Q1 2025 CCL Industries Inc Earnings Call
Operator: Here for today is Mr. Geoffrey Martin, President and Chief Executive Officer, and joining him is Mr. Sean Washchuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.
Is Mr. Shawn washed Chuck Senior Vice President and Chief Financial Officer. Please go ahead gentlemen.
Yeah.
Thanks, everyone Sean here.
Welcome to our first quarter Investor update and we'll jump right in.
Sean Washchuk: Thanks, everyone. Sean here. Welcome to our Q1 investor update. We'll jump right in. Turn everyone's attention to slide number 2, our disclaimer regarding forward information. I'll remind you that our business faces known and unknown risks and opportunities. For further details of these risks, please take a look at our 2024 annual report, particularly under the section Risks and Opportunities. Our annual and quarterly reports can be found online on the company's website, cclind.com, or on sedarplus.ca. The next slide, our summary income statement. For Q1 2025, sales increased 8.6%, with 3.8% organic growth, 1.4% acquisition-related growth, and 3.4% positive impact from foreign currency translation, resulting in sales of CAD 1.89 billion, compared to CAD 1.74 billion in Q1 2024.
Turn everyone's attention to slide number two our disclaimer regarding forward information.
Geoffrey Martin: Still both strong, very strong, actually. The health care business has picked up. That's modestly better, and we expect that to continue in Q2. Food and beverage was slightly down and slightly up in sales in Q1, down in profit. and I expect that will be the same sort of picture in Q2.
Speaker Change: I'll remind you that our business faces known and unknown risks and opportunities for further details of these risks. Please take a look at our 2024 annual report, particularly under the section risks and opportunities our annual and quarterly reports can be found on.
Speaker Change: Online on the company's website, CCL, IND dot com or on SEDAR plus dot CA.
Speaker Change: The next slide our summary income statement.
Stephen Macleod: Okay, that's helpful. Thank you.
Speaker Change: For the first quarter of 2025 sales increased eight 6%.
Geoffrey Martin: And then just on the ALS business, I was just wondering if you could give a little bit of color around the RFID growth within that business. And then secondly, for the new plant you have in Vietnam, are you seeing increased demand from apparel suppliers, apparel manufacturers exiting China? Are you seeing increased demand level because of that phenomenon?
Speaker Change: With three 8% organic growth.
Speaker Change: One 4% acquisition related growth and.
Speaker Change: And three 4% positive impact from foreign currency translation, resulting in sales of $1 89 billion.
Speaker Change: Compared to $1 $74 billion in the first quarter of 2024.
Speaker Change: Operating income was $316 $9 million for the 2025 first quarter compared to 282 million.
Geoffrey Martin: Well, you have to bear in mind our apparel labelling business is... heavily focused on European and Australian retailers. So they are not subject to the tariff issues that, obviously, the U.S. needs to take a stand. So our position in the U.S. is pretty small.
Sean Washchuk: Operating income was CAD 316.9 million for Q1 2025 compared to CAD 282 million for Q1 2024, a 9% increase excluding the impact of foreign currency translation. Geoff will expand on the segmented operating results of our CCL, Avery, Checkpoint, and Innovia segments momentarily. Corporate expenses were up for Q1 2025 due to slightly higher variable compensation expense than other general items compared to the prior year Q1. Consolidated EBITDA for Q1 2025, excluding the impact of foreign currency translation, increased 8% compared to the same period in 2024. Net finance expense was CAD 18.5 million for Q1 2025, slightly higher than the CAD 18 million for Q1 2024. The increase is due to a reduction in finance income earned on the company's cash and cash equivalents.
Speaker Change: For the first quarter of 2024 nine.
Speaker Change: A 9% increase excluding the impact of foreign currency translation.
Speaker Change: Jeff will expand on the segmented operating results of our CCL Avery checkpoint and <unk> segments momentarily.
Geoffrey Martin: and other people dominate the market in the US, so our biggest player is in Europe. But I can tell you that there's certainly a big move of many U.S. retailers looking at changing their sourcing policy. and particularly in Asia. And not easy to do because of the availability of components. in some of these other countries. But we're very well-placed to pick up, share in those circumstances because we're in all the countries where you would likely want to go. Bangladesh, Vietnam, in particular, being probably number one and number two on the list where, if you didn't want a source in China, where else would you go?
Speaker Change: Corporate expenses were up for the 2025 first quarter due to slightly higher higher variable compensation expense and other general items compared to the prior year first quarter.
Speaker Change: Consolidated EBITDA for the 2025 first quarter, excluding the impact of foreign currency translation.
Speaker Change: <unk>, 8% campaign compared to the same period in 2024.
Speaker Change: Net finance expense was $18 $5 million for the first quarter of 2025% slightly higher than the $18 million for the first quarter of 2020 for.
Speaker Change: The increase is due to a reduction in finance income earned on the company's cash and cash equivalents.
Speaker Change: The overall effective tax rates for Q1 2025.
Geoffrey Martin: They would probably be the two most important countries where people would look to go, and we're very well-placed.
Speaker Change: Was 24, 7% unchanged from the prior year first quarter.
Sean Washchuk: The overall effective tax rates for Q1 2025 was 24.7%, unchanged from the prior year Q1. The effective tax rate may change in future periods depending on the proportion of taxable income earned in different tax jurisdictions with different rates. Net earnings for the 2025 Q1 were CAD 207.4 million compared to CAD 192.1 million for the 2024 Q1, an increase of 6%, excluding foreign currency translation. The next slide, earnings per share. Basic and adjusted basic earnings per Class B share were CAD 1.18 for the 2025 Q1, compared to CAD 1.08 for the 2024 Q1. This is record quarterly adjusted earnings for CCL of CAD 1.18. The CAD 0.10 increase in adjusted basic EPS was primarily driven by improved operating income of CAD 0.13, favorable currency translation of CAD 0.02.
Geoffrey Martin: Right, okay, that's great.
Sean Washchuk: And then maybe just finally, for Sean, just on the DNA, it was a little bit higher, a little bit higher step up in Q1 from Q4. And I'm just wondering if that's a new run rate? It's a bit of foreign exchange, and it is a new run rate. We had some assets come on in the fourth quarter in Q1 here, so. It's roughly a new run rate. Right.
Speaker Change: The effective tax rate may change in future periods, depending on the proportion of taxable income earned in different tax jurisdictions with different rates.
Speaker Change: Net earnings for the 2025 first quarter with $207 4 million compared to $192 $1 million for the 2024 first quarter, an increase of 6% excluding foreign currency translation.
Sean Washchuk: Okay. That's great. That's helpful.
