Okay. Well, thank you, and good morning, everyone. Thank you for joining us for today's call. My name is Stephen MacLeod, and I cover the Canadian packaging sector here at BMO Capital Markets. And with me for today's virtual fireside chat is Geoffrey Martin, the CEO of CCL Industries. Thank you to Jeff for taking his time to provide an update for the business. I appreciate and look forward to our chat. We did our first fireside chat like this last June, so you know, really only three months into the pandemic. The landscape has certainly shifted quite materially since then. We look forward to hearing kind of what your views are, effectively a year into the pandemic here where we sit now. Before we get started, we have a good handful of people online, and I just wanted to let you know that anyone who's listening via webcast, there is an option to submit questions if there's anything that we don't cover in the Q&A, and then I can relay these questions anonymously. Let's get started. Jeff, I'll hand it over to you. I know you wanted to give some introductory remarks before we head into the Q&A. Yeah. Thank you, Stephen, and good morning, everybody. We've been doing these intra-quarter updates for investors. Really, the first one was last February in the middle of the crisis when it first started, right in the middle of it, and we've been doing them each quarter ever since. We're now lapping the one we did this time last year. This will be our last intra-quarter update, and then we'll be reverting to our normal quarter end investor calls and some public conferences which we attend. Just wanted to let everyone know that before we begin and hand it back to you, Stephen, for whatever questions you want to ask. Great. Okay. Thanks, Jeff. I just want to start with some high- level questions and then drill down into some of the segment specific trends. Sure talk about maybe the resin pricing backdrop and capital allocation. Just in terms of the higher level, you know, the business has really very definitely proved out its resiliency through the pandemic. Despite the steep drop-in global activity during the depths of last spring's lockdown, organic growth was only down 12% and then it's steadily recovered. Just as you think back over the last year, what were the biggest surprises for you as to how the business performed and how your people responded? Well, the biggest surprise, I think to everybody in our sector was the movement of GDP dollars from travel and entertainment into buying goods for the home. That generated outsized packaging demand in certain parts of the food and beverage space and of course, sanitizers and disinfectants. That was the big surprise in the pandemic. I think, you know, our Avery and Checkpoint business were the two that were deeply impacted, and that wasn't a surprise, you know. They're both related to what's going on at retail globally and also, home working versus office working. Not a big surprise to us that those two are the most impacted, but biggest upside really was that sort of surge in demand for packaged goods for the home. You know, you've talked in the past about, and even coming into this recession and the pandemic, that, you know, the business is really GDP minus coming in and GDP plus coming out. You know, as you look forward into 2021, do you expect to see that GDP plus type growth continuing in the recovery this time around? Yeah. Well, I think 2022 will be the acid test year, to be honest with you, because 2021 has got such weird comparatives. We're gonna have a very easy first half comparison. We had a big recovery in the second half, as you know. It's gonna be a year of two halves, the first half and a second half, with the first half comps being very easy and the second half being a good bit more difficult. I think really till we get into 2022, and we hope this thing will finally come to an end and we'll see what kind of world we're in. I think the year of 2021 will be lots of ups and downs like 2020 was. Okay. When you think back over the last year in terms of the company's COVID-19 response, all your plants remained open through the pandemic. You run a very decentralized business. As you think about and talk to your plant level managers around the globe, are they sensing a return to normalcy in most pockets of the world right now? Well, all of our plants are operating now and everyone's attending work, and that's in every country in the world really. It's been that way for quite some time. We only had a few interruptions in the second quarter of last year. But if you go to the various countries and ask, you know, how normal is life, you know, the places in the world that are normal, China is obviously number one on the list. Australia probably would be number two. You know, in Europe, there's still quite some disquiet about rising case numbers in Germany, rising case numbers in other countries in Europe. You see vaccine problems, which you've read all about in the newspapers. Europe is still, I think, somewhat behind the rest of the world in that regard. I think Latin America also, case numbers rising, although the economies there are pretty much wide open. It's a bit of a patchwork out there. In our operations, everything is operating pretty much normally. Okay. Great. Competitive landscape question for you. You know, you began making adjustments to the business proactively. Mm You know, if you go back even 14, 15 months from now, 18 months, in anticipation of economic weakness, of course, not knowing that there was a pandemic on the doorstep. You know, the business really has proven out its resilience. You know, in