Q4 2024 CCL Industries Inc Earnings Call
Good morning and welcome to CCL Industries fourth quarter investor update. Please note that there will be a question and answer session after the call.
Moving to the next slide our financial summary for the fourth quarter and the year.
For the fourth quarter of 2024 sales increased 9% with six 8% organic growth.
<unk>, 4% acquisition related growth and 0.8% positive impact from foreign currency translation, resulting in sales of 1.81 billion compared to 1.66 billion in the fourth quarter of 2023.
Operating income was $267 $9 million for the 2020 for fourth quarter compared to $254 8 million for the fourth quarter of 2023, 5% increase excluding the impact of foreign currency translation.
Jeff will expand on our segmented operating results of our CCL Avery checkpoint and in all the segments.
Corporate expenses were down for the 2020 for fourth quarter due to reduced long term variable compensation expense compared to the fourth quarter of 2023.
Solid EBITDA for the 2020 for fourth quarter, excluding the impact of foreign currency translation increased 7% compared to the same period in 2023.
Net finance expense was $19 $1 million for the fourth quarter of 2024.
Same amount for the 2023 fourth quarter.
The overall effective tax rate was 22, 9% for the 2020 for fourth quarter less than the 57% effective tax rate recorded in the fourth quarter of 2023.
The decrease in the effective tax rate can be attributed to a $95 million goodwill impairment loss recorded in the 2023.
Fourth quarter without any associated tax benefit.
The fact that the effective tax rates may change in future tax periods, depending on the proportion of taxable income earned in different tax jurisdictions with different rates.
Net earnings for the 2020 for fourth quarter were $179 $8 million compared to the $38 8 million recorded in the 2023 fourth quarter.
This was impacted by the aforementioned goodwill impairment charge in 2023.
For the year ended December 31, 2020 for sales operating income and net income increased 8%, 13% and 60% respectively compared to the year ended December 31 2023.
2024 included results from nine acquisitions completed since January one 2023.
Delivering acquisition related sales growth for the period of two 3%.
Organic growth of six 1%.
Foreign currency translation was a tailwind of 0.6% all to sales.
Net income included a $78 $1 million non taxable noncash revaluation gain recorded in the second quarter of 2024 when.
When we acquired the final 50% interest in our Pac Van CCL joint venture now fully consolidated.
And the 2023 year the company recorded a goodwill impairment charge of $95 million within the <unk> segment, all impacting the 60% increase to net income for the comparative years.
So moving to the next slide.
Earnings per share.
Basic earnings per class B share were $1.01 for 2020 for fourth quarter compared to 22.
The 2023 fourth quarter.
Adjusting for the one set of restructuring and other expenses resulted in adjusted earnings per class B share of $1 two an improvement of five 2% compared to the 97.
For the fourth quarter of 2023.
The increase in adjusted basic EPS of five.
It's principally attributable to an improvement in operating income accounting for six a reduction of corporate expense for three cents, partly offset by the combination of a reduction in JV equity earnings the negative impact of currency translation and a higher adjusted effective tax rate summing to a reduction of four cents.
Moving to the next slide.
Our free cash flow from operations.
For the fourth quarter of 2020 for free cash flow from operations was an inflow of $261 $7 million slightly behind the $273 8 million posted in the 2023 fourth quarter.
For the year ended December 31 2024.
Free cash flow from operations was $606 $5 million compared to $559 $6 million for the 2023 years.
This change is primarily attributable to an increase in cash provided by operating activities, which was generated by improved adjusted earnings partly offset by an increase in working capital compared to 2023.
Yeah.
Moving to slide six our returns to shareholders.
For 2024 year, the company repurchased two 6 million shares for total proceeds of $206 million.
Including the nine 4% increase in the 2024 annual dividend that was announced in February of 2024.
Dividends paid year to date have amounted to $206 $4 million, representing a solid 27% dividend payout ratio.
This totaled $407 million returned to shareholders in 2024.
Yeah.
Next slide.
Our cash and debt summary.
Net debt.