Sean Washchuk: Thanks, guys.
Speaker Change: The next slide earnings per share.
Speaker Change: Basic and adjusted basic earnings per class B share were $1 18 for the 2025 first quarter compared to $1 eight for the 2024 first quarter. This was record quarterly adjusted earnings for CCL of $1 18.
Daryl Young: Your next question for today is from Daryl Young with Stiefel.
Daryl Young: Hey, good morning, everyone. Just wanted to follow up a little bit on Stephen's question. And maybe with respect to your facility development plans over the last 18 to 24 months, you've had a pretty good pipeline. Are you hitting pause on new facility development or shifting the geographies you want to be in as a function of what's happening today in the tariff environment? No, not at all. No, we're expanding one of our plants in China. You have to bear in mind, the world doesn't begin and end in the United States. There's Europe, there's the rest of Asia, there's Australia, there's all of Latin America.
Speaker Change: The 10% increase in adjusted basic EPS was primarily driven by improved operating income of 13.
Speaker Change: Favorable currency translation of <unk>.
Speaker Change: These gains were partially offset by lower joint venture earnings of <unk> and higher corporate expenses of one.
Sean Washchuk: These gains were partially offset by lower joint venture earnings of CAD 0.04 and higher corporate expenses of CAD 0.01. Moving to the next slide, our free cash flow from operations. For Q1 2025, free cash flow from operations was an inflow of CAD 39.1 million, compared to an outflow of CAD 7 million posted in Q1 2024. This was largely due to a reduction of net capital expenditures in Q1 2025 compared to the prior year Q1. For the trailing 12 months, 31 March 2025, free cash flow from operations was CAD 652.6 million, compared to CAD 569.1 million for the 2024 trailing 12-month period. This change is primarily attributable to an increase in cash provided by operating activities, which was generated by improved adjusted earnings and reduced net capital expenditures over the comparative periods. Next slide, returns to shareholders.
Speaker Change: Moving to the next slide our free cash flow from operations.
Speaker Change: For the first quarter of 2025 free cash flow from operations was an inflow of $39 1 million compared to an outflow of $7 million posted in the first quarter of 2024.
Geoffrey Martin: And so we're still investing. We're rethinking some things in certain geographies based on, we may upscale a plant here, we may downscale a plant there, but we're making decisions based on. on what we think the customers might do. We're certainly not pausing anything.
Speaker Change: This was largely due to a reduction of net capital expenditures in the first quarter of 2025% compared to the prior year first quarter.
Speaker Change: For the trailing 12 months March 31, 2025 free cash flow from operations was $652 6 million compared to $569. One for the 2024 trailing 12 month period.
Daryl Young: Gotcha. Okay.
Geoffrey Martin: And then on in terms of CCL Secure, with the recent completion of the acquisition of your competitor in that market, is there any shifting market dynamics or opportunities that might come from that or anything that we should be thinking about going forward on the money printing side? Too early to tell.
Speaker Change: This change is primarily attributable to an increase in cash provided by operating activities.
Speaker Change: Which was generated by improved adjusted earnings and reduced nap net capital expenditures over the comparative periods.
Geoffrey Martin: Okay. And then just one last one on Inovia and the profitability, obviously very strong on the facility rationalization, but is there any changes in the commodity price and resins and what might be happening in that market that's a benefit as well? A little, so resins have come off, but we pass those along almost instantly. So it doesn't really have a huge impact. The big gain in profitability, though, was in the Americas. So it was Europe was up, but the reason for the outside gains is really driven by North America.
Speaker Change: Next slide.
Speaker Change: Returns to shareholders.
Speaker Change: For the 2025 first quarter the company repurchased one 4 million shares for $100 million.
Sean Washchuk: For Q1 2025, the company repurchased 1.4 million shares for CAD 100 million. Including the 10.3% increase in our 2025 annual dividend announced in February 2025, dividends paid year to date have amounted to CAD 56.3 million, for a total of CAD 156.3 million returned to shareholders. Next slide, our cash and debt summary. Net debt as at 31 March 2025, was CAD 1.75 billion, an increase of almost CAD 134 million compared to the 31 December 2024. This increase is principally a result of funds used for capital expenditures and share buyback. Although the company's net debt increased, the balance sheet closed the quarter in a strong position. Our balance sheet leverage ratio was approximately 1.14x at 31 March 2025, up from 1.08x reported at the end of 31 December 2024. Liquidity was robust with CAD 821 million of cash on hand.
Speaker Change: Including the 10, 3% increase in our 2025 annual dividend announced in February of 2025 dividends.
Speaker Change: Dividends paid year to date have amounted to $56 $3 million for.
Speaker Change: For a total of $156 $3 million returned to shareholders.
Speaker Change: Okay.
Speaker Change: Next slide our cash and debt summary.
Speaker Change: Net debt as at March 31, 2025 was 175 billion, an increase of almost $134 million compared to the December 31 2024.
Geoffrey Martin: and share gain in Altamira. So, an operating leverage impact in North America? Correct. Great.
Daryl Young: Thanks very much for your time.
Speaker Change: This increase is principally a result of funds used for capital expenditures and share buyback.
Arthur Nagorny: Your next question is from Arthur Nagorny with RBC Capital.
Speaker Change: Although the company's net debt increased the balance sheet closed the quarter in a strong position our balance sheet leverage ratio was approximately $1. One four times at March 31, 2025 up from 1.08 times reported at the end of December 31 2024.
Arthur Nagorny: Hey, good morning. Just maybe starting with the checkpoint segment. It sounds like your RFID facilities in China and Mexico don't have direct exposure to tariffs. But are you seeing any indirect impacts in that business or are things relatively unchanged so far? Well, so RFID impact for us is largely in apparel and our customers in apparel labelling are largely in Europe and Australia and not subject to tariffs.
Speaker Change: Liquidity was robust.
Speaker Change: With $821 million of cash on hand.
Speaker Change: And U S $1 9 billion.
Speaker Change: Of available Undrawn credit capacity on the company's revolving bank credit facility.
Sean Washchuk: $1.9 billion of available undrawn credit capacity on the company's revolving bank credit facility. The company's overall finance rate was 2.5% on 31 March 2025, compared to 2.6% at 31 December 2024. The company's balance sheet continues to be well-positioned as we move through 2025. Geoff, over to you.
Speaker Change: The company's overall finance rate was two 5% at March 31, 2025 compared to two 6% at December 31 2024.
