind of the more muted sentiment we're seeing over there. And that's confirmed by macro retail volume data that we see in Europe.

Speaker Change: Yes, Ghansham I'll, just let me reiterate.

Speaker Change: Think the broader macro environment still remains uncertain and we're seeing that even in feedback from our customers.

Speaker Change: But particularly in Europe.

Speaker Change: Customers in Europe, and their end customers are reflecting kind of the more muted sentiment we are seeing over there.

Speaker Change: Firmed by macro retail volume data that we see in Europe.

Deon Stander: To your IL question specifically, maybe just maybe take a step back. I think, you know, we laid out what we believe is the significant growth opportunity that lies ahead of us. The last time we met at the Investor Day and our conviction in delivering on that 15% plus growth target over the time. I think the Kroger announcement is just yet another inflection point, I think, that is going to really resonate in the industry and provide a catalyst for further growth. And think about our apparel business having adopted multiple proof points. We now have another proof point visible in logistics.

Deon Stander: To your aisle question specifically, maybe just maybe take a step back. I think, you know, we laid out what we believe is the significant growth opportunity that lies ahead of us, the last time we met at their investor day, and our conviction in delivering on that 15 percent plus growth target over the time. I think the Kroger announcement is yet another inflection point, I think, that is going to really resonate in the industry and provide a catalyst for further growth. And think about our apparel business having adopted multiple proof points; we now have another proof point visible in logistics, and we're now in the process of having a visible proof point in food as well. And I think that is going to be a key part of how we unlock the future.

Speaker Change: <unk> question, specifically, maybe just maybe take a step back.

Thank.

Speaker Change: We've laid out what we believe is the significant growth opportunity that lies ahead of us the last time, we met at their Investor day.

Speaker Change: And our conviction in delivering in that 15% plus growth target over the time.

Speaker Change: I think the Kroger announcement is just yet another inflection point I think that is going to really resonate in the industry and provide a catalyst for further growth and think about our apparel business, having adopted multiple proof points. We now have another proof point visible and logistics and we are now in the process of having a visible proof point in.

Deon Stander: And we are now in the process of having a visible proof point in food as well. And I think that is going to be a key part of how we unlock the future. I will also say our focus in the near term is very much on driving adoption, making sure that we're not only creating the demand, but also executing that demand. And some of these intra-quarterly movements are less focused on as we move forward. I will say in logistics specifically, the biggest variance that we saw was really down to prior year inventory customer bills, year on year.

Speaker Change: In food as well and I think that is going to be a key part of how we unlock the future.

Deon Stander: I will also say our focus in the near term is very much on driving adoption, making sure that we're not only creating the demand, but also executing that demand, and some of these entry comes, quarterly movements are less focused on as we move forward. I will say in logistics specifically, the biggest variance that we saw was really down to prior inventory customers builds, year on year, and then also the customer transition that impacted some RFID volume overall. And this is, I think, which is now larger being completed as Greg indicated, and that is, I think, a first year annualization challenge less on ongoing issue moving.

Speaker Change: I will also say our focus in the near term is very much on driving adoption.

Speaker Change: Making sure that we're not any creating the demand, but also executing that demand in some of these <unk> quarterly movements are less less focused on as we move forward I will say in logistics specifically the biggest variance that we saw was really down to prior year inventory customer builds year on year and then also in this customer.

Deon Stander: And then also this customer transition that impacted some RFID volume overall. And this is, I think, which has now largely been completed, as Greg indicated. And that is, I think, a first year annualization challenge, less an ongoing issue moving forward.

Speaker Change: That impacted some RFID volume overall and this is I think is which is now largely been completed as Greg indicated and that is I think a first year annualized Asian challenged lesson ongoing issue moving forward.

Operator: Wood.

Speaker Change: Okay.

John Mcnulty: Our next question comes from the line of John McNulty from DMO Capital. Please go ahead. Yeah, good morning, man. Thanks for taking my question. So I guess on the new trigger opportunity, can you help us to think about the scale of that? I know fresh bakery is kind of the first launch, and then there's more to come, but I guess can you help us to think about what that might mean in terms of either tag volumes or growth for you? How that is, is in? How quickly that may face? And then I guess also tied to that.

John Mcnulty: Our next question comes from the line of John McNulty from VML Capital. Please go ahead.

Speaker Change: Our next question comes from the line of John Mcnulty from BMO Capital. Please go ahead.

John Mcnulty: Yeah, good morning. Thanks for taking my question. So, I guess on the on the new Kroger opportunity, can you help us to think about the scale of that? I know Fresh Bakery is kind of the first launch, and then there's more to come. But I guess, can you help us to think about what that might mean in terms of either tag volumes or growth for you? How that phases in how quickly that may phase in? And then I guess, also tied to that, you know, I know there's a lot of There's a lot of discussion right now in the QSR markets around food safety.

John Mcnulty: Yes. Good morning, Thanks for taking my question. So I guess on the on the new Kroger opportunity can you help us to think about the scale of that I know fresh bakery is kind of the first launch and then theres more to come but I guess can you help us think about what that might mean in terms of either tag volumes or growth for you how that.

John Mcnulty: Zane how quickly that may phase in and then I guess also tied to that I know theres a lot of.

John Mcnulty: I know there's a lot of discussion right now in the QSR markets around food safety. I guess can you speak to the pilot programs that you're seeing? And if you see the potential for some meaningful launches in QSR as we go into 2025?

John Mcnulty: There's a lot of discussion right now in the <unk> markets around food safety I guess can you speak to the pilot programs that you are seeing and you see the potential for for some meaningful launches in <unk> as we go into 2025.

John Mcnulty: I guess, can you speak to the pilot programs that you're seeing and if you see the potential for some meaningful launches in QSR as we go into 2025?

Deon Stander: You know, John, thanks for the question. Let me spend a bit of time on the Kroger piece first, now switched to QSR. And I think, as I said, you know, our conviction in our long-term growth target of delivering on a 15% plus is really anchored on making sure that we drive adoption. So we saw, as we said, in the parallel driving that and continue to drive now in logistics. And I think for the first time the Kroger announced and puts an exclamation point under the fact that the technology has ubiquity and has value in driving demonstrable return investments for food customers, particularly at the grocery level as well.

Deon Stander: John, thanks for the question. Let me spend a bit of time on the Kroger piece first, and I'll switch to QSR. And I think, as I said, you know, our conviction in our long-term growth target of delivering on that 15% plus is really anchored on making sure that we drive adoption. So we saw, as we said, in apparel driving that and continue to drive that in logistics. And I think for the first time, the Kroger announcement puts an exclamation point under the fact that the technology has ubiquity and has value in driving demonstrable return on investments for food customers, particularly at the grocery level as well.