As at December 31, 2024 was $1 six $2 billion, an increase of $110 7 million compared to December 31 2023.
The increase is principally a result of funds used for capital expenditures business acquisition and share buyback.
Although the company's net debt increase the balance sheet closed the quarter in a strong position our balance sheet leverage ratio was approximately 1.08 times down.
From 1.13 times reported at the end of December 2023.
Liquidity was robust with $829 million of cash on hand.
Approximately U S $1 billion of available Undrawn credit capacity on the company's revolving credit facility.
The company's overall average finance rate was approximately two 6% at December 31, 2024 compared to two 8% at December 31 2023.
The company's balance sheet continues to be well positioned as we move into 2025.
Jeff: Jeff over to you.
Jeff: Thank you, Sean and good morning, everybody I'm on slide eight highlights our capital spending for the year 'twenty 'twenty four.
Around $457 million.
Jeff: And we're forecasting to spend about $495 million in 2025.
Jeff: Slide nine just a.
Jeff: Picture of the plant we have just completed.
Jeff: Human city in Vietnam, It's a new apparel label club.
Jeff: That was a very important country for apparel soul thinking about vault and stuff up in the first call for 2025.
Page 10 highlights in our Ccs segment.
Jeff: Five 4% organic growth low single digit in North America high single digits Latin America double.
Jeff: Double digit in Asia Pacific a lot of that driven by the success of seats helped design and low single digit decline in Europe.
Speaker Change: I'll have to go to the gains were strong in the HBC business CCR design and T cells to kill me.
Speaker Change: All of those three letter in health care and specialty with a lot more reduced in food and beverage has faced tough comps to a very strong fourth quarter and into the year and 2023.
Speaker Change: Slide 11 highlights for our JV is just to.
Speaker Change: So you mentioned, there's a couple of times already.
Speaker Change: Men CCL became a fully owned subsidiary.
Speaker Change: After five months of 2024, so we've had several months consolidated that's the reason for the difference in the 19 come in.
Speaker Change: And in the fourth quarter, there and you'll see we actually manage to and in the JV area exceed last year's numbers.
Speaker Change: Changes in foreign exchange issues.
Speaker Change: In Egypt in a year or two in the back half of 2023 didn't reverse in the annuity block since 2004.
Speaker Change: Page 12 highlights for Avery.
Speaker Change: A little soft culture and in the international business.
Speaker Change: And in a delayed start to the peak holter Holter cultural season in Europe, but they came back with a bang in January.
Speaker Change: Solid quarter in North America with favorable mix, some foreign exchange benefits relating to the Mexican peso and continued improvement in the U S horticultural business.
Speaker Change: Yeah.
Speaker Change: Slide 13 highlights the checkpoint.
Speaker Change: The culture and the merchandise availability business Salt Lake the Gainesville round.
Speaker Change: And in Europe on some new business wins.
Speaker Change: In the power label business, we continued to see strong sales growth north of 20% aided by share gains in RFID.
Speaker Change: Profits fell on unfavorable mix a lot of issues with foreign exchange in Turkey, and the poor quarter and lots of America.
Speaker Change: Slide 14 highlights for Nokia strong volume growth and share gain in North America, especially in the label segment.
Speaker Change: Profitability boosted productivity cost savings.
Speaker Change: Commercial discipline.
Speaker Change: We also saw improved results in Europe.
Also in Poland, where we continue to build share in label films and the Atkins like product line, which we most of which we sell and told me to see sale.
Speaker Change: The investment is largely completed the big news site in Germany in Leipzig newsletter.
Speaker Change: Use luggage films label plant.
Speaker Change: The pressure sensitive labels plug installed likely sometime in Q2 with 2025.
Speaker Change: Some comments on the outlook.
Speaker Change: The label and packaging businesses have had a solid start so far.
Speaker Change: New plant law says that we have.
Speaker Change: A bit of an.
Speaker Change: Particularly in the second half of 2020 full those should start to narrow it.
Speaker Change: C C. L design, however, a lot of easy comps in electronics. So the comps are much more difficult this year than they were last year and as you. All know we have a slowing automotive industry.