Geoffrey Martin: That's helpful. And I think you quantified your tariff exposure in MAS within Checkpoint. Can you maybe help quantify your trying to source the exposure within Avery as well? Well, that's a very good question and what we don't know about Avery is what the customers are going to do. The back-to-school season is normally planned nine, ten months in advance. you know we build a lot of inventory and I can tell you when the premium tariffs were announced that caused total chaos. among U.S. retailers planning for their back-to-school sessions, not just with our products but right across their entire portfolios, school bags, lunch supply boxes, and, and, and all the things you could imagine being in a Walmart aisle.
Speaker Change: The company's balance sheet continues to be well positioned as we move through 2025.
Jeff: Jeff over to you.
Jeff: Thank you Sean good morning, everybody I'm on slide eight highlights.
Jeff: Capital spending.
Geoffrey Martin: Thank you, Sean. Good morning, everybody. I am on slide 8, highlights of our capital spending. Fairly low quarter, a little under CAD 114 million for Q1. Much bigger number last year. We were building the plant for Innovia in Germany, and we are still anticipating spending about CAD 485 million for the year of 2025. Slide 9, highlights for the CCL segment. 4.5% Q1 organic growth, both single digits in North America, Europe, and Asia. Double digits in Latin America. Very strong profitability gains at home and personal care in CCL Design, with healthcare and specialty modestly up, but down a little in food and beverage, and we face tough comps at CCL Secure driven by timing of banknote substrate shipments. Slide 10, highlights of the joint venture.
Jeff: Third quarter was $114 million.
Jeff: Q1, I'll just pick a number last year building the plant.
Roger: Roger in Germany.
Jeff: Still anticipating spending about $495 million for the year.
Roger: Year of 2025.
Roger: Slide nine highlights the CCL segment following the Sun Q1 organic growth.
Roger: Single digits in North America, Europe, and Asia double digits in Latin America.
Geoffrey Martin: back to school time, and a lot of orders were suspended right across the board by some of these retailers. And for the season coming up, it's such a short season, I think many retailers are still pondering what to do about that, whether to still have the season. which merchandise for stock, which price increases they can accept given the tariffs that are coming in. And by far the biggest impact on them is their own direct sourcing from Chinese suppliers, not through people like ourselves.
Roger: Very strong profitability gains.
Roger: Okay, and CCL design with health care and specialty Motors play out.
Roger: Download missile and food and beverage faced tough comps they feel secure driven by timing of pipe substrate shipments.
Roger: Slide 10 highlights of the joint venture just pointing out here.
Roger: No longer include the pipe Memphis, Seattle and.
Geoffrey Martin: Just pointing out here that we no longer include the Pacman-CCL numbers, which are now fully consolidated this quarter versus being in the JV line this time last year. Slide 11, highlights for Avery. Solid quarter in North America, a little bit aided by foreign exchange, offset by slower international markets. Horticulture slightly up in Europe and the reverse in the US. Overall a solid quarter. Slide 12, highlights for Checkpoint. Strong quarter at the MAS business in Europe. That was more than offset by declines in other regions, especially in the Americas. The apparel label delivered very good organic sales growth, aided by RFID with much stronger profitability gains. Slide 13. Good news at Innovia. Very good quarter. Strong volume growth and share gain, especially in North America, where we had outsized profitability improvements.
Roger: And so now fully consolidated.
Roger: It's cool to vote in the JV line this time last year.
Roger: Slide 11.
Geoffrey Martin: So, back to school is frankly for us a very big unknown this year. Our opinion is most of the big retailers are hoping and praying there will be some tariff relief announcements. The problem is we're getting very near the knuckle on the timing now, we normally start shipping back to school in June, so it's a June-July shipment period, sometimes it drifts a little bit into August, but June and July are the two big months. and they're coming up pretty pretty soon. So, that's the big unknown. How big could it be? Maybe 10 million in EBIT for Avery?
Roger: Highlights for a very solid quarter in North America.
Roger: Foreign exchange offset by slower international markets multicultural slightly up in Europe in the reserve and the U S, but overall a solid gold.
Roger: Slide 12 highlights the checkpoint.
Roger: Strong <unk> business in Europe, but that was more than offset by declines in other regions, especially in the Americas.
Roger: Power, we're able to live in a very good organic sales growth aided by RFID.
Roger: With much stronger profitability.
Roger: Slide 13.
Roger: Good news.
Roger: Good quarter strong volume growth and share gain, especially in North America, where we had outsized profitability improvements.
Geoffrey Martin: This and Q2, something like that. Could be something like that.
Roger: <unk> rolls up in Europe on the benefit.
Arthur Nagorny: All right, that's helpful.
Roger: Imaging closure volume in the U K.
Geoffrey Martin: And then I think within CCL design, you called out slowing auto markets. And I was just wondering what you're seeing kind of globally, and how you expect to navigate the current environment. Well, we just adjusted our cost to suit, so we're definitely seeing unit volume decline. across the board in North America and Europe.
Geoffrey Martin: Results were also up in Europe on the benefits of the Belgian closure, volume in the UK, and also Poland building share in label films. We had one of the best quarters we've had in some time in this business. We do plan to start up our new plant in Leipzig in Germany for low-gauge label films in the current quarter. There'll be some start-up costs going on there for a few more quarters to come. Slide 14. I know this is on many of your questions for later on. I thought I'd deal with it up front. The impact of tariffs on the company. Vast majority of the company's business globally is based on in-country demand from locally produced supply. We do have some CCL and Innovia products made in Mexico. They are all USMCA compliant, and they're currently tariff-free for the US.
Roger: It also pose on building share in label films.
Roger: One of the best quota sweetheart in some time in this business.
Roger: We do all the time.
Roger: Our new plant in Leipzig in Germany for low gauge label films in the current quarter.
Roger: There will be some startup costs going on that for people to come.
Speaker Change: Slide 14, I know this is all many of your questions later on but David it upfront.
Geoffrey Martin: So you've all read them. What's going on with the big car producers? So it's not a huge business for us, 300 million or thereabouts, just to give you a frame of context. And when volume goes down, we just adjust hypothesis.
Speaker Change: Impact of tariffs on the company vast majority of the company's business globally is based on in country demand from locally produced supply.
Speaker Change: We do have some.
Speaker Change: Ccs via products made in Mexico, but they all U S. MCA compliant when it currently tariff free for the U S.
Speaker Change: The exception from Mexico, as a ring binder products for a very that could be subject to higher tariffs due to Chinese content.
Geoffrey Martin: I just wanted to touch on the EcoFloat line in Poland. Just wondering how that's coming online and when you expect to hit sort of full run rate in that facility? Well, it'll be a while before we'll hit full run rate, but it's... Every month the numbers get better. It's solidly profitable now and every month they're making money, but it's by no means a full capacity.