John: John Thanks for the question.

Speaker Change: Let me spend a bit of time on the Kroger piece first and I'll switch to <unk>.

Speaker Change: As I said, our our conviction in our long term growth target of delivering on that 15% plus is really anchored on making sure that we drive adoption. So we so as we said in apparel driving that and continue to drive <unk> and logistics and I think for the first time, the Kroger announcement puts an exclamation point under the fact that the technology has ubiquity and <unk>.

Speaker Change: <unk> value and driving demonstrable return on investments for food customers, particularly at the grocery level as well.

Deon Stander: I also just would characterize that that food segment, as you recall, is the largest of all the segments that we've been talking about. It is of an order of magnitude higher than a parallel, which is only 40% penetrators, roughly in the 200 million units of billion units side. So it presents a significant upside for the industry and for us as the market leaders. The work that we're doing with Kroger will start in the bakery channel and then roll out across the estate for over time. And our expectation, John, is that in time ultimately will expand beyond bakery into areas such as protein and fresh produce.

Deon Stander: I also just would characterize that that food segment, as you recall, is the largest of all the segments that we've been talking about. It is of an order of magnitude higher than apparel, which is only 40% penetrated, roughly in the 200 million units, a billion unit side. So it presents a significant upside for the industry and for us as the market leaders. The work that we're doing with Kroger will start in the bakery channel and then roll out across the estate for over time. And our expectation, John, is that in time ultimately will expand beyond bakery into areas such as protein and fresh produce.

I also just would characterize that foods segment as you'll recall is the largest of all of the segments that we've been talking about it as part of an order of magnitude higher than apparel, which is only 40% penetrated roughly in the 200 million units 1 billion unit side. So it presents a significant upside for the industry and for us as the market leaders.

The work that we're doing with Kroger will start in the bakery channel and then rollout across the estate for over time and our expectation John is that in time, ultimately will expand beyond bakery into areas such as protein and fresh produce.

Deon Stander: I think equally, this is going to take time, and the roll out will be adoption. We've seen this in a parallel; we've seen this in logistics, and I don't doubt that we can also see this in food. But I think the couple of things that stand up for me on the Kroger piece, one is the value of the partnership that we've had with them over a long period, which actually was founded on the relationship that we have with our best on business in Kroger over many years as well. And secondly, the fact that we've been able to bring to them an approach that both drives at an innovation level, but also at an execution level.

Deon Stander: I think, equally, this is going to take time and the rollout will be adoption. We've seen this in apparel, we've seen this in logistics, and I don't doubt that we're going to also see this in food. But I think there's a couple of things that stand out for me on the Kroger piece. One is the value of the partnership that we've had with them over a long period, which actually was founded on the relationship that we have with our Veston business and Kroger over many years as well. And secondly, the fact that we've been able to bring to them an approach that both drives at an innovation level, but also at an execution level.

Speaker Change: I think equally this is going to take time and the rollout will be adoption. We've seen this in apparel. We've seen this in logistics in the <unk> that we can also see this in food.

Speaker Change: But I think as a couple of things that stand out for me.

Speaker Change: On the Kroger piece, one is the value of the partnership that we've had with them over a long period, which actually was founded on the relationship that we have with our very strong business in Kroger over many years as well.

Speaker Change: And secondly, the fact that we've been able to bring to them.

Speaker Change: An approach that.

Speaker Change: Both drives it and innovation level, but also at an execution level.

Deon Stander: We don't comment, as you know, on the size of programs, the specific customer levels, but this roll out will help us deliver on that 15% plus growth target, as we discussed in our investment age on.

Deon Stander: We don't comment, as you know, on the size of programs at specific customer levels, but this rollout will help us deliver on that 15% plus growth target, as we discussed in our investor day.

Speaker Change: We don't comment as you know on the size of programs with specific customer levels, but this rollout will help us deliver on that 15% plus growth target as we discussed in our Investor Day John.

Speaker Change: <unk>.

Deon Stander: On the QSR specifically, I think we already have a couple of QSR's in roll out, most notably one where their focus has been on food safety, which is what drove it originally. And in that instance, we're actually leveraging digital identification and physical items to go back to source so that you have transparency of where something was produced and its freshness through the cycle. We have a number of other QSRs in similar discussions. And I do think the more there are, more recent FISMA regulations that have come out in the United States will act as an accelerant for food safety drive.

Deon Stander: On the QSR specifically, I think we already have a couple of QSRs in rollout, most notably one, where their focus has been on food safety, which is what drove it originally. And in that instance, we're actually leveraging the digital identification and physical items to go back to source so that you have transparency of where something was produced and its freshness through the cycle. We have a number of other QSRs in similar discussions. And I do think the more recent FISMA regulations that have come out in the United States will act as an accelerant for food safety drive.

Speaker Change: On the <unk> specifically.

Speaker Change: We already have a couple of <unk> in rollout, most notably one where their focus has been on food safety, which is what drove it originally and in that instance, we're actually leveraging the digital identification physical items to go back to source. So that you have transparency of where something was produced and its freshness through the cycle, we have a <unk>.

Speaker Change: Number of other <unk> in similar discussions and I do think the more the more recent physical regulations that have come out of the United States will act as an accelerant for food safety drive and by definition I think theyre going to lean into RFID is an enabling technology, which then we will continue to be to our benefit as the mark.

Deon Stander: And by definition, I think they're going to lean into RFIDs and enabling technology, which then will continue to be to our benefit as the market leader.

Deon Stander: And by definition, I think they're going to lean into RFID as an enabling technology, which then will continue to be to our benefit as the market leader.

Speaker Change: Leader.

George Staphos: Our next question comes from the line of George Staphos from Bank of America. Please go ahead. Hi everyone, good morning. I'm George. Thanks for taking my question. So I wanted to continue on the Intelligent Label question progress. So I know you can't talk about size of program and all that relative to a customer.

George Staphos: Our next question comes from the line of George Staphos from Bank of America. Please go ahead.

Speaker Change: Our next question comes comes from the line of George Staphos from Bank of America. Please go ahead.

George Staphos: Hi, everyone. Good morning. George, thanks for taking my question. So I wanted to continue on the Intelligent Label question progress. So I know you can't talk about size of program and all that relative to a customer.

George Staphos: Hi, everyone. Good morning.

George Staphos: George Thanks for taking my questions.