light of this sort of last year, how have your competitors fared through the pandemic? Are there any notable areas of market share gains or new customer wins? Well, we always have new customer wins on the margin. I don't think that the landscape has really changed a whole lot in the pandemic. I think the trends that we see are industry trends. People we compete with in the Avery and Checkpoint space have suffered like we did. People we compete with in the packaged goods space have prospered like we did. I haven't seen real change in the competitive landscape. I do think there will be more, you know, probably the big mega trend we see is the global trading situation. The movement of goods around the world has got more difficult. Probably some movement towards more regional sourcing versus global sourcing in some industries. I wouldn't know, that's maybe not a competitive trend, but I think is a trend. Competitive-wise, I haven't seen a whole lot of change in our landscape. Right. Would a more regional sourcing business model, presumably that would benefit you on the label side at least? Well, we're well positioned for that. You know, we're everywhere our customers are, so it's their behavior that'll be driving that. Where that move occurs, we'll be in a good place to capitalize it. Yeah. Okay, great. Okay, well, that's great. Thank you. Then I wanted to now just talk about each segment. Sure. Maybe starting with the CCL segment, you're coming off a very strong Q4 with 7.4% organic growth, the highest level I think you've reported since 2018. Are you still seeing a strong start to 2021 so far? Is the year likely to play out as you've expected with, you know, a stronger first half and tougher comps in the back half? Yeah, yeah. The CCL segment space is up about 5% as reported for the first two months. We'll see what March brings. March is a pretty big month, so it may. Things may improve beyond that in Q1. That's an as-reported number, not an organic number. The year started off pretty solidly. I think probably the change we've seen is the sanitizer and disinfectant boom is sort of over. You know, as the vaccination rollout has occurred and as people have stopped the panic buying, we saw this time last year of some of those areas. I think in the home and personal care space, we've seen some softening of demand in those product categories without yet seeing a recovery in some of the things that have been pandemic driven. That's probably the one area of softness we see in the first quarter. All the other spaces we're in are all rising, in some cases quite rapidly. Yeah. Okay. Your strength in Q4 was pretty broad-based. I just wanted to dig into each of the various end markets. Yeah. Yeah. Yeah. Yeah. Maybe starting with them, historically, you know, what you may call core label businesses, home and personal care, healthcare and specialty, food and beverage. Yeah. That might be an unfair way to characterize it, but maybe starting with the home and personal care business, can you give some color on, you know, how the label business labels has trended versus aerosols and tubes, and maybe say, maybe starting on the aerosol side? Yeah. Well, the label business has certainly performed better than our tube and aerosol business in Q1, 'cause the comps this time last year were pretty much unaffected. We still got some trailing demand issues in aerosols and tubes relative to travel retail demand. Small sized tubes, small sized aerosols, sun care products, things like that. You know, the demand is still. It is improving quite rapidly. I expect the comps on those two product lines will be tougher in Q1 than they will be for the rest of the year. The label business is still solid, you know, with that one caveat I gave about the sanitizer and disinfectant boom having normalized, but not come to an end, but it's just normalizing. You know, those product lines will just return to their normal places in the HPC space. Right. Okay. On the aerosol side, if I recall correctly, aerosol and tubes is roughly 40% of HPC and labels are 60%. That's right. That's right. Yeah. That's right. Within the aerosols and tubes, you talked about specialty retail, which I recall is 25% of the overall business. Have you begun to see that sort of pick back up as travel has opened up and economies have opened? Only a bit. Yeah. You know, the order intake is good, but the shipment. I think there's a lot of optimism about the summer. The shipments, you know, we're not in the season yet where we'd be shipping that stuff. You know, I expect Q2 to be a lot better than Q1 in those categories, you know, as retailers get more confidence in demand levels. It's improved a bit, and the order intake has been better than the shipments because they're placing orders for those summer season related products now. We'll have to wait and see what the summer brings. The optimism in the order intake would indicate it'll be better than it certainly was this time last year, a lot better. Okay. Turning to labels within home and personal care. Mm-hmm. You talked about how things have certainly normalized on the. Mm-hmm Sanitation side. You know, profitability came down a little bit in Q4 on the overall business, on the CCL Container build-out. Can you talk a little bit about where you are in that capacity expansion and whether this has continued to be a drag? I think it'd be a drag in Q1, but we'd expect it to improve markedly in the three remaining quarters of the year. I think it'll still be a bit of a drag in Q1, but I'd expect things to improve significantly as we go through the next three quarters. Yeah. Okay, great. Okay, well, maybe