Geoffrey Martin: The exception from Mexico is our ring binder products for Avery, that could be subject to higher tariffs due to Chinese content and the impact of back to school coming up later in this quarter. Checkpoint MAS products, which represent about 30% in the US, rely significantly on a China supply chain currently. We had planned even before all the tariff noise to change that for part of the business, but we're obviously accelerating that in view of the current situation. The company's global footprint remains a competitive advantage to help customers reconsidering their global supply chains. Slide 15, a few comments on the outlook. Just you all know, we had an Easter vacation that straddled the two quarters, so part in March last year, part in April last year, all in April this year. That will have some impact.
Speaker Change: And then and the impact of back to school coming up in the in the later in this quarter.
Speaker Change: Checkpoint MKS products.
Speaker Change: Represent about 30%.
Speaker Change: In the U S rely significantly on the China supply chain currently we.
Speaker Change: We had planned even before all the tariff noise to chain change that for part of the business.
Arthur Nagorny: That's all for me. Thank you for the time.
Speaker Change: Accelerating mountain view of the current situation.
Speaker Change: Company's global footprint remains a competitive advantage to help customers reconsidering the globe.
Operator: Once again, if there are any questions, please press star 1.
Speaker Change: With the supply chain.
Speaker Change: Slide 15, a few comments on the outlook.
Speaker Change: So just you all know we have a he.
Speaker Change: Easter vacation straddled the two quarters.
Ahmed Abdullah: You have a follow-up question coming from Ahmed Abdullah, your line is live. Yeah, hi, this one's for Sean. The Belgium facility is up for sale and it's anticipated to happen in 2025.
Speaker Change: In March last year pause in April last year all in April this year.
Speaker Change: So that will have some impact.
Speaker Change: Segment backlog was very solid going into Q2 in April orders are stable, we had a very good month of April.
Sean Washchuk: Should we expect an EBITDA bump in one of the quarters like what happened in the third quarter of 22 when you sold excess China real estate? Our expectation is that facility will be sold probably in the next 60 to 90 days with no material impacting us.
Geoffrey Martin: CCL segment backlogs was very solid going into Q2, and all April orders were stable. We had a very good month of April, just as a by the way. Avery outlook is, however, marked by uncertainty for the U.S. back-to-school season. I'll address that in the Q&A later on. Checkpoint growth continues to be expected in RFID, and our apparel labeling business has very limited exposure to U.S. apparel sourcing, particularly from China. Innovia should continue to improve, but we do have the German plant start-up costs to take into consideration, and we expect FX to continue to be a modest tailwind. With that, operator, we'd like to open up the call for some questions.
Speaker Change: By the way.
Speaker Change: Outlook is have them out by uncertainty for the U S back to school season, well addressed.
Speaker Change: Q&A later on.
Speaker Change: Checkpoint growth continues to be expected in RFID.
Speaker Change: In our apparel labeling business has very limited exposure to U S apparel sourcing.
Geoffrey Martin: Okay, that's it for me. Thank you very much.
Speaker Change: And from particularly from China.
Geoffrey Martin: We have reached the end of the question and answer session, and I will now turn the call over to Geoff for closing. Okay everybody, thank you for joining us this course and we look forward to talking to you in the summer.
Speaker Change: We now have you should continue to improve but we do have the German plants Papa call take into consideration.
Speaker Change: But FX to continue to be a modest tailwind.
Speaker Change: So with that operator, we'd like to open up the call for some questions.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Certainly at this time, we will be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Operator: Certainly. Your first question for today is from Ahmed Abdullah with National Bank of Canada.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue for.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Your first question for today is from Ahmed Abdullah with National Bank of Canada.
Speaker Change: Yes, hi, good morning. Thank you for taking my question and congrats on the strong quarter.
Speaker Change: Just touching on that tariff slide and your comment around competitive advantage as customers reconsider supply chains.
Ahmed Abdullah: Yeah. Hi, good morning. Thank you for taking my question, and congrats on the strong quarter. Just touching on that tariff slide and your comment around competitive advantage as customers reconsider supply chains, can you give us a bit more color? Are these conversations already happening? Do you foresee significant market share gain there because of that?
Speaker Change: You give us a bit more color are these conversations already happening.
Speaker Change: Do you foresee significant market share gain there because of that.
Speaker Change: Well I think we're just in a good position to help so we've got we've got operations all over the world.
Geoffrey Martin: Well, I think we're just in a good position to help. We've got operations all over the world. If somebody wants to move production from country A to country B, we are typically a go-to company because we're everywhere where our customers are. That's really our strength. We think we'll be very well placed to handle any company in any part of our business that decides to move production from one part of the world to another.
Speaker Change: So if somebody wants to move production from country to country.
Speaker Change: We typically have.
Speaker Change: Go to the go to company because.
Speaker Change: We're we're everywhere where our customers are so that's really our strength.
Speaker Change: So we think we'll be very well placed to handle.
Speaker Change: Any any any company in any part of our business. It is hard to move production from mom and pop with a wealth of another.
Speaker Change: Okay, Thanks, and given the backdrop of tariffs and some cost pressures that are obviously yet to come as a result of that.
Ahmed Abdullah: Okay, thanks. Given the backdrop of tariffs and some cost pressures that are obviously yet to come as a result of that, how much of CCL segments growth this year do you see coming from pricing?
Speaker Change: How much of the segments of Ccs segment growth. This year do you see coming from pricing.
Speaker Change: I don't think the <unk> segment is particularly affected by tariff so.
Geoffrey Martin: I don't think the CCL segment is particularly affected by tariffs or pricing in the way you're suggesting, because that's really a local business. The impact will probably be where customers may decide to move operations from one country to another, but we're Switzerland on that. We're neutral on it. It's not a big impact on us. I don't see it being a factor in our pricing decisions.
Speaker Change: Rising in the way youre, suggesting because that's very that's really a local local business.
Speaker Change: So.
Speaker Change: The impact will probably be where customers may decide to move.
Speaker Change: Operations from one from one country to another.
Speaker Change: But with Switzerland on that win.
Speaker Change: When you Shlomo, it's not a big impact on us.
Speaker Change: But I don't see it being a being a factor in our pricing decisions.
Speaker Change: Yeah.
Speaker Change: Okay, That's fair and just one last one for me in some instances.
Speaker Change: Theres been complexity and implementing tariffs do you see an opportunity there and leveraging RFID solutions or other logistics or verification solutions that you have.