George Staphos: So I wanted to continue on the intelligent label.

Question.

George Staphos: Progress. So I know you can't talk about size of program and all of that relative to a customer.

George Staphos: Can you talk to us though about how many stores this initially is launched at within Kroger over, you know, whatever number of months or quarters you can speak to and, you know, tell us a little bit more underneath the hood what's going on in terms of how Kroger needs to implement this. You know, front end, back end, and how you're involved. So any color there would be helpful.

George Staphos: Can you talk to us, though, about how many stores this initially is launched at within Kroger over whatever number of months or quarters you can speak to? you know, tell us a little bit more underneath the hood what's going on in terms of how Kroger needs to implement this, you know, front end, back end, and how you're involved. So any caller there would be helpful.

George Staphos: Can you talk us though about.

George Staphos: How many stores. This initially is launched at within Kroger over.

George Staphos: Whatever number of months or quarters, you can speak to.

George Staphos: Yeah.

George Staphos: Tell us a little bit more underneath the hood whats going on in terms of how kroger needed to implement this front end back end and how youre involved so any color there would be helpful. And then secondly, what's going on with <unk> in terms of the slowdown there and what's that mean in terms of your.

George Staphos: And then secondly, what's going on with Vestcom in terms of the slowdown there and what's that mean in terms of your earnings, recognizing that you are still you raised guidance for the year that I'll come back in the next round. Sure George, on the Kroger specific role, so the focus is initially on bakery and we're going to ramp over time as we go through the next number of quarters to ultimately be close to the kind of full estate, which I think is in the order of sort of two in two thousand eight hundred stores. And there are the way that we're doing that, George, is because bakery in some ways is largely contained within one department within within within one supply chain.

Deon Stander: And then secondly, what's going on with with Vestcom in terms of the slowdown there? And what's that mean in terms of your earnings, right, recognizing that you are still you raised guidance for the year, and I'll come back in the next Sure George. On the Kroger specific rollout, so the focus is initially on bakery and we're going to ramp over time as we go through the next number of quarters to ultimately be close to kind of full estate, which I think is in the order of 2,800 stores. And the way that we're doing that, George, is because bakery in some ways is largely contained within one department, within one supply chain, it's a much easier piece to execute.

George Staphos: Earnings recognizing that you are still you raised guidance for the year and then I'll come back in the next round.

Speaker Change: Sure George on.

Kroger's specific rollout so the focus initially on bakery and we're going to ramp over time as we go through the next.

Speaker Change: A number of quarters to ultimately be close to the kind of full estate, which I think is in the order of two to 2800 stores.

And the way that we're doing that George is because bakery in some ways is largely contained within one department within <unk> within within one supply chain. It's a much easier piece to execute most of execution will actually happen in the bakery in the store not in the specific supply chain itself, although there will be elements as we progress.

Deon Stander: It's a much easier piece to execute. Most of the execution will actually happen in the bakery in the store, not in the specific supply chain itself, although there will be elements as we progress that will further go back down the supply chain. That makes it more manageable, and the approach that we're going to take working collaboration with Kroger is to do this on the phase roll out as we go across the next six or so quarters as well.

Deon Stander: Most of the execution will actually happen in the bakery, in the store, not in the specific supply chain itself, although there will be elements as we progress that will further go back down the supply chain. That makes it more manageable, and the approach that we're going to take working in collaboration with Kroger is to do this on a phased rollout as we go across the next six or so quarters as well.

Speaker Change: It will further go back down the supply chain that makes it more manageable.

Speaker Change: And the approach that we're going to take working collaboration with Kroger is to do this on a phased rollout as we go across the next six or so quarters as well.

Deon Stander: In terms of Vestcom, the issue that we saw in the third quarter was really related to a couple of points. So one was the general drugstore channel softness that I'm sure all of you are aware of had an impact on some of our volume in the third quarter. One of our customers is just now starting to emerge from bankruptcy, which is a positive sign. Will return to growth is moved forward and actually will see overall Vestcom growth in the fourth quarter actually again. The second element, which is a little a little bit more little different, is that because of the hurricane, we saw particularly affecting southeastern states, part of the emergency declaration that happens is they have a price freeze on all food items. And so that meant there were less price ticket changes during that period.

Deon Stander: In terms of VESCOM, the issue that we saw in the third quarter was really related to a couple of points. So one was the general drugstore channel softness that I'm sure all of you are aware of had an impact on some of our volume in the third quarter. One of our customers is just now starting to emerge from bankruptcy, which is a positive sign. We'll return to growth as we move forward, and actually we'll see overall VESCOM growth in the fourth quarter, actually, again. The second element, which is a little bit more, a little different, is that because of the hurricane we saw, particularly affecting southeastern states, part of the emergency declaration that happens is they have a price freeze on all food items, and so that meant there were less price ticket changes during that period.

Speaker Change: <unk>.

Speaker Change: In terms of Eskom.

Speaker Change: The issue that we saw in the third quarter was really related to a couple of points. So one was the general drugstore channel softness that I'm sure. All of you are aware of had an impact on some of our volume in the third quarter. One of our customers is just now starting to emerge from bankruptcy, which is a positive sign we will return to growth as we move forward and actually we will see.

Speaker Change: Overall based on growth in the fourth quarter actually again, the second element, which is a.

Speaker Change: A little bit more.

Speaker Change: Little different is that.

Speaker Change: Because of the Hurricane we saw particularly affecting south eastern states part of the emergency declaration that happens to have a price freeze on all food items and so that meant that we list price ticket changes during that period again that will ameliorate as we move into the fourth quarter.

Deon Stander: Again, that will be ameliorated as we move into the fourth quarter. Yes, and VESCOM remains a very significant high-value segment business with outsized and above-segment margins, and good growth prospects, even in the drugstore channel where we're engaged with a very large white space opportunity and are hoping to have some progress as we go through 25 in that regard.

Deon Stander: Again, that will be ameliorated as we move into the fourth quarter. Yes, and Vestcom remains a very significant high-value segment business with outsized above segment margins and good growth prospects even in the drugstore channel where we're engaged with a very large white space opportunity and hoping to have some progress as we go through 25 in that regard.

Speaker Change: <unk> remains a very significant high value segment business for us with the outsized above segment margins and good growth prospects, even in the drugstore channel, where we're engaged with a very large white space opportunity and hoping to have some progress as we go through 'twenty five in that regard George.

