CCL Industries Inc Q4 2024 Earnings Call Transcript

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

Question: Ahmed Abdullah - National Bank of Canada - Analyst : 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 impact is EBITDA this quarter?

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Okay, perfect. And should we factor in a similar run rate in the first quarter of 2025?

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Okay, thank you for that. And so we've been seeing some industries that operate across the US 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Okay. Okay, well, thank you for that. I'll queue up again. Thank you.

Question: Nikolai Goroupitch - CIBC Capital Markets - Analyst : Hi, I hope you're doing well. One of your competitors on the RFID side had recently scaled back its growth outlook due to volume headwinds with the large logistics customer. Do you see any sort of similar headwinds in your business?

Question: Nikolai Goroupitch - CIBC Capital Markets - Analyst : Okay, great, thanks. And then, considering the year-over-year decline in checkpoint EBITDA margins for Q4, do you have any expectations where margins can stabilize in the segment going forward and what factors?

Question: Nikolai Goroupitch - CIBC Capital Markets - Analyst : Great, thank you, that's everything for me. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Sean Stewart - TD Cowen - Analyst : Thank you. Good morning. Wanted to follow up on the RFID industry trends and there was mention made of Avery Dennison seeing some slowdown in their growth path. You're much earlier on the growth curve than they are curious on your perspective on the runway for further market share gains for CCL and RFID applications. And further context on roll out into non apparel applications as you moving forward.

Question: Sean Stewart - TD Cowen - Analyst : Okay, thanks for that, Geoff, and just one other question the qualitative commentary with respect to the Q1 outlook. It sounds constructive. And there was a lot of reference to various segments having a solid start to the year. Should we read that as, ongoing clear organic growth for a number of these segments? Is it a solid start relative to typical seasonal trends just trying to qualify the reference point you're talking about with that commentary?

Question: Sean Stewart - TD Cowen - Analyst : OkOkay, thanks for that Geoff that's all I have. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Jonathan Goldman - Deutsche Bank - Analyst : Hi, good morning, guys, and thanks for taking my questions. Geoff, in the outlook you noted so far in Q1 sales orders are stable. I just want to clarify, does that refer to year on year or quarter on quarter and is that across all segments?

Question: Jonathan Goldman - Deutsche Bank - Analyst : Whatever was printed in the press release, I believe.

Question: Jonathan Goldman - Deutsche Bank - Analyst : No, that's fair, and I guess speaking of your customers, like we've been reading about CPG companies increasing advertising and marketing spent to support demand. Maybe it's too early if you've seen any of that impact your volumes. But what's the typical lag between when they start increasing the -- ?

Question: Jonathan Goldman - Deutsche Bank - Analyst : 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?

Question: Jonathan Goldman - Deutsche Bank - Analyst : Can you quantify the checkpoint impact?

Question: Jonathan Goldman - Deutsche Bank - Analyst : Okay, fair enough. Thank you.

Question: Daryl Young - Stifel Nicolaus - Analyst : Hey, good morning, everyone. I just wanted to follow up a little bit on the tariff question. Are you anticipating any pull forward of demand or changes to your order flow as companies maybe build safety stock in advance of some of the uncertainties that are out there? Or have you seen that at all to start the year?

Question: Daryl Young - Stifel Nicolaus - Analyst : Okay. And then with respect to CCL Design, can you just remind us of the relative profitability of automotive and electronics. And whether the slowdown in auto could be a margin headwind for the broader CCL segment or is it too small to move the needle?

Question: Daryl Young - Stifel Nicolaus - Analyst : And then going forward as we move into 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 volume weighted. Is there any impact to operating leverage and like I said differently, can you sustain the margins you've seen across '24?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Hey, good morning everyone. One of your suppliers is called the deflationary 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 today?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Deflation.

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Got it. 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 in terms of like cross-border exposure or -- ?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Got it. And then just had a question on buybacks. Obviously you're active once again this quarter. But just given where the share prices today, do you see any potential for accelerating the pace of buybacks going forward?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : I'll just try to sneak one last one in here. On M&A, can you maybe just share what your pipeline looks like today and what you're hearing from potential acquisition candidates?

Question: Arthur Nagorny - RBC Capital Markets - Analyst : Perfect, that's all for me. Thank you.

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Yeah, thank you. Just a follow up on that M&A question. Are you or holding off, on finding anything given the macro uncertainty?

Question: Jonathan Goldman - Deutsche Bank - Analyst : Not a factor at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Okay. And just one last one on Innovia, it's nice to see the top line growth continuing. Where are we in terms of achieving the operational savings that we're being targeted and did you see any of that in this quarter?

Question: Ahmed Abdullah - National Bank of Canada - Analyst : Okay. Thank you and that's it for me.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Thank you. Good morning, guys. Just a few questions. Morning, Geoff. I had a little bit of trouble connecting this morning, so just wanted to get a few questions in. Appreciate the colors so far. Just with respect to Checkpoint, I know you know you called out sort of the turkey FX being a big impact. Was that most of the -- would that account for most of the margin decline on a year-over-year basis?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's helpful, and I guess as you swing into 2025. It sounds like the outlook is sort of mixed on the checkpoint business. Are you still seeing mix as a negative headwind?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's helpful. And then maybe just turning to Innovia. You've currently called out 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 2025?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, great. And then maybe just finally, you highlighted on your investment highlight slide an investment in Vietnam. It doesn't look material if it's a single plant. But just wondering if you can give a little bit of color around kind of the investment and what you expect to -- ?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Of course. Okay, that's great. Thanks, Geoff. I appreciate the color.

Question: Michael Glen - Raymond James - Analyst : Hey, good morning, Geoff. When we go back to your outlook for Q4, it feels like it was more conservative than how results came in. I'm just trying to understand how things differed versus expectations in the quarter on your side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Michael Glen - Raymond James - Analyst : And were there any segments in CCL that you would say like the home and personal care you're highlighting the strengths there. Was that a surprise versus expectations in Q4?

Question: Michael Glen - Raymond James - Analyst : 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?

Question: Michael Glen - Raymond James - Analyst : Okay, and then finally on my side, just overall, so $485 million of CapEx this year and you know a fairly heavy level or high level last year. So are you able to indicate what type of manufacturing square footage growth you're seeing with that capital investment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 12:30PM, CCLb.TO - Q4 2024 CCL Industries Inc Earnings Call

Question: Michael Glen - Raymond James - Analyst : Okay, thank you for taking the questions.