Speaker Change: He feels secure older backlog improved significantly compared to a slow start to 2024.
Speaker Change: He has had a solid start thinking around what was coming into the maintenance about horticulture.
Speaker Change: Checkpoint and collinson of power on a significantly more difficult.
Speaker Change: Thank you for the whole year, we face, but RFID is still growing.
Speaker Change: No that'd be it continues to improve and just another reminder, about the German plant startup costs will have to face in Q2.
Speaker Change: At current exchange rates, we expect foreign exchange to be a modest tailwind for the year coming.
Speaker Change: So with that operator, we'd like to open up the call for questions. Please.
Speaker Change: No problem, Jeff. Thank you. We are now opening the floor for questions. If you would like to ask a question. Please press star one on your key pattern now a confirmation tone will indicate that Youll line isn't Nicky you May press star two if you would like to release your question from Nicky So any participants using speaker equipment. It.
Speaker Change: Might be necessary to pick up your handset before you press Vickie. Please wait a moment also be poll for questions.
Speaker Change: Yeah.
Speaker Change: Thank you. Your first question is coming from Ahmed Abdullah of National Bank of Canada I've met your line is life.
Ahmed Abdullah: Thanks, and good morning. Thank you for taking my question can you provide us any color on startup costs that you flagged last quarter, how much of that impacted EBITDA in this quarter.
Ahmed Abdullah: It's not a material number it's worth calling out because we'd had it we had a number of start ups last year.
Ahmed Abdullah: We had a wine and spirits plugged in Italy, starting from scratch, one in Spain, and starting from scratch.
Ahmed Abdullah: We opened up a new plant in North Carolina for the pharmaceutical industry that have to go through qualification processes with its customers.
Ahmed Abdullah: We had the RFID inlays planting checkpoint.
Ahmed Abdullah: If you look at it annually it certainly will be less than $10 million annually.
Ahmed Abdullah: So that gives you a rough a rough flavor some something in that order.
Ahmed Abdullah: Okay, perfect and should we factor in a similar run rate in the first quarter of 2025.
Ahmed Abdullah: I hope so.
Ahmed Abdullah: Okay.
Ahmed Abdullah: Thank you for that and.
Ahmed Abdullah: So we've been seeing some industries that operate across the U S borders with Canada, and Mexico, increasing their level of inventory domestically are you noticing any of that in your results is there a pull forward dynamic that we kind of should think about in 2025.
Ahmed Abdullah: So I think we saw any of that in the fourth quarter.
Ahmed Abdullah: We haven't seen much of that in the Q1 order trends.
Ahmed Abdullah: But most of our businesses our local local.
Ahmed Abdullah: We've seen and there's an embedded it in our aluminum can business because I'll pause here to look those.
Ahmed Abdullah: Speculation about obvious Paris will affect aluminum products downstream aluminum products. So we've seen a little bit of that.
Ahmed Abdullah: So that's you know that's 5% of our sales so it's not a big factor in how we see things.
Ahmed Abdullah: Okay.
Ahmed Abdullah: Well, thank you for that and I'll queue up again.
Speaker Change: Thank you very much. Your next question is coming from Nikolaj corrupt pitch of CIBC capital markets Nikolai.
Ahmed Abdullah: Yeah.
Speaker Change: Hi, I hope you're doing well why.
Speaker Change: One of your competitors on the RFID side recently scaled back its a growth outlook due to a volume headwinds largely logistics customer do you see any sort of similar headwinds in your business.
Speaker Change: We don't have any logistics customers in our refineries.
Speaker Change: Businesses.
Speaker Change: Largely retail retail driven.
Speaker Change: And now over 90% apparel driven.
Speaker Change: So so I think most of the headwinds youre referring to there.
Been around that.
Speaker Change: With competitive developments in the logistics space.
Speaker Change: We are currently not to participate in that part of the auto segment.
Speaker Change: Okay, great. Thanks, and then considering the year over year decline in the checkpoint EBITDA margins for Q4 do you have any expectation as to where margins can stabilize in the segment going forward and what factors you're right. We had a very bad.