Ahmed Abdullah: Okay, that's fair. Just one last one for me. In some instances, there's been complexity in implementing tariffs. Do you see an opportunity there in leveraging RFID solutions or other logistics or verification solutions that you have as the CBP tries to formulate how to apply tariffs? Is that a possible tailwind?
Speaker Change: The CBB tries to formulate.
Speaker Change: <unk> Paris.
Speaker Change: Is that a possible tailwind.
Speaker Change: All right.
Speaker Change: Okay.
Speaker Change: Back in queue. Thank you.
Geoffrey Martin: No.
Ahmed Abdullah: Okay. I'll get back in queue. Thank you.
CIBC Patel: Your next question is from <unk> Patel with CIBC capital markets.
Operator: Your next question is from Hamir Patel with CIBC Capital Markets.
Patel: Hi, good morning.
Speaker Change: Jeff for your main CCL segment, I know you said orders have been solid quarter to date, but would you expect a slower year over year level of growth from four 5% that you printed in Q1, just given just thinking about the tough 9% organic.
Hamir Patel: Hi, good morning. Geoffrey Martin, for your main CCL segment, I know you said orders have been solid quarter to date, would you expect a slower year-over-year level of growth from the 4.5% that you printed in Q1, just thinking about the tough 9% organic comps you had in Q2 a year ago?
Patel: Organic comps you had in Q2 a year ago.
Speaker Change: Well, we had a very good April.
Speaker Change:
Speaker Change: So April was I think one of the best month, we've ever had as a company. So we certainly didn't see that in April one and then as you know we have.
Geoffrey Martin: Well, we had a very good April. In fact, April was, I think, one of the best months we've ever had as a company, so we certainly didn't see that in April. As you know, we had the full impact of Easter this April. It's a very tenuous situation we're in, so we just really have to wait and see how things unfold. The order intake has been okay.
Speaker Change: The full impact of Easter in April.
Speaker Change: But it's a very tenuous situation we're in.
Speaker Change: We just really have to wait and see how things unfold, but order intake has been okay.
Speaker Change: Okay fair enough.
Speaker Change: Just wanted to ask about the M&A.
Hamir Patel: Okay, fair enough. Geoffrey, just one other thing about the M&A environment and the pipeline. Have you seen any sort of change in vendor expectations, and would you expect to be able to sustain the same pace of tuck-in M&A that you did last year in 2025?
Speaker Change: Environment and in the pipeline have you seen.
Speaker Change: Any sort of <unk>.
Speaker Change: And vendor expectations and would you expect to be able to sustain the same pace of tuck in M&A that you did last year and 25.
Speaker Change: I think we've seen some expectations in some sectors automotive.
Geoffrey Martin: I think we've seen some expectations in some sectors, automotive in particular. Given all the concerns people have about the automotive supply chain. Expectations there have certainly changed. In the CCL label space, not really. People still have memories of the la la days of a few years ago. Not many expectations have changed in that space. I wouldn't say we've noticed a particular change. We hear it's more difficult to finance private equity transactions than it was a few years ago. That's no surprise to anybody. I don't see the environment having changed a whole lot.
Speaker Change: In particular.
Speaker Change: And then just given given all the concerns people have about the automotive supply chain, so expectations, there certainly changed.
Speaker Change: In the CCL label space, not really people still have.
Memories of the law allows is a few years ago.
Speaker Change: Not many expectations have changed in that space.
Speaker Change: So I wouldn't say we've noticed in particular.
Speaker Change: Particular particular change.
Speaker Change: Here, it's more difficult to finance private equity transactions and it was.
Speaker Change: A few years ago, that's no surprise to anybody but.
Speaker Change: But I don't see the environment, having changed a whole lot.
Speaker Change: Okay Fair enough. Thanks, that's all I had I'll turn it over.
Speaker Change: Okay.
Speaker Change: Yeah.
Hamir Patel: Okay, fair enough. Thanks. That's all I had. I'll turn it over.
Speaker Change: Your next question for today is from Sean Stewart with TD Cowen.
Geoffrey Martin: Okay.
Operator: Your next question for today is from Sean Steuart with TD Cowen.
Sean Stewart: Thanks, Good morning, everyone.
Speaker Change: I have a question on the.
Speaker Change: Checkpoint organic sales growth, which slowed down this quarter, how much of that was tied to the north American MKS products tariff fallout and.
Sean Steuart: Thanks. Good morning, everyone.
Geoffrey Martin: Good morning.
Sean Steuart: Geoffrey, a question on the Checkpoint organic sales growth, which slowed down this quarter. How much of that was tied to the North American MAS products tariff fallout? Can you give us some more specifics on the mitigation initiatives you've talked about to address that particular issue?
Speaker Change: And can you give us some more specifics on the mitigation initiatives you've talked about two to address that.
Speaker Change: Particular issue.
Speaker Change: Yeah, Yeah. It was a sudden slowed calls her in Q1 it often is.
Geoffrey Martin: Yeah. It was certainly a slow quarter in Q1. It often is because the retailers move into the new year, the January sales season. The MAS business is often slow in Q1, in North America in particular. It certainly was this quarter. It was very strong in Europe. That was on some new business wins. In the apparel space, Q1 last year, we grew over 25% in apparel labeling, driven by RFID. We obviously couldn't carry on growing at that pace. It's still high single-digit growth in apparel labeling. The comps were obviously a lot more difficult given what happened Q1 last year.
Speaker Change: They they chose the retailers move into the new year, you have the January sale season.
Speaker Change: <unk> business is often slow in Q1.
Speaker Change: In North America in particular.
Anthony Rose this quarter. It was not it was very strong in Europe that was on some new business wins.
Speaker Change: And then in the apparel space.
Speaker Change: Q1 last year, we grew over 25% in the apparel labeling driven by RFID.
Speaker Change: Obviously, he couldnt carry on growing at that pace still high single digit.
Speaker Change: Growth in apparel labeling.
Speaker Change: For the call.
Speaker Change: We're obviously more difficult getting will happen Q1 last year.
Speaker Change: And the mitigation initiatives around that.
Speaker Change: The China supply.
Speaker Change: Yeah.
Sean Steuart: The mitigation initiatives around the China supply-.
Speaker Change: How long does that take to place these products.
Speaker Change: So I mean tariffs from China.
Geoffrey Martin: Yeah
Sean Steuart: how long does that take to play out?
Speaker Change: Since since Trump won.
Geoffrey Martin: These products have been tariffed from China since Trump won, since the first era of Trump, and continued throughout the Biden era. We have been making some plans to move some of the production to other parts of the world for some time. We're accelerating those now as we speak. We import around CAD 5 million or CAD 6 million a month, just to give you a cost from plants and sub-suppliers in China. That would be subject to the premium tariffs you've all read about from China, just to give you a frame of reference on it.