turning to the healthcare and specialty side. Mm-hmm. You saw sales and profitability growth in Q4 on pandemic demand. We actually, speaking of which, have a question that just came in on the line specific to this segment. Do you deal with any of the COVID-19 vaccine makers or providers? And is that expected to provide any benefit to the healthcare specialty business? Yes, we do. We are involved in some of the vaccines, but I wouldn't say the labels we're making in that area are pretty small. Those vials are not very big. There's lots of them, but it isn't a material factor in our situation. Yes, we are involved in both vaccines and supplies for testing equipment. Okay. Then maybe outside of the vaccines, can you talk about some of the drivers of demand in this business through Q4 and maybe into Q1? You saw elevated demand around the pandemic. Has that business also begun to normalize back to historical levels? So far that seems to be holding up well. Last year we saw in Q2 a real big boom in over-the-counter medicines. As we get into the second quarter, I think that probably will change a bit. Q1 is still more or less the same trends we saw this time for most of last year. Whether that will continue in Q2 or not, you know, as people's confidence with vaccines remains to be seen. We've still seen solid growth in lawn and garden chemicals, which is another area where we had a big boom from the pandemic last year. So far, demand in that space continues to remain strong. Whether it will be as strong as last year once we get into the summer, the people have more choices to spend their money remains to be seen. Right. Can you just remind us of the breakdown in the healthcare and specialty business between what's sort of core healthcare versus specialty, i.e., lawn and garden? Well, specialty for us is really, I mean, it's really ag chem and lawn and garden. More ag chem in Europe, more lawn and garden in the U.S. Our European businesses are more chemicals for fertilizers for farmers. In the U.S., it's more heavily lawn and garden, consumer driven. It's a chemical industry, basically. Right. What's the split between healthcare versus ag chem, lawn and garden? What do you mean what's the split? The revenue split. We don't give that information out. Okay. Maybe moving to the food and beverage business. You know, you saw some- Yeah, go. ... Q4 sales growth on sleeves and label demand. Can you talk about how that business has trended into Q1 and where you've seen maybe pockets of strength and weakness? Yeah. We've seen the recovery that started in Q4 continue in Q1. The comps are, of course, easier than they were this time last year, so it's not expected that we're doing better there than we were in Q1 last year. The return of some level of on-premises demand, particularly in North America, is encouraging. We'd expect the trends in this business to be very good comparatively compared to last year, where we had particularly the mineral water category, but also beer and wine and spirits were impacted by the pandemic, especially outside the U.S. Mm-hmm. Okay. You saw full-year profits down year-over-year in this business, largely due to on-premises and travel-related demand. Mm-hmm. Have you seen this pick up with on-premise openings? Yeah. They were only down a little last year. They're only down slightly and they'll be up meaningfully this year. We'll have a big bounce back year in food and beverage for sure. Yeah. Demand driven and also, just the new business wins and other things going on in the market. I think we're gonna have a good year in that space this year. Oh, okay. Sleeves is a segment of this market that's had outsized growth. Yeah ... over the last few years. What's driving that secular demand for sleeves, and is there any end in sight? Well, it's been heavily driven by North America and, well, the Americas really. I mean, North America, Mexico, and Brazil. That's been the growth driver. Europe has been more steady Eddie, but I think it's more share gains than end use drivers. The reasons to use sleeves haven't changed. People like the 360-degree graphic look. They like the presentation of the package. It allows them to premiumize products fairly easily at low cost. I don't think those mega trends have gone away, and we'll return with gusto once this industry normalizes. Okay. The trend as I recall has been stronger for sleeve demand in places like Asia and Europe. You're seeing that trend becoming more popular in places like North America? Well, I wouldn't say we've seen it more popular. I think we've just gained a lot of shares in the U.S. I think you know, we're the market leader in Europe. We weren't the market leader in the U.S. We're heading towards being that as we speak, but I think in the U.S. in particular, we've seen quite a bit of share gain. Okay, great. Maybe moving on to the Design and Secure business. Sure. On design, automotive is 50% of the business, drove a big rebound in Q4. Are you seeing this recovery continue into Q1? Yes, we are. Automotive is up, and the demand for IT peripherals hasn't gone away. The first two months of the year were up over 20% at CCL Design. So, that's the strongest of our businesses right now, both top line and bottom line, driven by a recovering automotive industry and continuing demand for IT peripherals. I think you have to remember on the IT side, this time last year, we were in the middle of the China shutdown in Q1. So, the Q1 comps for us are very easy in this space because China was really closed for, you know, from almost the whole quarter last year. So, the comps in this thing are really