Speaker Change: An unusually strong fourth quarter last year.
Speaker Change: So.
Speaker Change: You can swing in the foreign exchange in Turkey.
Speaker Change: A meaningful number.
Speaker Change: So that moves a factor.
Speaker Change: A week.
Speaker Change: Results from our business in Brazil in the fourth quarter.
Speaker Change: And then we had mix, which was not as favorable as it was last year or so.
Speaker Change: So depending on which.
Speaker Change: Types of RFID labels, bold by which customers.
Speaker Change: The mix is quite positive factors last year, the negative effects of the ship.
Speaker Change: I think it's just the vagaries of.
Speaker Change: For full Q law students and spoke units shipped.
Speaker Change: But I think the under.
Speaker Change: The underlying trend as you look at the year to date numbers, that's probably more representative of what's really going on in the business as we speak right now.
Speaker Change: [noise].
Speaker Change: Great. Thank you that's everything for me.
Speaker Change: Thank you very much. Your next question is coming from Sean Stewart of TD Cowen showing your line is nice.
Sean Stewart: Thank you good morning.
Speaker Change: Wanted to follow up on the RFID industry trends in.
Sean Stewart: There was mentioned native Avery Dennison seeing.
Sean Stewart: Seeing some slowdown in their growth are you you're much earlier on the growth curve than they are.
Sean Stewart: Curious on your perspective on.
Sean Stewart: The runway for further market share gains for CCL on RFID applications and.
Sean Stewart: Further context on rollout into non apparel applications as you move forward.
Well our focus is on <unk>.
Sean Stewart: On the apparel and and then goods that go into that.
Sean Stewart: Normal power retail supply chain.
Sean Stewart: With the Walmart initiative.
Sean Stewart: In particular in the.
Sean Stewart: The numbers of CPG companies that are required now at the time.
Sean Stewart: Products that go into the general merchandise.
Sean Stewart: All of the Walmart store.
Sean Stewart: That's what our plans in Mexico is particularly focused on something up with and there are two things that we're focused on.
Sean Stewart: And we still think RFID will grow.
Sean Stewart: You can see that I growth rates the factor of that size.
Sean Stewart: Compared to compared to others in this space.
Sean Stewart: So you know as we as we grow we'll probably see that growth rate.
Sean Stewart: Narrow down towards the industry averages at some point.
Sean Stewart: But right now we're in we're in we're in a good spot and then.
So, let's see what next year brings.
Speaker Change: Okay. Thanks for that Jeff and then just one other question did the qualitative commentary with respect to the Q1 outlook it sounds constructive.
Sean Stewart: There was a lot of reference to various segments, having a solid start to the year.
Speaker Change: Should we read that as.
Sean Stewart: Ongoing.
Sean Stewart: Organic growth for a number of these segments.
Sean Stewart: The solid start relative to typical seasonal trends just trying to qualify the reference point here.
That commentary.
Sean Stewart: One it's one month in.
Sean Stewart: I'm trying to paint the picture based on one month studies are but the start to the year was okay.
Sean Stewart: That's about all I can really say to you you know as well as I do there's a lot of black clouds on the horizon.
Sean Stewart: No tariffs.
Speaker Change: Ex us, particularly.
Speaker Change: In a big way because we're more of a local local supplier, but our customers may be forced into a lot of decisions that could be quite disruptive. So.
Speaker Change: But whereas concerned as most people in the business for about what this all means.
Speaker Change: And particularly the role of the chaotic laser being implemented so we wish it was a bit more if it has to be done we wish it was a bit more organized.
Speaker Change: And so so it's not like we're looking at a year that's the <unk>.
Speaker Change: Shining and the Roses rules smelling of nice things, there's a few things to sold out so it will have to wait to just wait and see how things unfold.
Speaker Change: But we haven't seen any any anything that causes us.
Speaker Change: And our order intake.
Speaker Change: The polls for Juarez.
Speaker Change: Sorry, Paul.