Speaker Change: The first layer of Trumpf and continued throughout the Biogen area. So we have been making some plans to move some of their production to the other.
Speaker Change: Other parts of the world for some time.
Speaker Change: We are accelerating those now as we speak.
Paul: Paul so around five or $6 million a month just to give you a.
Paul: Costs from from from.
Paul: Plants and sub suppliers.
Paul: In China.
Paul: That would be subject to the sort of the premium tariffs you've all read about from China, just to give you a <unk>.
Paul: Frame of reference on it.
Paul: Okay. Thanks for that.
Speaker Change: A question for Sean at the seasonal increase in working cap was a little larger than we would normally expect and should we just chalk that up to the broader macro environment and.
Sean Steuart: Okay, thanks for that. A question for Sean. The seasonal increase in working cap was a little larger than we would normally expect. Should we just chalk that up to the broader macro environment? How should we think about the cadence of that unwind going forward through the rest of the year?
Speaker Change: How should we think about the cadence of that unwind going forward through the rest of the year.
Speaker Change: I don't think there'll be any changes just a little bit bigger this year.
Speaker Change: B the macro circumstances, but it will unwind as we as we go through the year and into the fourth quarter will will cover working capital and he's got a bit of a tariff buildup that too so.
Sean Washchuk: I don't think there'll be any changes, just a little bit bigger this year. Could be the macro circumstances, it will unwind as we go through the year and into Q4, we'll cull the working capital.
Speaker Change: Okay.
Speaker Change: In total inventory build to avoid tariffs.
Geoffrey Martin: You've got a bit of tariff build up there, too.
Sean Steuart: Yep
Understood.
Geoffrey Martin: of internal inventory build to avoid tariffs.
Speaker Change: Okay. That's all I have for now thanks, guys.
Speaker Change: Thank you.
Sean Steuart: Understood. Okay, that's all I have for now. Thanks, guys.
Speaker Change: Your next question is from Stephen Macleod with BMO capital markets.
Geoffrey Martin: Thank you.
Operator: Your next question is from Stephen MacLeod with BMO Capital Markets.
Stephen Macleod: Thank you good morning, guys.
Speaker Change: Yes.
Speaker Change: Hey, Jeff.
Stephen MacLeod: Thank you. Good morning, guys.
Speaker Change: Just on the outlook on the outlook slide is this.
Geoffrey Martin: Hey, Steve.
Speaker Change: Relates particularly to the CCL segment in past quarters, you've had kind of the breakdown of some of the moving parts on the components in our Ccs segment I'm. Just wondering if you can provide that color for the Q2 outlook.
Stephen MacLeod: Hey, Geoffrey. Just on the outlook slide as it relates particularly to the CCL segment. In past quarters, you've had kind of the breakdown of some of the moving parts on the components in the CCL segment. I was just wondering if you can provide that color for the Q2 outlook.
Speaker Change: Well, it's I wouldn't say it's changed from Q1.
Speaker Change: The one business that has changed in terms of outlook.
Geoffrey Martin: Well, I wouldn't say it's changed from Q1. The one business that has changed in terms of outlook from Q1 is CCL Secure, because we've got a full order book now for the balance of the year. That's one change. I think Home and Personal Care and CCL Design are still both strong. Very strong, actually. The healthcare business has picked up. That's modestly better, and we expect that to continue in Q2. Food and Beverage was slightly down and slightly up in sales in Q1, down in profit, and I expect that'll be the same sort of picture in Q2.
Speaker Change: From Q1 is CCL secure because we've got a full order book now.
Speaker Change: The balance of the year.
Speaker Change: So that's one change that I think home and personal care CTO Kazan.
Speaker Change: It's still.
Speaker Change: Strong very strong actually.
Speaker Change: The our health care businesses picked talk that's modestly Bachelor and we expect that to continue in Q2.
Speaker Change: Food and beverage was slightly down slightly up in sales in Q1s that down in profit.
Speaker Change: And I expect that'll be the same and then.
Speaker Change: Same sort of picture in Q2.
Speaker Change: Okay. That's that's.
Speaker Change: That's helpful. Thank you.
Speaker Change: And then just on the <unk> business I was just wondering if you could give a little bit color around.
Stephen MacLeod: Okay. That's helpful. Thank you. Then just on the ALS business, I was just wondering if you could give a little bit color around the RFID growth within that business. Secondly, for the new plant you have in Vietnam, are you seeing increased demand from apparel suppliers, apparel manufacturers exiting China for that? Are you seeing increased demand level because of that phenomenon?
Speaker Change: The RFID growth within that business and then secondly.
Speaker Change: For the new plant you have in Vietnam are you seeing increased demand from.
Speaker Change: Apparel suppliers apparel manufacturers exiting China for that.
Speaker Change: These increased demand level because of that phenomenon.
Speaker Change: Well you have to bear in mind.
Speaker Change: Our apparel labeling businesses.
Geoffrey Martin: Well, you have to bear in mind, our apparel labeling business is heavily focused on European and Australian retailers. They are not subject to the tariff issues that obviously US retailers are. Our position in the US is pretty small and other people dominate the market in the US, so our biggest play is in Europe. I can tell you there's certainly a big move of many US retailers looking at changing their sourcing policies, particularly in Asia, and not easy to do because of the availability of components in some of these other countries. We're very well-placed to pick up share in those circumstances because we're in all the countries where you would likely want to go. Bangladesh, Vietnam, in particular, being probably number one and number two on the list, where if you didn't want to source in China, where else would you go?
Speaker Change: Heavily focused on the European and Australian retailers.
Speaker Change: So they're not subject to the tariff issues that Oh lets say you U S. REIT to play this out.
Speaker Change: So our position in the U S. It's pretty small.
Speaker Change: And all the other people who dominate the market in the U S.
Speaker Change: Our biggest players as it is in Europe.
Speaker Change: But I can tell you that there's certainly a big mover.
Speaker Change: Many U S U S free titles looking at changing the sourcing policies in.
Speaker Change: And particularly in Asia.
Speaker Change: And not easy to do because of the availability of components.
Speaker Change: And some of these other countries.
Speaker Change: We are very well placed to pick up share in those circumstances, because we're in all the countries, where you would likely want to go back.
Speaker Change: Bangladesh, Vietnam, and particularly being probably the number one and number two on the list, but if you didn't want to source in China, where else would you go they will probably be the two most important countries where people would look to go.
Speaker Change: We're very well placed.