quite easy. Automotive also began to shut down in March last year, so this year we got the complete reverse. We are seeing some issues in automotive. The newspapers are full of all this stuff about chip demand and availability of supplies and impeding automotive OEMs' ability to make enough cars, and we are seeing some impact of that. Even given that, we're still seeing solid growth in the automotive space and significant increases in profits. Okay, great. When you think about the automotive business, are you seeing any secular tailwinds or opportunities from, you know, all the investment going into EV and different components that are going into cars? No, I think that's a good trend for us because the products we have in the IT space are also relevant for those electric vehicles. We're, you know, Switzerland on electric or conventional drive. Yeah. We have products for both. You know, I think as electric cars gain more and more traction, the need to customize them to differentiate is gonna become more and more of a factor. I think making cars look sexier is gonna become a bigger and bigger issue because the performance from one e-car to another car isn't gonna really be that noticeable in terms of its difference. How the car looks and feels when you're in it and outside it's gonna be a big factor. You know, just speaking of components. The design business has often, I think, benefited in the past from less metal components being used in electronics. Is that a trend that you're still seeing? You know, less rivets and things like that, more towards labels or Sure, yeah. I mean, nobody wants public enemy number one if you're an automotive supplier, it screws, nuts, and bolts. You know, the automotive industry loves adhesive fastening systems that can be applied by robots. But we see many opportunities to grow in both of those spaces. Automotive will always be a cyclical business, always has been, always will be, whereas the electronic space is more product cyclical. Depending on where we are with the product life cycle, you know, business is either better or worse down to that. The business, both arms of it are a bit more cyclical, but it's still what we're seeing in that space is very encouraging to us. Great. CCL Design has been and continues to be a key focus for M&A, I believe. Sure. Where do you see the biggest opportunities there? Well, more and more of what we're doing, just more of the same. Mm-hmm. You know, building out our footprint a little bit around the world. You know, we're somewhat Asia-centric in the electronics industry, so building our footprint out in other parts of the world will be important. I do think there'll be some migration, not as much as people surmise out of China, but it's probably not gonna go very far in Asia, maybe go all the way to Vietnam from China. You know, Mexico will become an important country. Brazil will become an important country. Parts of Europe will become more important than they are today in electronic assembly. I think we'll want to build our footprint out and our nuts-and-bolts product line capability to broaden the offering we have for the customers. We're very encouraged by what's happened so far, and we think there's lots of room to grow in this space, both organically and by M&A. Okay. When you talk about complementary products, and I know when we've been at Labelexpo in the past, you know, there have been, you know, decorative technologies. Are those things that would fit into the CCL Design bucket? Not really. No, I don't think you'll find much at the CCL Design or Labelexpo. It's the products are much more technical, more performance driven. They use all kinds of different converting equipment, that's broadly sourced from the mechanical engineering industry. It's a very different business from our core label business. We're primary in adhesive technology in that space, and that's a big factor in our performance. The kind of converting we do is rather different from what we do at CCL Label. There's a little bit of overlap where the products are packaging related, but a lot of the things we do in that industry are more inside the phone or inside the car and are much more performance driven. Okay. Yeah. Great. Okay. Maybe finishing off the CCL segment with the CCL Secure business. Mm. Again, coming off a good Q4. You've talked in the past about new note issuances versus replenishments. Have you seen any change in demand for those two drivers. No, we haven't large countries. I'm not gonna say which ones they are till they become public. There are two going to happen this year, and we're gonna be involved in both of them. We expect this year eventually to be a good one. I think the second half of the year last year, we had some very rich mix in our business profile. That won't repeat this year. Repeating second half profitability this year versus last year might be difficult. I'm quite confident the business will grow again a bit this year. Have you seen any changes to long-term demand for this business coming out of the pandemic? Not really. No. I mean, in the pandemic, it's well known publicly that there's been a run on cash just about everywhere in the world, you know, during the pandemic, as people sought cash for whatever reasons they wanted to. They just wanted it. Every region of the world has seen growth of notes in circulation. That hasn't stopped as of the current time of writing. We're continuing to be optimistic about prospects for this business in the near term. Great. Actually, this is my final CCL segment question. Are there any end markets, just as we think about the business more