Speaker Change: Okay. Thanks for that Jack that's all I have.
Speaker Change: Okay.
Speaker Change: Hi, Keith.
Speaker Change: Your next question is coming from Jonathan Goldman of Deutsche Bank, Jonathan Your line is nice.
Jonathan Goldman: Hi, Good morning, guys and thanks for taking my questions I'm just any outlook you noted so far in Q1 sales orders are stable I just wanted to clarify does that refer to year on year or quarter on quarter and is that across all segments.
Speaker Change: Okay.
Speaker Change: Complete youre, referring to the CCL commentary I gave.
Speaker Change: Whatever it was printed in the press release I believe.
Speaker Change: Yeah, So I would say I would say it's in line with what we expected and we expect it to grow and so so far away.
Speaker Change: We've seen most of what I said is a solid stoppage.
Speaker Change: It's in line with our expectations so far.
Speaker Change: I mean I.
Speaker Change: But you know we grew earnings lost last year.
Speaker Change: 16% so.
Speaker Change: Oh.
Speaker Change: Are we going to repeat that in 2025, that's probably frankly.
Speaker Change: A little bit of a long shot, but I'll I'll do you expect them to grow rather than by some amount yet yes, we all of them.
Speaker Change: We'll have to wait and see how all of this stuff.
Speaker Change: What's going on in the World.
Speaker Change: The effects on our customers and nuts.
Speaker Change: To the extent we can.
Speaker Change: Sure. So I mean, that's what really causes about.
Speaker Change: Yeah.
Speaker Change: No that's fair and I guess speaking of your customers like we've been reading about CPG companies, increasing advertising and marketing spend to support demand.
Speaker Change: It's too early if you've seen any of that impact your volume was about what's the typical lag between when they start.
Speaker Change: It's a patented.
Bottom marine in the CPG space.
Speaker Change: Is it's very difficult for them now.
Speaker Change: Through.
Speaker Change: Pricing.
Speaker Change: The increase is there's a lot of pressure retail too.
Speaker Change: At least.
Speaker Change: Plug in the plug hole and even start to reserve some of the inflation that we've seen in the last two or three years. So there's a lot of pressure around that.
Speaker Change: And if you're a CPG company.
Speaker Change: And then growing by volume and by value.
Speaker Change: I'm doing promotions and all that sort of thing.
Speaker Change: As the only way to grow and that all soon.
Speaker Change: <unk> interest in packaging.
Speaker Change: To promote products in store and online so.
Speaker Change: So.
Speaker Change: Yeah, I mean, I think the CPG space is still use it but.
Speaker Change: But it's it's okay.
Speaker Change: That's that's all of it is I would describe it.
Speaker Change: Interesting and maybe if I could just squeeze one more in are you able to quantify the FX headwind in Turkey the impact on margins.
Speaker Change: It's not material.
Speaker Change: Materials checkpoint theres no material to the company.
Speaker Change: Could you quantify the checkpoint impact.
Speaker Change: Okay fair enough. Thank you.
Speaker Change: Thank you very much.
Speaker Change: Question is coming from Daryl Young from Stifel. Your line is life.
Daryl Young: Hey, good morning, everyone.
Daryl Young: Just wanted to follow up a little bit on the tariff question.
Speaker Change: Are you anticipating any.
Daryl Young: Pull forward of demand or or changes to your order flow as companies may be built safety stock in advance of <unk>.
Daryl Young: But some of the uncertainties that are out there or have you seen that at all start the year.
Daryl Young: We haven't seen it so far.
Daryl Young: And.
Daryl Young: The business, where we think we might have seen a bit of it is in our in our aluminum can business, which both of them.
Daryl Young: Isn't too surprising.
Daryl Young: But that's a fairly small part of the company.
Daryl Young: Checkpoint.
Daryl Young: Yeah.
Speaker Change: The CCL label CCL design CCL secure we haven't seen any of that activity so far.
Daryl Young: Okay.
Speaker Change: And then with respect to C. C. L design can you just remind us of the relative profitability of the automotive and electronics and whether the slowdown in auto could be a margin headwind for the broader Ccs segment or is it too small to move the needle.