Geoffrey Martin: They would probably be the two most important countries where people would look to go, and we're very well-placed.
Speaker Change: Right. Okay. That's great and then maybe just finally for Sean just on the DNA. It was a little bit higher a little bit higher step up in Q1 from Q4 and I'm just wondering if that's a new run rate.
Stephen MacLeod: Right. Okay, that's great. Then maybe just finally for Sean, just on the D&A, it was a little bit higher step up in Q1 from Q4, and I'm just wondering if that's a new run rate.
Speaker Change: It's a bit of foreign exchange and it's and it is a new run rate we added some assets come on in the fourth quarter in Q1 here. So it's roughly a new run rate.
Sean Washchuk: It's a bit of foreign exchange, and it is a new run rate. We had some assets come on in Q4 and Q1 here. It's roughly a new run rate.
Speaker Change: Right. Okay. That's great. That's helpful. Thanks, guys appreciate it.
Stephen MacLeod: Right. Okay, that's great. That's helpful. Thanks, guys, appreciate it.
Daryl Young: Your next question for today is from Daryl young with Stifel.
Speaker Change: Yes.
Operator: Your next question for today is from Daryl Young with Stifel.
Speaker Change: Hey, good morning, everyone. Just wanted to follow up a little bit on Steven's question.
Speaker Change: And maybe with respect to your facility development plans over the last 18 months to 24 months, you've had a pretty good pipeline. There are you hitting pause on new facility development or shifting the geography do you want to be and as a function of what's happening today in the tariff environment.
Daryl Young: Good morning, everyone. Just wanted to follow up a little bit on Stephen's question, maybe with respect to your facility development plans. Over the last 18 to 24 months, you've had a pretty good pipeline. Are you hitting pause on new facility development or shifting the geographies you want to be in as a function of what's happening today in the tariff environment?
Speaker Change: No no no.
Speaker Change: Uh huh.
Speaker Change: <unk> one of our plants in China.
Geoffrey Martin: No, not at all. No. We're expanding one of our plants in China. You have to bear in mind, the world doesn't begin and end in the United States. There's Europe, There's the rest of Asia, there's Australia, there's all of Latin America. We're still investing. We're rethinking some things in certain geographies based on, we may upscale a plant here, and we may downscale a plant there, but we're making decisions based on what we think the customers might do. We're certainly not pausing anything.
Speaker Change: You have to bear in mind the world doesn't begin and then you're not in the United States. This year.
Speaker Change: For.
Speaker Change: The rest of Asia, Australia, that's all of Latin America.
Speaker Change: And so we're still investing.
Speaker Change: We're rethinking some things in certain certain geographies peso, we may upscale applause here, we made downscaling, they're making decisions based on.
Speaker Change: And what do you think that customers might do.
Speaker Change: Suddenly not closing anything.
Speaker Change: Got you, Okay, and then on in terms of the CCL secure them.
Speaker Change: With the recent completion of the acquisition of your competitor in that market is there any shifting market dynamics or opportunities that might come from that or anything that we should be thinking about going forward on the money printing side.
Daryl Young: Got you. Okay. In terms of CCL Secure, with the recent completion of the acquisition of your competitor in that market, is there any shifting market dynamics or opportunities that might come from that, or anything that we should be thinking about going forward on the money printing side?
Speaker Change: Too early to tell.
Speaker Change: Okay, and then just one last one on Adobe Oh.
Geoffrey Martin: Too early to tell.
Speaker Change: And the profitability, obviously very strong on that facility rationalization, but is there any any changes in the commodity price and resins and what might be happening in that market, that's a benefit as well.
Daryl Young: Okay. Just one last one on Innovia, and the profitability, obviously very strong on the facility rationalization. Is there any changes in the commodity price and resins and what might be happening in that market that's a benefit as well?
Speaker Change: And therefore, some resins that things have come off come off.
Paul: So, but we Paul.
Geoffrey Martin: A little. Resins have come off, but we pass those along almost instantly. It doesn't really have a huge impact. The big gain in profitability, though, was in the Americas. Europe was up, but the reason for the outsized gains is really driven by North America and share gain in North America.
Paul: So it was a long almost almost instantly.
Paul: So it doesn't really have a huge huge impact.
Paul: The big gain in profitability, though both balls in the Americas. It was Europe was up.
Paul: The reason for the outsized gains is really driven by North America.
Paul: And share gain in North America.
Paul: So not an operating leverage impact in North America.
Correct.
Paul: Great. Thanks, very much for your time.
Daryl Young: An operating leverage impact in North America?
Paul: No problem.
Geoffrey Martin: Correct.
Daryl Young: Great. Thanks very much for your time.
Speaker Change: Your next question is from Arthur <unk> with RBC capital markets.
Geoffrey Martin: No problem.
Operator: Your next question is from Arun Viswanathan with RBC Capital Markets.
Arthur <unk>: Hey, good morning.
Arthur <unk>: Just maybe starting with the checkpoint segment. It sounds like you are putting facilities in China, and Mexico are doing them direct exposure to tariffs, but are you seeing any indirect impacts in that business or.
Arun Viswanathan: Hey, good morning. Just maybe starting with the Checkpoint segment. It sounds like your RFID facilities in China and Mexico don't have direct exposure to tariffs. Are you seeing any indirect impacts in that business, or are things relatively unchanged so far?
Arthur <unk>: Are things relatively unchanged so far.
Arthur <unk>: Well, so so RFID in pipe from us is largely an apparel.
Geoffrey Martin: Well, RFID impact from us is largely in apparel, and our customers in apparel labeling are largely in Europe and Australia and not subject to tariff.
Arthur <unk>: And our customers in the apparel labeling largely in Europe, and Australia are not subject to tariffs.
Arthur <unk>: That's helpful.
Arthur <unk>: And I think you quantified your tariff exposure in EMEA as within checkpoint can you maybe help quantify.
Arun Viswanathan: Got it. That's helpful. I think you quantified your tariff exposure in MAS within Checkpoint. Can you maybe help quantify your China sourcing exposure within Avery as well?
Arthur <unk>: China sourcing exposure within <unk> as well.
Arthur <unk>: Well.
Arthur <unk>: Very good question and what we don't know about day rates for our customers is it going today.
Geoffrey Martin: Well, that's a very good question, and what we don't know about Avery is what the customers are going to do. The back-to-school season is normally planned 9, 10 months in advance because we build a lot of inventory. I can tell you when the premium tariffs were announced, that caused total chaos amongst US retailers planning for their back-to-school sessions, not just with our products, but right across their entire portfolio of school bags, lunch supply boxes, and all the things you could imagine being in a Walmart aisle at back-to-school time. A lot of orders were suspended right across the board by some of these retailers.