Michael Roxland: Our next question comes from the line of Michael Rock Flood from True Securities. Please go ahead. Thanks to Greg John for taking my questions. Two questions for me, just in three Q. Can you comment how much intelligent Eble to actually grow? You mentioned strong growth in the Ion apparel; in general retail, you mentioned the weakness in logistics and the drug-sturch balance. Just wondering how much you actually grew in the corner.

Michael Roxland: Our next question comes from the line of Michael Roxland from Truist Securities. Please go ahead.

Speaker Change: Our next question comes from the line of Michael Rod lift from true Securities. Please go ahead.

Michael Roxland: Thanks Deon, Greg, John for taking my questions. Two questions for me just in 3Q, can you comment how much intelligent labels actually grew? You mentioned strong growth in the in the ION apparel and general retail, you mentioned the weakness in logistics, and the drugstore accounts.

Speaker Change: Thanks, Greg John for taking my questions.

<unk>.

Speaker Change: Two questions from me just in <unk> can you comment how much intelligent labels actually grew you mentioned strong growth in the in the IOL apparel and general retail you mentioned the weakness in logistics and the drugstore channel. So just wondering how much it actually grew in the quarter and then second question is just following up on your comments on the drugstore.

Deon Stander: I'm just wondering, you know, how much it actually grew in the quarter? And the second question is, Deon following up on your comments on the drugstore. It sounds like, based on the last question, that it's temporary in terms of the weakness, but could it be something more permanent? You're seeing a lot of drugstores, Walgreens, and others announce store closures, so do you think there's been a shift in drugstores, in terms of fewer drugstores, that could have some type of more permanent impact?

Deon Stander: And the second question is, is Deon following up on your comments on the drug store, child? It sounds like a bit less question than it's tabular in terms of weakness, but could it be something more permanent? Do you see a lot of drug stores, Walgreens, and others in the store closure? So do you think there's been a shift in drug stores, in terms of fuel drug stores, that could have some type of more permanent impact on that. So Mike, in the third quarter, I think, as you heard Greg say, we moved our, given the softness in logistics, we called out.

Speaker Change: Channel.

Speaker Change: Last question Matt.

Speaker Change: Temporary.

Speaker Change: Some of the weakness.

Speaker Change: Would it be something more permanent you saw drugstores, Walgreens and others announced store closures. So do you think theres been a shift in.

Speaker Change: In drug stores in terms of fewer drugstores.

Speaker Change: Perhaps some type of more permanent impact on desktop.

Deon Stander: So, Mike, in the third quarter, I think as you heard Greg say, we moved our, given the softness in logistics we called out, we moved our year-to-date performance from the half year we were mid to high teens to mid-teens for the year-to-date after nine months. As it relates to the drugstores, there's certainly a temporary piece of this volume recovery as it relates to, for example, hurricane pricing and some of the recovery of these, some of our drugstore channel partners as they come through their own challenges. But I don't necessarily see this as a long-term permanent shift.

Speaker Change: So the market in the third quarter I think as you heard Greg say, we moved our given the softness in logistics, we called out we moved our year to date performance from the half year, we were mid to high teens to mid teens for the year to date after nine months.

Deon Stander: We moved our year-to-date performance from the half year; we were mid to high teens to mid teens for the year-to-date after nine months. As it relates to the drug stores, there's certainly a temporary piece of this volume recovery, as it relates to, for example, hurricane pricing and some of the recovery of these, some of our drug store channel partners, as they come through their own challenges. But I don't necessarily see this as a long-term permanent shift. In fact, we actually see significant white space opportunity. We don't deal with all the drug store players, and we have, in discussion, with a very large one, talking about how we can deliver some of the solutions we have.

Speaker Change: As it relates to the drugstores.

Speaker Change: Certainly a temporary piece of this volume recovery as it relates to for example, hurricane pricing in some of the recovery of some of our drugstore channel partners as they come through their own challenges.

Speaker Change: But I don't necessarily see this as a long term permanent shift in fact, we actually see significant white space opportunity, we don't deal with OLED drugstore players.

Deon Stander: In fact, we actually see significant white space opportunity. We don't deal with all the drugstore players, and we have in discussion with a very large one talking about how we can deliver some of the solutions we have.

Speaker Change: And we have in discussion with a very large one.

Speaker Change: Talking about how we can deliver some of the solutions. We have if you think about what we do in our best Com business is really to provide two elements. One is a productivity solution for labor efficiency in store and.

Deon Stander: But, you know, if you think about what we do in our best-come business, it is really to provide two elements. One is a productivity solution for labor efficiency in store, and labor is still the biggest denominated quotient concern that retailers generally have. And the second is a media solution that brings consumer connection at the point of purchase of the shelf. Much of what Vescom does, which is largely a data composition engine, and it takes in multiple feeds of data, and then sends that out in terms of a label format. It's patented ourselves, and so we have a uniquely advantage solution that regard.

Deon Stander: You know, if you think about what we do in our BESCOM business, it's really to provide two elements. One is a productivity solution for labor efficiency in-store. And labor is still the biggest denominated quotient concern that retailers generally have. And the second is a media solution that brings consumer connection at the point of purchase to the shelf. Much of what Vescom does, which is largely data composition engine and takes in multiple feeds of data and then sends that out in terms of a label format, is patented ourselves. And so we have a uniquely advantaged solution in that regard.

Speaker Change: And labor is still the biggest denominated quotient concern that retailers generally half and the second is our media solution that brings consumer connection at the point of purchase of the shelf much of what <unk> does which is larger data composition engine that it takes in multiple feeds data and then <unk>.

Speaker Change: Send that out in terms of the label format.

Speaker Change: These patent it ourselves and so we have a uniquely advantaged solution in that regard.

Deon Stander: And I do think as retail continues to have some degree of challenge when it comes to labor and attracting consumers into the store, our solutions will increasingly resonate in that.

Deon Stander: And I do think, as retail continues to have some degree of challenge when it comes to labor and attracting consumers into store, our solutions will increasingly resonate in that regard.

Speaker Change: Do think as retail continues to have some degree of challenge when it comes to labor and attracting consumers into the store or solutions will increasingly resonate in that regard.

Operator: Our next question comes from the line of check.

Jeff Zekauskas: Our next question comes from the line of Jeff Zekauskas from J.P. Morgan.

Speaker Change: Our next question comes from the line of Jack <unk> from Jpmorgan. Please go ahead.

Jeffrey Zekauskas: Jess, is that cookies from JP Morgan? Please go ahead. Thanks very much. So, in the solutions group, their solutions grew 15%. So, that's, so that's 6% growth for the whole segment. And if intelligent labels is now growing 15, and it used to grow 17 or 18, that means that intelligent labels grew 10. So, Vescom and embellishments then must have shrunk 10%. Is that correct?