Speaker Change: It's too small to have that much impact, it's a $300 million business the margins in the electronics space.
Speaker Change: A bit higher.
Speaker Change: And then we've got one on one or two of our operations in automotive.
Speaker Change: Have come off a difficult 2020.
Speaker Change: Trey and we expect them to do better in 2024, So we've got some internal things going on.
Speaker Change: It may be that in some of the industry down trend in automotive.
Speaker Change: The demand is.
Speaker Change: Say, it's declining but it's.
Speaker Change: It's slow.
Speaker Change: The new project Arena as I would characterize as slow.
Speaker Change: Got it okay.
Speaker Change: And then going forward as we move into and the CCL segment, I would say more of a normalized or balanced volume price mix versus the last few years, which I think was more maybe a volume weighted.
Speaker Change: Is there any impact to operating leverage and I guess said differently can you sustain the margins you've seen across 24 mm.
Speaker Change: If you look back in the history of CCL label, a decade or more you don't see much margin variation and we've been through the global financial crisis and Covid.
Speaker Change: Got it okay. Thanks very much.
Speaker Change: Yeah.
Speaker Change: Thank you very much. Your next question is coming from Osten <unk> of RBC capital markets.
Osten: Hey, good morning, everyone.
Speaker Change: One of your suppliers as called out deep inflationary cost pressures, which they're passing on I was just wondering what you're seeing on the cost side and the kinds of conversations you're having with your customers.
Osten: Deflation or inflation.
Osten: First.
Osten: You said inflation or deflationary.
Osten: Equally yes, I would say in some parts of the.
Osten: As the labels space, we were expecting some modest deflation.
Osten: In 2025.
Osten: I'd characterize it as modest.
Osten: No nothing's alright.
Osten: And even for us one way or the other.
Speaker Change: Got it.
Speaker Change: And then I just wanted to follow up on tariffs I think you mentioned you supply locally but in terms of sourcing do you have any exposure.
Speaker Change: Kevin like cross border exposure.
Speaker Change: Yes by and large local local sorry.
Speaker Change: So we do have the digital pain points here or there.
Speaker Change: And and but it socal tape.
Speaker Change: If you're trying to find out what's.
Speaker Change: These things are going to be implemented it's it's it's very difficult to get straight answer from any of them.
Speaker Change: Dealing with Boulder control so.
Speaker Change: So, but we expected it will be.
Speaker Change: It'll probably go ahead on things that are already tariffs like light like China like like like the muscles.
Speaker Change: Arena.
Speaker Change: What happens beyond that in terms of the broad brush stuff that was announced earlier and then very quickly withdrawal.
Speaker Change: You know, we're not we haven't seen anyone panicking about Latin doing things in the way they interact with us.
Speaker Change: Suggest anything going on.
The automakers coming into us.
Speaker Change: With the exception of our can business.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: And then just had a question on buybacks. Obviously you were active once again this quarter, but just given where the share price is today do you see any potential for accelerating the pace of buybacks going forward.
Speaker Change: Possibly.
Speaker Change: Yeah.
Speaker Change: But you know when you try to sneak one last one in here.
Speaker Change: On M&A can you maybe just share what your pipeline looks like today and what are you hearing from potential acquisition candidates that no change no change from the previous coming through at night you know.
Speaker Change: I mean, we have a lot of things that we're working on.
Speaker Change: The environment has changed.
Speaker Change: Perfect. That's all for me thank you.
Thank you very much. Your next question is coming from.
Speaker Change: <unk> of National Bank of Canada.
Speaker Change: Amit Your line is nice.
Speaker Change: Yes. Thank you.
Speaker Change: Follow up on that M&A question.
Speaker Change: Are you on.
Speaker Change: Holding off.
Speaker Change: Finding anything given the macro uncertainty.
Speaker Change: Yeah.
Speaker Change: On a factor at all.
Speaker Change: No.
Speaker Change: Okay, and just one last one on and no yeah, it's nice to see the top line growth continuing.