broadly, are there any end markets where you've seen any structural changes in demand that have come out of the pandemic? No. Is it no? No. No, not really. Okay. I think the big change, Stephen, in the CCL space is the impact of sustainability initiatives. The public interest in seeing, you know, more responsible use of packaging, I mean, that's the mega trend in the CCL space really. It's across all five legs of it. We have a number of solutions that we offer our customers in that regard, and that's probably the most important mega trend that we all face. Yeah. I think the other thing that's worth commenting on is just how, you know, bumpy the year will be in the current cycle just due to the comps. In the first two months of the year, our label business in the U.S. was up mid-single digits. Our label business in Europe was down low single digits%. We were up double digits in Latin America and up well over 20% in Asia and up over 50% in China. I think when you imagine how when we report our numbers for the first half of the year, you know, we're gonna have these wild swings in comps due to what happened last year and where you're at on the stage of recovery this year and depending on where you were in the mix. I think that's just something everyone needs to be aware about as we eventually report our numbers for Q1 and Q2. Okay, that's great. Even, you know, notwithstanding the tough comps in the back half of the year, you'd expect this business to be up year-over-year in 2021 or is it too soon? Yeah, we do. We expect, you know, to have solid growth in CCL overall this year. Yeah. Yeah. Great. Okay, maybe moving on to the Avery business. I'll just pause here to remind people that if you have questions, feel free to submit them through the interface. We have a couple waiting here that we'll get to. Maybe just turning to the Avery business, which, you know, as people know, was one of the areas of the business that experienced the most acute pandemic-related weakness. Can you just provide an update on where you are on the DTC business? Well, I think it's probably worthwhile just giving you a view about how it's currently doing. Okay Quarter-to-quarter because it's kind of interesting, really. I think, you know, I just wanna remind everybody, Avery was the least impacted business in Q1 last year. The impact on them of the pandemic really only began the last week in March, where we saw order intake drop quite dramatically. We didn't see shipments drop because we had the orders in already. Q1 sales last year were actually up year-over-year, and they'll be down, they're down currently in the mid-teens due to that. Sequentially, we still see things improving, month-on-month and quarter-to-quarter. Comparatively, in Q1, we had pretty much an unaffected quarter this time last year, and we'll have a still affected quarter this year. Once we get into Q2, that situation will completely reverse as we expect to see continuing sequential recovery against a very difficult Q2 last year. The DTC businesses, no change in trend, really. Event badges are still down very significantly. That was last year, pro forma category, well over CAD 100 million. In certain parts of it, large parts of it was down over 90%, particularly event badges. We have seen limited change to that. There are some people now beginning to order badges for prospective events in Q2, but placing orders, not getting shipments. Events in Q1 were still highly restricted worldwide. We still have some business in the naming category. That's still held up better, but it's still down. Direct to consumer labels continues to boom, so that's still growing. Avery for the quarter is up almost double this time last year. It's still a mixed story in direct-to-consumer. In the legacy core business, in the binders and indexes and organization categories, as you might expect, workplace- and schools-driven, still down significantly. Labels has held up quite well, particularly internationally. Okay. I suppose it's too early to tell on back to school at this point. We're only in March. Yeah, I think it's quite likely that back to school for most of the mass market retailers last year wasn't good. We'd expect some of the big mass market retailers to restrict or to reduce the amount of space they give to back to school items this year because of that. Maybe some of the office superstore groups will do the reverse of that to try and capitalize on the share gains and, you know, take a bit more risk than the mass market people will do. What actually happens is really gonna depend more on whether school openings in this fall are gonna be normal or not. We all hope they will be, but reality is none of us know. Yeah. Okay. On the printable media business, how's that business trending? Well, as I said, that's held up quite well. Okay. We're actually up a little bit outside the U.S., down a little bit inside the U.S. In printable media in the United States, we have a large badge category that makes up a significant chunk of it. That's also down significantly. The label side of it, which is the big beast in printable media, is also like its international brothers. It's held up quite well. Yeah. Okay. It sounds like you're seeing, as you mentioned at the beginning of the Avery section, you are seeing the gap continue to close. You still expecting that? Well, it's sequentially closing. I think Sequentially. This quarter we had such a good start to last year, so I just wanted to remind everyone, Q1 last year was not only unaffected, it was also good. We've got a very tough comp at Avery in Q1. It'll be down. Well, currently it's down in the mid-teens