Greg Lovins: Please go ahead. Thanks, friends. So in the solutions group based solutions 15%. So that's So that's 6% growth for the whole segment. And if Intelligent Labels is now growing 15 and it used to grow 17 or 18. That means that intelligent labels grew 10. So VESTCOM and embellishments then must have shrunk 10%?

Thanks very much.

Speaker Change: So in the solutions group based solutions grew.

Speaker Change: 15%.

Speaker Change: Matt.

Speaker Change: So that 6% growth for the whole segment.

Speaker Change: And yes.

Speaker Change: Intelligent labels is now growing 15 than it used to grow 17, or 18 that means that intelligent labels Tam.

Speaker Change: Okay calm and embellishments, then must have shrunk 10%.

Greg Lovins: Is that correct?

Speaker Change: Is that correct.

Greg Lovins: And then secondly, Kroger's baked goods are about $5 billion. and I don't. Their average baked good is somewhere. $2.50 and $5.00. So that's a billion tests. Billion tags at three cents so that's 30 million to 60 million a year. Is this the order of magnitude we're talking about? Yeah, on your first question, Jeff, so when you look at overall and high value segments, as we talked about, we're up low single digits, ex-currency in the quarter. So Deon already talked about Vescom. Vescom was down given the drugstore channel impacts that that we talked about. And Bellex was also a little soft, partially impacted by that Bangladesh unrest, as well as in performance apparel, a little bit softer this quarter as well.

Jeffrey Zekauskas: And then secondly, Crockers baked goods are about $5 billion. And I don't know, you know, their average baked good is somewhere between $250 and $5. So, that's a billion tags, or maybe two billion tags, at 3 cents, so that's 30 million to 60 million a year. Is this the order of magnitude we're talking about?

Speaker Change: And then secondly.

Speaker Change: Croakers zip codes or about $5 billion.

Speaker Change: And.

Speaker Change: Hydropower.

Speaker Change: Their average bank good somewhere between two and five.

Speaker Change: $5.

The Belgian tax or maybe 2 billion tax at three of that 30 million to $60 million a year.

Speaker Change: This is the order of magnitude we're talking about.

Greg Loven: Yeah, and your first question, Jeff, so when you look at overall and high value submits, as we talked about, we're up a low single digits, ex-currency in the quarter. So Deonari talked about Vescom; Vescom was down, given the drugstore channel impacts that we talked about, and Vescom was also a little partially impacted by that Bangladesh unrest, as well as in performance of Perrella, a little bit softer this quarter as well. Intelligence labels grow, if you recall, is in both segments, so we continue to drive growth in the solution segment, as we also continue to leverage our strong converter base within our material segment to grow really in the general retail categories that we've talked about growing very well in, that shows up in the materials business.

Speaker Change: Yeah on your first question Geoff So when you look at it overall in high value segments as we talked about were up low single digits X.

Speaker Change: Ex currency in the quarter. So do you already talked about <unk> was down given the drugstore channel impacts that that we talked about embellished was also a little soft partially impacted by that Bangladesh unrest.

Speaker Change: As well as in performance apparel, a little bit softer this quarter as well intelligent labels growth. If you recall is in both segments. So we continue to drive growth in the solutions segment. As we also continue to leverage our strong converter base within our materials segment to grow really in the general retail categories that we've talked about growing very well in that.

Greg Lovins: Intelligent Labels growth, if you recall, is in both segments. So we continue to drive growth in the solution segment as we also continue to leverage our strong converter base within our materials segment to grow really in the general retail categories that we've talked about growing very well in. That shows up in the materials business. So it's split between both our growth and IL split between both solutions and materials. So overall, that's that's largely the framework for how we get to where we were on overall high value.

Shows up in the materials business. So it's split between both our growth and I'll split between both solutions and materials. So overall, that's that's largely the framework for how we get to where we were in overall high value segments and different Kroger Youre right that bakery is the smallest part of the kind of what I would call periphery perishable items, but it's one.

Deon Stander: So it splits between both our growth and IELTS split between both solutions and materials, so overall, that's larger than framework for how we get to where we were in overall high value. And Jeff and Kroger, you're right that bakery is the smallest part of their kind of what I would call periphery perishable items, but it's one that has significant impact for the retailer in this regard. A lot of what gets done in terms of understanding what items are fresh and highly perishable, in that regard, are manually done. And so you have both an impact on kind of labor effectiveness as well as the associate experience in the store.

Deon Stander: And Jeff and Kroger, you're right that bakery is the smallest part of their kind of what I would call periphery perishable items, but it's one that has significant impact for the retailer in this regard. A lot of what gets done in terms of understanding what items are fresh and highly perishable in that regard are manually done. And so you have both an impact on kind of labor effectiveness as well as the associate experience in the store. And this is why we know that the technology can impact both of those, both improve the associate experience, which is critical for retailers, and the second piece is also making sure that you're able to drive efficiency and by definition reduce waste as well.

Speaker Change: That has significant impact for the retailer in this regard a lot of what gets done in terms of understanding what items of freshen highly perishable in that regard are manually done and so you have both an impact on kind of labor effectiveness as well as the associated experience in the store and this is <unk>.

Deon Stander: And this is why we know that the technology can impact both of those, both improve their social experience, which is critical for retailers, and the second piece is also making sure that you're able to drive efficiency and, by definition, reduce waste as well.

Speaker Change: We know that the technology can impact both of those both improved associate experience, which is critical for retailers and the second piece is also making sure that you are able to drive efficiency and by definition reduce waste as well.

Deon Stander: We're not going to comment on the size of the exact program as we roll out over time, Jeff, but I will say that this is going to be, for us, a very important tipping point for the industry. It's the first visible marker that food in grocery will go, and when people realize the scale of the ubiquity of that benefit, like in apparel, as we now started to see logistics, I think it'll act as a catalyst for further acceleration and adoption.

Deon Stander: We're not going to comment on the size of the exact program as we roll out over time, Jeff, but I will say that this is going to be for us a very important tipping point for the industry. It's the first visible marker that food and grocery will go. And when people realize the scale of the ubiquity of that benefit, like in apparel, as we're now starting to see in logistics, I think it'll act as a catalyst for further acceleration in adoption.

Speaker Change: We're not going to comment on the size of the exact program as we rollout over time Jeff.

