CCL Industries Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Hamir Patel - CIBC Capital Markets - Analyst : Sorry, can you hear me ?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Good morning. Hi, guys. Could you comment on -- you pointed to start-up costs weighing on the in the CCL segment would make it challenging to match prior year profitability. Could you quantify what that headwind would be from start-up costs? And should we expect that to persist into Q1 as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:00PM, CCLb.TO - Q3 2024 CCL Industries Inc Earnings Call

Question: Hamir Patel - CIBC Capital Markets - Analyst : Fair enough, Geoff. Are you able to comment on how pricing is faring across the different segments?

Question: Hamir Patel - CIBC Capital Markets - Analyst : Great. Thanks, Geoff. That's all I had. I'll turn it over.

Question: Ahmed Abdullah - National Bank Financial - Analyst : Yeah. Good morning. Thanks for taking my question. Given the one e month visibility you have at the CCL Label segment, are you sitting at a very different order level or backlog versus last year? Or is this cost in more to do with the last weeks of December?

Question: Ahmed Abdullah - National Bank Financial - Analyst : Okay. That's fair. And taking -- I mean, the outlook commentary for the whole CCL segment, do you still expect to see EBITDA growth year-over-year for the segment?

Question: Ahmed Abdullah - National Bank Financial - Analyst : Okay. That's fair. And just on the Innovia operational savings. I see the margin definitely improved year-over-year. Is there any of these savings that have trickled in into the -- or is this more a story of 4Q and into '25?

Question: Ahmed Abdullah - National Bank Financial - Analyst : Okay. All right. Thank you. I'll queue back up.

Question: Sean Steuart - TD Cowen - Analyst : Thanks. Good morning, everyone. Geoff, I'm wondering if you can provide some context on perceived exposure in the event that Trump imposes a blanket US import tax, how that could affect your business, whether it's with respect to finished product or procuring feedstock?

Question: Sean Steuart - TD Cowen - Analyst : Okay. Thanks for the detail. And then within the CCL segment, you noted Latin American organic growth in the high single-digit range, which I think is a little bit of a deceleration from what you've seen in recent quarters. And hoping you could provide perspective on is that just lapping difficult comps, where do you see Latin American organic growth normalizing for the business.

Question: Sean Steuart - TD Cowen - Analyst : Okay. That's all I have for right now. Thanks very much.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Thank you. Good morning, guys. Just wanted to follow up -- ask a couple of things. Just on the Checkpoint business. Can you talk a little bit about -- you talked about the ALS business up 30%. Can you talk about the breakdown between the drivers of that number on RFID versus retailer inventory normalization?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Yes. And are you seeing any moderation in those -- in the RFID growth rates as you sort of turn the page into Q4 in 2025?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Yeah. Okay. That's great. And would you sort of characterize it? You already have relationships with all the -- a lot of the large label buyers around the world. So is it fairly easy or simple to kind of embed RFID into those relationships as a conduit for incremental sales?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Right. Okay. That's great color. Thanks, Geoff. I appreciate it. Just turning to the buyback. Obviously, very active this quarter with $100 million of deployment. Can you talk about sort of how you're thinking about the now and heading into Q4?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay. Great. Thanks, Geoff. And then maybe just finally, in terms of other capital deployment, -- can you talk a little bit about what you're seeing on the consolidation or M&A front?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : That's great. Thanks so much, Geoff. I appreciate it.

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Hey. Good morning. Just wanted to go back to RFID. I believe your Mexico facility came online in Q2 -- and just wondering how that's ramping up, I guess, relative to your initial expectations?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : And then just one more on RFID. I think you called out some customer wins in the quarter. Is there anything in particular that you would call out there?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : All right. And then last one for me. It sounds like the Pacman acquisition is progressing ahead of expectations in the first fully consolidated quarter here. What trends are you seeing in the Middle East?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Perfect. Thanks, Geoff.

Question: Michael Glen - Raymond James - Analyst : Hey. Good morning. Jeff, I just want to circle back to RFID. So if apparel label is comping 30%, but just to make sure I understand that correctly, like RFID would be a much smaller portion of that business overall. So it's comping meaningfully higher. Is that the right way to think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:00PM, CCLb.TO - Q3 2024 CCL Industries Inc Earnings Call

Question: Michael Glen - Raymond James - Analyst :

Question: Michael Glen - Raymond James - Analyst : Okay. And I just want to circle back on the Trump question. Can you just remind us about what your China export business looks like and maybe give some indication of some of the steps you've taken over the past, call it, eight years to mitigate any risk from China tariffs or China supply chain issues?

Question: Michael Glen - Raymond James - Analyst : Okay. And finally for me. So North America organic does appear to have slowed sequentially. I think it was high single digit in 2Q and now it's low single digit in 3Q. Was there anything specific that you could call out on North America just comps.

Question: Michael Glen - Raymond James - Analyst : Just the comp. Okay. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 14, 2024 / 1:00PM, CCLb.TO - Q3 2024 CCL Industries Inc Earnings Call

Question: Michael Glen - Raymond James - Analyst : Thank you for the questions.

Question: Daryl Young - Stifel Canada - Analyst : Hey. Good morning, everyone. Just one higher-level question from me around your approach to M&A. So historically, you've shied away from competitive processes and been more long-term relationship focused. But given the elevated monetization environment for the private equity landscape, is there an argument for maybe adapting to participate in some of these processes as some of these assets come to light? Just given how active private equity has been in your space in the last decade?

Question: Daryl Young - Stifel Canada - Analyst : That's good color. Thank you very much, Geoff.

Question: David McFadgen - Cormark Securities Inc. - Analyst : Great. Couple of questions. Just circling back on the Checkpoint business. So in your presentation, you talked about the fact that you've had ALS going up over 30%, driven by RFID wins. So when you say RFID wins, does that mean new clients? Or does that mean converting existing clients to RFID?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. I don't know if you also on this one, but like what percentage of your existing clients have adopted RFID and then I'm just wondering what the opportunity is just with your existing clients today.

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. And that business within Checkpoints, it's about a $250 million business today, right?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. And then just a question on CCL Secure. So you said that was down marketing in the quarter, just -- I think you called out just strong comps, but are there any other factors that caused it to be down in the quarter?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. Great. Thanks.