Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you remind us what's going on with the Intelligent Label (IL) guidance adjustment?
A: Deon M. Stander, President and CEO, explained that the adjustment in IL guidance was due to slightly lower volumes in logistics from lower parcel shipments. However, there was growth in apparel IL ahead of the base business, driven by strong new programs like Inditex. The recovery of the apparel business in the second half is expected to be a key driver for IL growth.
Q: Were the Solutions margins as expected for the first quarter?
A: Gregory S. Lovins, Senior VP & CFO, noted that Solutions margins decreased sequentially due to seasonality in apparel and logistics, which was expected. Employee cost increases also contributed to this. Margins are anticipated to improve in the second quarter due to higher volume and additional productivity initiatives.
Q: What supports the confidence in the normalization of the apparel market by mid-2024?
A: Deon M. Stander mentioned slight improvements in apparel import rates and comfortable inventory levels among customers as indicators that support the expectation of normalization by mid-year.
Q: What was the impact of pricing on Materials in the first quarter, and how will it evolve?
A: Gregory S. Lovins explained that pricing was down mid- to high single digits year-over-year due to deflation. The largest year-over-year pricing headwind was in Q1, with expectations for pricing to increase sequentially into Q2 due to targeted pricing actions.
Q: How does Avery Dennison handle inflation, specifically the rising paper costs in Europe?
A: Gregory S. Lovins stated that it typically takes about a quarter to implement pricing adjustments in response to inflation. The company expects to manage the current inflation in paper costs through product reengineering and pricing actions.
Q: Can you provide insights into the cadence of IL deployments for 2024?
A: Deon M. Stander highlighted that all programs currently in rollout or expansion are expected to continue, with efforts focused on moving pilots in food and logistics to adoption quicker than planned. The technology for IL is proven, and the company is working to demonstrate the benefits across various industries to encourage broader adoption.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