Speaker Change: Where are we in terms of achieving the operational savings that were being targeted and did we see any of that in this quarter.
Speaker Change: Some of it not all of it.
Speaker Change: But we had a much better year in <unk>.
Speaker Change: Let me add in 'twenty three.
Speaker Change: The closure.
Speaker Change: Closure of the Belgium plant has gone very well.
Speaker Change: We've agreed the sale of the real estate so.
Speaker Change: But it looks like that'll go going forward in the first half of the Cup.
Speaker Change: Good so the project when was when they had very smoothly.
Speaker Change: Very pleased with the outcome.
Speaker Change: Okay.
Speaker Change: Thank you that's it for me.
Speaker Change: Thank you very much Joe.
Speaker Change: Next question is coming from Stephen Macleod of BMO capital markets. Steven Your line is now.
Stephen Macleod: Thank you good morning, guys.
Speaker Change: Just a few questions. Good morning, Jeff I had a little bit of trouble connecting this morning, So I.
Stephen Macleod: I just wanted to get a few questions and I appreciate the color so far just.
Stephen Macleod: With respect to checkpoint I know you you know you called out sort of the Turkey, FX being a a big impact was that was that most of the wood that account for most of the margin decline on a year over year basis.
Stephen Macleod: No no I think it was it was that it moves mix.
Stephen Macleod: <unk> was a pretty big factor, so we have very rich mix.
Stephen Macleod: Fourth quarter end.
Stephen Macleod: I wouldn't say, we had bad makes in full the fourth quarters of this year, but it is nowhere near as rich as it was.
Stephen Macleod: The year prior.
Stephen Macleod: And then we had a very difficult.
Stephen Macleod: End of the year period, as our operation in Brazil.
Stephen Macleod: So.
Stephen Macleod: All three of them are contributing.
Stephen Macleod: Okay. Okay. That's.
Stephen Macleod: That's helpful and I guess as you swing into 2025, you know it sounds like the outlook sort of mixed.
Stephen Macleod: On the checkpoint business or are you still seeing mix as a negative headwind.
No no I don't.
Stephen Macleod: So.
Speaker Change: I think we'll just have to wait and see how things unfold.
Stephen Macleod: But.
It's all it's all driven by how technically complex the particular RFID.
Stephen Macleod: And lives.
Stephen Macleod: You used them.
Stephen Macleod: To wait and see who hold as well in the first quarter of the year, but it was unusually strong in Q4.
Speaker Change: Okay. That's that's helpful. And then maybe just turning turning to Adobe up.
Speaker Change: You know you've currently called out kind of $17 million to $20 million in savings from the Belgian plant closure is that and I know you said you didn't see all of it in Q4, but you saw some but do you still expect to see that flowing through in fiscal 'twenty to 'twenty five.
Speaker Change: I hope so.
Speaker Change: We have some offsets with this with us.
Speaker Change: Start up costs in Germany.
Speaker Change: So sure there's a lot going on.
Speaker Change: So we've got.
Speaker Change: We've got the benefits of the flow through from Belgium, and then we'd go up and starts up in Germany.
Speaker Change: But this is the strength and an overview of I would say it was particularly driven by the results in the Americas.
Speaker Change: And a very nice recovery in Poland.
Speaker Change: To see that continue.
Speaker Change: In the first part of next year too.
Speaker Change: Okay. Okay, Great and then maybe just finally you highlighted on your investment highlights slide a and investment in Vietnam.
It doesn't look a material if it's single plant, but just wondering if you can give a little bit of color around kind of the investment in.
Speaker Change: And what do you expect a change.
Speaker Change: Because of its importance in the apparel space so yeah.
Speaker Change: So you know when you when you think about the most important countries to be in and in the world.
Speaker Change: The apparel supply chain in China is still number one in Bangladesh is number two.
Speaker Change: And in Vietnam is certainly in the top three or four countries.
Speaker Change: You've never had much of a presence there so that's for me.
Speaker Change: For our apparel label and also frankly for growth in RFID.