But I will say that this is going to be for us. It's very important tipping point for the industry. It's the first visible marker that food and grocery will go and when people realize the scale of the ubiquity of that benefit like in apparel as we now starting to see in logistics I think it will act as a catalyst for further acceleration.

Speaker Change: And adoption.

Joshua Spector: Our next question comes from the line of Josh Specter for me. Yes, please go ahead. Yeah, good morning. I guess maybe more generally within RFID and specifically the food opportunity. Can you just talk about the margins or kind of the drop through that you expect on that market, assuming you're not going to comment on progress specifically. I guess does that come in line with where your average RFID book of businesses today is it below until you get scale or is there some reason why it's higher? Any framing there be helpful, thanks. Yeah, sure, Josh.

Josh Spector: Our next question comes from the line of Josh Spector from EDS. Please go ahead.

Speaker Change: Our next question comes from the line of Josh Spector from UBS. Please go ahead.

Josh Spector: Yeah, good morning. I guess maybe more generally within RFID and specifically the food opportunity, can you just talk about the margins or kind of the drop through that you expect on that market, assuming you're not going to comment on Kroger specifically, I guess, does that come in line with what your average RFID book of businesses today? Is it below until you get scale? Or is there some reason why it's higher? Any framing there would be helpful.

Speaker Change: Yes, hi, good morning.

Maybe more generally within RFID and specifically the food opportunity.

Josh Spector: Can you just talk about the margins are kind of drop through that you expect on that market, assuming youre not going to comment on kroger's specifically.

Josh Spector: Does that come in line with what your average RFID E book of business is today.

Josh Spector: Low until you get scale or is there. Some reason why it's higher any framing there would be helpful. Thanks.

Deon Stander: Yeah, sure, Josh. I started saying that for our, as we said, for a long time, our intelligent labels platform is above segment margin overall. And whether the product is ultimately in apparel or in logistics, or now in these different food categories, while the ASP may vary, depending on the complexity of the product or the breadth of the solution, we typically see relatively consistent margins across all of these, and they're above average segment margin.

Speaker Change: Sure, Josh I'd start with saying that four hour as we said for a long time, our intelligent labels platform as above segment margin overall.

Deon Stander: I started saying that for our, as we said for a long time, our intelligent labels platform is above segment margin overall. And whether the product is ultimately in apparel or in logistics or now in these different food categories, while the ASP may vary depending on the complexity of the product or the breadth of the solution, we typically see relatively consistent margins across all of these, and they're above average segment margin.

Speaker Change: And whether the product is ultimately in apparel or in logistics or now in these different food categories. While the ASP may vary depending on the complexity of the product or the breadth of the solution. We typically see relatively consistent margins across all of these and they are above average segment margin.

Operator: Thank you.

Matthew Roberts: Our next question comes from the line of Matthew Roberts from Raymond James. Please go ahead. Hey, good morning, everybody, and thank you for the time. Maybe a second, but you know, a little bit more premium? Yes. Okay, thanks.

Matthew Roberts: Our next question comes from the line of Matthew Roberts from Raymond James, please go ahead. Hey, good morning, everybody.

Speaker Change: Our next question comes from the line of Matthew Roberts from Raymond James. Please go ahead.

Matthew Roberts: Hey, good morning, everybody and thank you for the time.

Matthew Roberts: And thank you for the time. Maybe I can touch a little bit more. Can you hear me? Yes, okay, thanks. Maybe I could touch a little bit more on the food opportunity and see what Kroger is trying to look or learn from the bakery.

Speaker Change: And by channel.

More.

Matthew Roberts: Can you hear me.

Speaker Change: Yes, okay.

Matthew Roberts: Okay. Thanks.

Matthew Roberts: Maybe I could take just a little bit more on the food opportunity and see what Kroger is trying to look or learn from the bakery. I know he said his six or so quarters for the full rollout, but once it is in place, are there any milestones or timelines put in place before potentially rolling in? We're going to get out to other departments.

Speaker Change: Maybe I can touch a little bit more on the fruit opportunity.

Speaker Change: Kroger is trying to.

Matthew Roberts: I know you said it's six or so quarters for the full rollout, but once it is in place, are there any milestones or timelines put in place before potentially rolling it out to other departments? And also, while I appreciate it is still early and planning with more to come in a couple months for 2025. And in September, you laid out your long-term financial framework. But should we expect 2025 to be within that framework of the 5% top line and 10% EPS growth? Or are there any unique items or timing from 2024 that could impact that bridge?

Speaker Change: Learn from the bakery I know you said, there's six or so quarters for the full rollout, but once it is in place or are there any milestones or time lines put in place before potentially rolling it out to other departments.

Deon Stander: And also, while I appreciate it is still early in planning with more to come in a couple of months for 2025, and then September, you laid out your long-term financial framework, but should we expect 2025 to be within that framework of the 5% top line and 10% EPS growth, or are there any unique items or timing from 2024 that could impact that bridge. Thanks for taking the questions. Yeah, in terms of the broader food opportunity, Matthew, just me reiterate again, you know, it's the largest category that we see for aisle adoption. Overall, the order of magnitude comparison is 200 billion units are same food in the dressable market relative to 55 or 74 logistics relative to 45 or so for apparel.

Speaker Change: And also while I appreciate it is still early and planning with more to come in a couple of months.

Speaker Change: For 2025.

Speaker Change: And then in September you laid out your long term financial framework, but should we expect 2025 to be within that framework of the 5% topline and 10% EPS growth or are there any unique items or timing from 2024 that could that could impact that bridge.

Deon Stander: Thanks for taking the question. Yeah, in terms of the broader food opportunity, Matthew, just let me reiterate again, you know, it's the largest category that we see for aisle adoption overall. The order of magnitude comparison is 200 billion units of same food in the addressable market relative to 65 or 70 for logistics relative to 45 or so for apparel. So there's an enormous runway, multi-decade opportunity ahead of us in that regard.

Speaker Change: Thanks for taking the questions.

Speaker Change: Yes in terms of the broader food opportunity.

Speaker Change: Can you just maybe reiterate again, it's the largest category that we see for IL adoption overall.

Speaker Change: The order of magnitude comparison is 200 billion units the same food and addressable market relative to 65% to 70 for logistics relative to 45% or so for apparel. So theres an enormous runway multi decade opportunity ahead of us in that regard.