after two months. We'll see how it pans out when we close the books. Yeah. Okay. Okay. That's where it stands today. Yeah. Okay. As you begin to comp the Q2, Q3, Q4, you know, as you begin to comp in the back half of this year, do you still expect the full year to be up year-over-year? We expect every quarter after Q2 to be up. Yeah. Hopefully we'll make up the shortfall in Q1. I expect the year to be up for sure. Yeah. Whether we get back to 2019 levels is probably the question mark, but I certainly expect us to exceed 2020's numbers by a good margin. Yeah. Okay. Once things normalize, do you sort of expect this business to revert back to its longer- term growth rate, which? Yeah. sort of- We'll still be the same place we were, Stephen. You know, we've got these growth categories, and we've got these categories that are in decline. We would have said going into 2020, you know, that we would have got through that in 2020. Come 2022 over 2021, we'd expect this business to be probably heading towards being a growth category rather than a mixed category. The margin expectation over the long term, do you still see margins, you know, potentially getting into the low 20s% over the long term as you continue to execute? Correct. We expect the EBIT margin to return into the low 20s% once things normalize. As we were talking about Avery, we got a question that came in from the line here. When you think about you know the badges business with respect to events, are your people seeing any potential impact to in-person events from a rise in virtual conferences? Or do they think that things will revert back once we're through the pandemic? Well, we got an order last week for an electronic dance event in Las Vegas for 400,000 wristbands. 400,000 people are descending on Vegas for an event in April. I guess events, my guess is when events come back, they'll come back with a bang. Yeah. Anyone who thinks there aren't gonna be conventions and meetings and events and concerts, I think, doesn't understand human nature. Yeah. Certainly, there's probably a lot of pent-up demand out there. Okay. Well, that's great. Maybe moving to the Checkpoint business, which was- Yeah. another one of the businesses that was acutely impacted during the early days of the pandemic, but really came back strongly in the back half of the year, certainly seeing some good recovery. Yeah. Can you talk about how that business is trending so far in Q1? I can, yeah. It's up slightly at the top line. It's up significantly on the bottom line. The mix trend we saw in Q4 is continuing in Q1. Up slightly in revenue and up significantly in profits. I'd expect that to be how the quarter pans out too. We do have to remember this time last year, the apparel industry, the manufacturing side of apparel, the supply chain last year was. The restrictions had already started, so suppliers of clothing items in apparel and shoes and the like were all affected in January and February and March last year, even though demand may not have been, the supply side of apparel was. We've seen that grow quite significantly in the first quarter so far, and I'd expect it to continue in March. The MAS business, so which is the part where retailers buy that equipment from us directly, we're still seeing that affected by some retail closures and specialty retail, CapEx constraints on equipment, and people still more worried about store safety than they are worried about store security. Okay. Just talking about RFID. I had a couple questions here, and we just had one come in on the line. Yeah. Sure. Has increased e-commerce activity through the pandemic or maybe more likely something trends like buy online pickup in store, has that led to heightened interest in RFID? And then from there, any new orders or are people getting, you know, more like more warm on conversions or adoption, I guess? I think the interest in RFID is heavily in apparel. The interest, retailer interest outside of apparel is limited, niche-y. Mm-hmm. There's the mega trend is really apparel driven because apparel doesn't have line of sight and has got SKU complexity to it. That's the mega trend, and we're still in relatively early days of the rollout of that technology into that industry. In all honesty, some of the early adopters didn't really get the benefits out of it they thought they were gonna get out of it 'cause it's not a panacea to more basic business problems. The current rollouts that are being done by some of the better managed retailers are more thoughtful, more likely to produce the right kind of returns and responses. I think it's a trend that will continue, and we'll continue to be a player in the space. Yeah. How big of an opportunity is it for Checkpoint in terms of? Well, our apparel label business is a little under $200 million. The market leader is, you know, $1.5 billion, and then probably the market's $5 billion. There's lots of room for us to grow, to gain share by M&A and by just execution. We have all the technologies that the market leader has. We're not- Yeah Disadvantaged by technology. We are disadvantaged by footprint. We have footprint in certain parts of the world. We're more of a player in Europe than we are in the U.S. We have strong footprint in Asia. We don't have such strong footprint in North Africa and Latin America, which are also important sourcing countries for apparel retailers. In the past, within that 200 million ALS revenue bucket, how much of it is RFID? Well, we don't really measure that 'cause it, you know, we make an RFID inlay, and we, you know, I think this year we'll sell, I don't know, 1.5 billion, something