Arthur <unk>: Back to school season is normally plan 910 months in advance.
Arthur <unk>: Because we build a lot of inventory and I can tell you when the when the premium tariffs were announced like Kohls total chaos.
Arthur <unk>: Amongst U S reset it's planning for the back to school fashions, not just with our products, but right across their entire portfolio of school bags lunch supply bulk foods, and and and all those things you could imagine.
Arthur <unk>: Being in a warm up.
Speaker Change: But back to school time, and a lot of older cars suspended right across the board by some of these retailers.
Speaker Change: And and for the season coming up it's such a show season I think many retailers are still pondering what to do about that but still have the season.
Geoffrey Martin: For the season coming up, it's such a short season, I think many retailers are still pondering what to do about that, whether to still have the season, which merchandise to stock, which price increases they can accept given the tariffs that are coming in. By far, the biggest impact on them is their own direct sourcing from Chinese suppliers, not through people like ourselves. Back to school is, frankly for us, a very big unknown this year. Our opinion is most of the big retailers are hoping and praying there'll be some tariff relief announcement that would allow them to deal with it. The problem is we're getting very near the knuckle on the timing now. We normally start shipping back to school in June.
Speaker Change: Which merchandise the stock.
Speaker Change:
Speaker Change: Price increases they can accept given given the tariffs.
Speaker Change: Coming in.
Speaker Change: And by far the biggest impact from them has their own direct sourcing from Chinese suppliers not thought about through people like ourselves.
Speaker Change: Back to school as is frankly for us a very big unknown.
Speaker Change: Sure.
Speaker Change: Our opinion is most of the big retailers are hoping and praying there will be some tariff relief.
Speaker Change: It allows them to deal with it but.
Speaker Change: The problem is we're getting very near to knock on the timing that we normally start shifting back to school in June So June July shipment.
Speaker Change: Period, then sometimes just a little bit into August, but in June and July, but two big months.
Geoffrey Martin: It's a June, July shipment period. Sometimes drifts a little bit into August, but June and July are the two big months, and they're coming up pretty soon. That's a big unknown. How big could it be? Maybe CAD 10 million in EBIT for Avery. Guessing Q2, something like that. Could be something like that.
Speaker Change: They are coming up pretty soon.
Speaker Change: So that's the big a big unknown.
Speaker Change: How big could it be maybe 10 many of the EBIT for Avery.
Speaker Change: In Q2, something like that.
Speaker Change: It could be something like that.
Speaker Change: Okay. That's helpful.
Speaker Change: And then I think within CCL design, you called out.
Arun Viswanathan: Right. That's helpful. Then I think within CCL Design, you called out slowing auto markets. I was just wondering what you're seeing globally and how you expect to navigate the current environment.
Speaker Change: Slowing auto markets.
Speaker Change: And I was just wondering what you're seeing kind of globally.
Speaker Change: How do you expect to navigate the current environment.
Speaker Change: Well, let me just suggest kind of close the thing so but definitely seeing unit volume declines.
Geoffrey Martin: Well, we just adjust our cost to suit. We're definitely seeing unit volume declines across the board in North America and Europe. You've all read what's going on with the big car producers. We just adjust our cost to suit. It's not a huge business for us, CAD 300 million or thereabouts, just to give you a frame of context. When volume goes down, we just adjust our cost to suit.
Speaker Change: Across the board in North America.
Speaker Change: Europe for a minute.
Speaker Change: You all read them once.
Speaker Change: What's the kind of one of the big car producers for.
Speaker Change: So we just start just like close to suit. So it's not a huge business for us 300 million or thereabouts, yeah right.
Speaker Change: Right frame as context.
Speaker Change: Uh huh.
Speaker Change: When when volume goes down we just adjust probably close to see.
Speaker Change: Okay, and then last question for me.
Speaker Change: Just wanted to touch on equal flow mine in Poland.
Arun Viswanathan: Okay, last question from me. Just wanted to touch on the EcoFloat line in Poland. Just wondering how that's coming online, and when you expect to hit full run rate in that facility.
Speaker Change: I'm, just wondering how thats coming online.
Speaker Change: And when do you expect to hit sort of full run rate.
Speaker Change: In that facility.
Speaker Change: Well it'll be a while before we hit full run rate, but it's there.
Speaker Change: Every every month the numbers get better.
Geoffrey Martin: Well, it'll be a while before we'll hit full run rate, but every month the numbers get better. It's solidly profitable now, and every month we're making money, but it's by no means at full capacity yet.
Speaker Change: Solid solid solid very profitable now and every month I'm, making money, but it's by no means at full capacity yet.
Speaker Change: Alright, Thats all for me. Thank you for the time.
Speaker Change: Okay.
Arun Viswanathan: All right. That's all for me. Thank you for the time.
Speaker Change: Once again, if there are any questions. Please press star one.
Geoffrey Martin: No problem.
Operator: Once again, if there are any questions, please press star one. You have a follow-up question coming from Ahmed Abdullah. Your line is live.
Speaker Change: I have a follow up question coming from Ahmed Abdullah Your line is live.
Ahmed Abdullah: Yeah, Hi, this one is for Sean.
Speaker Change: Zoom facilities up for sale and it's anticipated to happen in 2025.
Ahmed Abdullah: Yeah. Hi. This one's for Sean. The Belgium facility is up for sale, and it's anticipated to happen in 2025. Should we expect an EBITDA bump in one of the quarters, like what happened in Q3 2022 when you sold excess China real estate?
Speaker Change: We expect an EBITDA bump and one of the quarters like what happened in the third quarter of 'twenty two when you sold access China real estate.
Speaker Change: Our expectation is that facility will be so we'll probably in the next 60 to 90 days.
Geoffrey Martin: Our expectation is that facility will be sold probably in the next 60 to 90 days with no material impact to EBITDA.
Speaker Change: With.
Speaker Change: No material impact to EBITDA.
Speaker Change: Okay. That's it for me thank you very much.
Ahmed Abdullah: 60 to 90. Okay, that's it for me. Thank you very much.
Speaker Change: We have reached the end of our question and answer session and I will now turn the call over to Jeff for closing remarks.
Operator: We have reached the end of the question and answer session, and I will now turn the call over to Geoffrey for closing remarks.
Jeff: Okay, everybody. Thank you for joining us for schools and we look forward to talking to you in the summer.
Geoffrey Martin: Okay, everybody, thank you for joining us this quarter. We look forward to talking to you in the summer.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Jeff: Yeah.