Speaker Change: Very important for us to have.
Speaker Change: Presence in Vietnam that was big enough to be credible to the customers and.
Speaker Change: We've now gone through.
Speaker Change: The process of building the building, there which is not easy.
Speaker Change: And yeah, we're in good shape for the stuff up in 2020 five.
Speaker Change: Of course, Okay. That's great. Thanks, Jeff I appreciate the color.
Jeff: No problem.
Speaker Change: Thank you very much and your next question is coming from Michael Glen of Raymond James Michael Your line is life.
Hey.
Speaker Change: Good morning, Jeff when we go back to your outlook for Q4, it feels like it was a more conservative than how results came in I'm, just trying to understand how things deferred versus expectations in the quarter on your side.
Speaker Change: Well I I think what we called out was the city with the comps.
Speaker Change: The more difficult and I think we called out close it was gonna be Jessica we were pointing out that the comps are more difficult for them.
Speaker Change: And then as you saw the rate of the race of gain over prior year narrowed pretty significantly in Q4 compared to the prior three calls is and that's what we were calling out.
Speaker Change: If you go interpreted that we were negative about Q4, it's not what he said or what we meant.
Speaker Change: I don't think it transfer it pretty much as we expected. So we were not surprised in any shape way or form by how Q4 pans out.
Speaker Change: As you've seen the pace of getting over prior year quarters narrowed pretty substantially.
Speaker Change: And were there any segments and see all that you would say like the the home and personal care or youre highlighting the strengths. There was that a was that a surprise versus expectations in Q4 here.
Speaker Change: Right.
Speaker Change: Okay, and then with RFID I know you're up against difficult comps, but you're also up against what looks like a pretty large increase in capacity I'm just trying to reconcile the two items as we look through 2025.
Speaker Change: Yeah. So so so.
Speaker Change: But at the end of last year.
Speaker Change: Think about numbers the numbers are in lies.
Speaker Change: End of last year, we were running at about a 3 billion unit and like Cliff.
Speaker Change: We now have capacity in place to raise up to $5 billion.
Speaker Change: And you need some service capacity in this space to look at some of the customers properly.
Speaker Change: I'm quite sure will see unit volumes.
Speaker Change: Growing double digits and.
Speaker Change: In the year ahead.
Because what we're focused.
Speaker Change: Focusing on channels and partners.
Speaker Change: Parts of the business that are growing.
Speaker Change: And and we're focused on.
Speaker Change: Parts of the RFID market, where we add value V. L D in light clothing.
Speaker Change: And distributing and have software integration with our customers.
Speaker Change: There's a lot more value add in that.
Speaker Change: That part of the business when you just supplying a commodity in language.
Speaker Change: And number of people can make and the price point is the deciding factor.
Speaker Change: Okay and then finally on my side just overall so 485.
Speaker Change: Dollars of Capex this year, and you know a fairly heavy level or high level last year. So are you able to indicate.
Speaker Change: What type of manufacturing square footage growth youre seeing with it with that capital investment.
Speaker Change: No no no all time, but.
Speaker Change: We put quite a bit of money last year into a into into our aluminum business.
And we've got more going in this year, because that's growing quite a bit right.
Speaker Change: And so that that was one factor.
Speaker Change: So we have quite a number of new plants, we've referred to that was another factor.
Speaker Change: But I couldn't quantify it in terms of manufacturing.
Footage, but if you look at the <unk>.
Speaker Change: Capital expenditure rate as a percentage of sales.
Speaker Change: The last 567 years, you'll see it's in a pretty narrow range and we're still well within that range.
Speaker Change: Okay. Thank you for taking my questions.
No problem.
Speaker Change: Thank you very much well we appear to have reached the end of our question and answer session I will now hand, it back over to the management team for closing comments.
Speaker Change: Okay. Thank you very much Jennifer.
Speaker Change: Thank you everybody for joining the call today, we look forward to talking to you at night.
Speaker Change: You will see a little bit of Sunshine I can thank you very much.
Speaker Change: Thank you everyone. This does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.