Deon Stander: So there's an enormous runway multi-decade opportunity ahead of us in that regard. As it relates to the timing of the rollout, we're not necessarily sharing all the details unless they're focused on bakery first and over the estate rollout over a period of time. Based on those results, the anticipation is that we will then move to categories like proteins and leafy greens as we move forward. And again, that will take time, and I will stress this again, there will be uneven rollout as we go through this period, both from the timing and an adoption phase across. We've seen this across apparel; we've not seen this slightly in logistics, and I don't know if we're going to see this in food as well.

Deon Stander: As it relates to the timing of the rollout, we're not necessarily sharing all the details on this. We're focused on bakery first and over the estate will roll out over a period of time. Based on those results, our anticipation is that we will then move to categories like proteins and leafy greens as we move forward. And again, that will take time. And I will stress this again. There will be uneven rollout as we go through this period, both from a timing and an adoption phase across. We've seen this across apparel. We've seen this slightly in logistics, and I don't doubt we're going to see this in food as well.

Speaker Change: As it relates to the timing of the rollout we're not necessarily sharing all the details unless they are focused on bakery first over these states will rollout over a period of time.

Speaker Change: Based on those results.

Speaker Change: Our anticipation is that we will then move to categories like proteins and leafy Greens as we move forward and again that will take time and I will stress again, there will be uneven rollouts as we go through this period, both from a timing and an adoption phase across.

Speaker Change: We've seen this across apparel, we've not seen a slightly in our logistics and it ended up we're going to see this in.

Deon Stander: Our focus, I'll reiterate this, our focus is ensuring we're driving adoption, creating the demand, and then executing and fulfilling that demand.

Deon Stander: Our focus, I'll reiterate this, our focus is on sharing with driving adoption, creating the demand, and then executing and fulfilling that demand.

Speaker Change: In food as well our focus I'll reiterate our focus is on ensuring we are driving adoption, creating the demand and then executing and fulfilling that demand.

Greg Loven: Yeah, on this 2025 question, Matt, as you said in Investor Day, we laid out our financial framework for the future where we talked about growing 10% adjusted earnings per share growth annually. I would say right now our early view of 2025 is that we'd be following that algorithm that we laid out a month or so ago. When we look at the drivers of that, obviously until our label is growth, we've talked about being a driver of that, and apparel will have a more normalized first half of the year next year. And our margins in the second half of this year in solutions are better in our first half, so that should give us a little bit of first half benefit as well.

Greg Lovins: Yeah, on the 2025 question, Matt, as you said, in Investor Day, we laid out our financial framework for the future, where we talked about growing 10% adjusted earnings per share growth annually. You know, I would say, right now, our early view of 2025 is that we'd be following that algorithm that we laid out a month or so ago. You know, when we look at the drivers of that, obviously, intelligent labels growth, we've talked about being a driver of that. And apparel will have a more normalized first half of the year next year. And, you know, our margins in the second half of this year in solutions are better in our first half.

Speaker Change: Yes on the 2025 question, Matt as you said at Investor Day, we laid out our financial framework for the future, where we talked about growing 10% adjusted earnings per share growth annually.

Speaker Change: Right now our early view of 2025 is that we'd be following that algorithm that we laid out a month or so ago.

Speaker Change: When we look at the drivers of that obviously intelligent labels growth, we've talked about being a driver of that.

Speaker Change: And apparel will have a more normalized first half of the year next year.

Speaker Change: And in our margins in the second half of this year and solutions are better than our first half so that should give us a little bit of first half benefit as well.

Greg Lovins: So that should give us a little bit of first half benefit as well. And then continue to have more normalized growth in materials. But as Deon laid out earlier, a bit uncertain retail environment there. So we remain cautious a little bit on that front. But those are the main drivers that helped get us towards delivering that target we laid out back in September.

Greg Loven: And then continue to have a more normalized growth in materials. But is the on laid out earlier a bit on certain retail environment there, so we remain cautious a little bit on that front, but those are the main drivers that help get us towards delivering that target we laid out back in September.

Speaker Change: And then continue to have a more normalized growth in materials.

Speaker Change: But as Dion laid out earlier, a bit uncertain retail environment. There. So we remain cautious a little bit on that front, but those are the main drivers that helped get us towards delivering that target we laid out back in September.

Anthony Pettinari: Our next question comes from the line of Anthony Petanari from City. Please go ahead. Good morning. Do you think your label volumes track kind of in line with the industry in 3Q, or given it may be difficult to track market share quarter to quarter, maybe you could just speak here to date. And then I guess maybe same question for intelligent labels, do you think you're kind of growing in line or stronger a little bit weak?

Anthony Pettinari: Our next question comes from the line of Anthony Pettinari from Citi. Please go ahead.

Speaker Change: Our next question comes from the line of Anthony Pettinari from Citi. Please go ahead.

Anthony Pettinari: Good morning. Do you think your label volumes tracked kind of in line with the industry in 3Q? Or, you know, given it may be difficult to track market share quarter to quarter, maybe you could just speak year to date. And then I guess maybe same question for intelligent labels. Do you think you're kind of growing in line or stronger or a little bit weaker? Market. And then just to reiterate, like the the weaker three QIL activities that just completely kind of like timing of project.

Anthony Pettinari: Good morning.

Anthony Pettinari: Good morning.

Anthony Pettinari: Do you think your label volumes track kind of in line with the industry in <unk>.

Anthony Pettinari: Okay.

Anthony Pettinari: Given it may be difficult to track market share quarter to quarter, maybe you could just speak year to date and then I guess, maybe same question for intelligent labels. Do you think you are kind of growing in line or or or stronger or a little bit weaker than the market.

Deon Stander: for the market, and then just to reiterate, the weaker 3QIL activity, is that just completely kind of like timing of projects in the comp, or is there anything from like an industry perspective that you'd point to the impacted volumes in the quarter? Yes, I think the high level, yes, our level volumes are large in line with industry, and we continue to hold, if not slightly maintained, and expand share in our level business generally across the world. As it relates to our IEL business, there is some volatility because of this logistics significant rollout last year and some softness this year, but generally, because we're performing, given that we're creating the market, we're performing in line with the market overall.

Anthony Pettinari: And then just to reiterate the weaker <unk> activities that just completely would kind of like timing of projects and the comp or is there anything from like an industry perspective.

Deon Stander: Comp, or is there anything from like an industry perspective that you Yes, sir. I think at a higher level, yes, our label volumes are largely in line with industry and we continue to hold, if not slightly maintain and expand share in our label business generally across the world. As it relates to our aisle business, there is some volatility because of this logistics significant rollout last year and some softness this year, but generally, of course, we're performing, given that we're creating the market, we're performing in line with the market overall, and we expect over the long term to continue to be the majority share provider and slightly expand our share as we move through that, given some of the competitive advantages we have as well.

Anthony Pettinari: You'd point to.

Anthony Pettinari: That impacted volumes in the quarter.

Speaker Change: Yes, I think the high level ESR label volumes are largely in line with industry and we continue to hold if not slightly maintain and expand share in our label business generally across the world.

Speaker Change: As it relates to our IOL business.

Speaker Change: There is some volatility because of this logistics significant rollout last year and some softness this year, but generally the costs, we're performing given that we creating the market. We're performing in line with the market overall and we expect over the long term to continue to be the majority share provider to slightly expand our share's moved through that given some of them.

Deon Stander: And we expect a bit of a long term to continue to be the majority share provider, and slightly expand our share as we move through that, given some of the competitive advantages we have as well. As it relates to the third quarter, your question was, was it related to just those specific comps and the transition piece? Yes, it was; there was nothing else that really had a fundamental impact on what we saw from a third quarter IEL performance?

Speaker Change: The competitive advantages, we have as well.

Deon Stander: As it relates to the third quarter, your question was, was it related to just those specific comps and the transition piece? Yes, it was. There was nothing else that really had a fundamental impact on what we saw from the third quarter aisle.

Speaker Change: As it relates to third quarter. Your question was was it related to just those specific comps and the transition piece. Yes. It was there was nothing else that really had a fundamental impact on what we saw from the third quarter outperformance.

Michael Leedhead: Our next question comes from the line of Michael Leedhead from Barclays. Please do ahead. Great. Thank you. Good morning, guys.

Michael Leithead: Our next question comes from the line of Michael Leithead from Barclays, please go ahead. Great, thank you.

Speaker Change: Our next question comes from the line of Michael <unk> from Barclays. Please go ahead.

Michael <unk>: Great. Thank you good morning, guys.

Greg Lovins: Good morning, guys. Can you speak to the pricing in both of your businesses sequentially in the third quarter? Are you seeing incremental price giveback, or are prices generally flat at current levels? And relatedly, it sounds like European materials, input costs up, price and demand perhaps a bit softer.

Greg Loven: Can you speak to the pricing in both of your businesses sequentially in the third quarter? Are you seeing incremental price give back, or prices generally at the current levels? And, relatedly, it sounds like European materials, input costs up, price and demand, perhaps a bit softer. Is there any change in terms of how you guys need to approach the European market going at the 25, or is it just sort of predatory weakness given where we are in the cycle at this point?

Michael <unk>: Can you speak to the pricing in both of your businesses sequentially in the third quarter are you seeing incremental price give back or have prices generally flat at current levels and relatedly it sounds like European materials.

Michael <unk>: Input cost price and demand, perhaps a bit softer.

Greg Lovins: Is there any change in terms of how you guys need to approach the European market going into 2025, or is it just sort of transitory weakness, given where we are in the cycle? Thanks, Mike, for the question. So overall, when we look from Q2 to Q3, we saw low single-digit inflation, really, I guess, very low single-digit inflation sequentially after a little bit of sequential inflation in the second quarter as well. And as you said, that's really largely in paper in Europe is where we're seeing that. And we talked about last quarter that we were announcing and implementing some price inactions.

Michael <unk>: Is there any change in terms of how you guys need to approach the European market going into 'twenty five or is it just sort of transitory weakness given where we are in the cycle at this point.

Greg Loven: Thanks, Mike, for the question. So overall, when we looked from Q2 to Q3, we saw low single-digit inflation really, I guess very low single-digit inflation sequentially after a little bit of sequential inflation in the second quarter as well. And, as you said, that's really largely in paper, and in Europe is where we're seeing that. And we talked about last quarter that we were announcing and implementing some price in actions. So we also had some low single-digit price benefit sequentially from Q2 to Q3, as you're managing that. So the net impact was pretty negligible in the quarter overall.

Speaker Change: Thanks, Mike for the question. So overall when we look from Q2 to Q3, we saw low single digit inflation really I guess very low single digit inflation sequentially. After a little bit of sequential inflation in the second quarter as well and as you said that's really largely in paper in Europe is where we're seeing that and we talked about last quarter that we.

Speaker Change: Were announcing and implementing some pricing actions. So we also had some low single digit price benefit sequentially from Q2 to Q3 as you're managing that so the net impact was pretty negligible in the quarter. Overall, so I think when we when we look forward, we continue to see relatively stable environment overall from a materials perspective.

Greg Lovins: So we also had some low single-digit price benefit sequentially from Q2 to Q3 as we're managing that. So the net impact was pretty negligible in the quarter overall. So I think when we look forward, we continue to see a relatively stable environment overall from a materials perspective.

Greg Loven: So I think when we look forward, we continue to see a relatively stable environment overall from a materials perspective. So we don't see that shifting too much in the very near term; difficult to call more on an ongoing basis.

Greg Lovins: So we don't see that shifting too much in the very near term, difficult to call more on an ongoing basis.

Speaker Change: So we don't see that shifting too much in the very near term difficult to call more on an ongoing basis, though.

Speaker Change: Okay.

Operator: There are no further questions at this time.

Operator: Mr. Eble, there are no further questions at this time.

Speaker Change: Mr. <unk> there are no further questions at this time I will now turn it back over to you for closing remarks.

John Eble: I will now turn it back over to you for closing remarks. Thanks, Jeremy. As you all know, our overarching objective is to deliver GDP plus growth and top quartile returns, which is a recipe for superior EVA and value creation over the long term. We are confident that the consistent execution of our strategies will enable us to achieve our long-term objectives.

Deon Stander: I will now turn it back over to you for closing remarks. Thanks, Jeremy. As you all know, our overarching objective is to deliver GDP plus growth and top quartile returns, which is a recipe for superior EVA and value creation over the long term. We are confident that the consistent execution of our strategies will enable us to achieve our long-term objectives.

Speaker Change: Okay.

Greg Lovins: Thanks, Jeremy.

Speaker Change: As you all know our overarching objective is to deliver GDP plus growth and top quartile returns, which is a recipe for superior EBITDA and value creation over the long term.

Speaker Change: We are confident that the consistent execution of our strategies will enable us to achieve our long term objectives. This now concludes our Q3 earnings call. Thank you all for joining today.

Operator: This now concludes our Q3 earnings call. Thank you all for joining today.

John Eble: This now concludes our Q3 earnings call. Thank you all for joining today.

Operator: Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.

Operator: Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.

Speaker Change: Ladies and gentlemen that does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.

Speaker Change: Okay.

Sure.