like that of RFID inlays. The market's probably 20 billion in apparel, just to give you a frame of reference. We're a player. We're probably in the top 10 players in the world in it, but we're by no means the leader. We have strong positions in certain parts of the world, you know, where we've got assets in the right place. We're anxious to grow in this industry and get our share position that we deserve. Yeah. Okay. We had one question come in on the line here with respect to Checkpoint applicable to the apparel labeling business. Are you seeing QR codes being embedded into tags? Is that something that- QR codes will get used in lots of other applications in the retail supply chain, particularly for drugs in the pharmaceutical industry and for consumer- packaged goods. They're a much better solution where line of sight isn't important. I think two-dimensional codes will have their place in the track and tracing of goods through the supply chain. But in apparel, you've got a unique set of problems with SKU complexity, inventory going walkabout in the store, lot size components which you don't have in a lot of other consumer goods, that make their set of problems quite distinct and quite unique. Okay. That's great. Yeah, that certainly lots of questions coming in on the Checkpoint, which is great. Maybe turning to Innovia. Mm-hmm ... again, coming off a strong Q4. Kind of two components in this business that are topical, certainly the demand as well as the cost, the resin price environment. Maybe just starting with demand, can you talk a little bit about how demand evolved through the pandemic and sort of where you are now? Where we are now, first two months of the year, we're up in the mid-teens. A lot of that's price. Some of it's the trading acquisition of the business we bought in Poland last year. When we get to the quarter end, we'll give you more color on that. That's all I'm gonna say on it for now. We've been able to pass through resin costs so far reasonably successfully. When resin was falling, a lot of our customers moved to shorter pass-through arrangements than they had done in the past. We've benefited on the upside of that. Now we have rising prices. The terms that were agreed for pass-throughs, you know, that were applied in the down cycle still apply in the up cycles. So far profits for the quarter are up nicely. It looks so far like we're doing a fairly good job of managing our way through the resin crisis. Availability has been challenging at times but getting the amount of resin we need at the time we need it. We have had some supply interruptions in Mexico with natural gas supply as a result of the Texas storm, but they haven't been terribly material, and so far, so good. That's great. You're actually up in profits in- Right. the Innovia business. Yeah. Right. Significantly, actually. Yeah. That's year over year? Year-over-year, yeah. Yeah. I expect March might be more difficult, you know, 'cause the resin, the resins have been escalating extremely rapidly through the quarter. I mean, they've pretty much doubled since the fall of last year. Each week and each month we've seen resin escalation, so we may have a bit more pain in March than we've seen in January and February. We'll have to wait and see how the quarter pans out, but so far, it's been good. Yeah. Yeah. Okay, that's great. You would attribute, you know, certainly through the last period of resin price inflation was much more painful, and then you were able to renegotiate your contracts. Would you attribute how you're performing now to those pricing pass-through mechanisms? It's partly that, but I think the other big thing is the operational improvements we've made in our factories, particularly the one in Mexico. It's been quite dramatic down there. That plant is really performing very significantly better than it was this time last year. Also, the same in Europe and our plant in Australia. All of our operations, operationally and productivity-wise, are running at much better rates than they were this time last year. Yeah. The team has done a great job with that. That's great. One question that came in on the line, it's sort of higher level with respect to, you know, resin pricing and other cost inflation. Yep. You know, just to confirm, I know we've talked about this in the past, but you know, you wouldn't expect inflationary pressure on margins in your other businesses. Historically, you've had very good success either passing the prices through or absorbing- Yeah. those prices without margin. Well, we're a long way down the food chain in the label converting businesses. You know, if you take a polyester release liner, which has got significant inflation baked into it, you know, that's a significant portion of our suppliers' cost. But then the end supplier adds its margin to it, then it gets to us, and then we convert it, and we have our conversion margin. You know, 20% raw material cost might need a 1% or 2% price increase for converted labels. Mm. I think you have to sort of bear in mind commodity pricing and converted label pricing. As you know, the position in the channel is a big factor. It'll have to be the rate of inflationary increases we've seen will require us to raise prices even in the label business. It's just too far and too extreme. I think in North America, it is exacerbated by the petrochemical outage, and probably that will recede as the second quarter unfolds. We may see some easing, 'cause the premiums that are being paid in the U.S. for certain grades of resin above what you can buy it at in China are so severe that that'll have to normalize. Either China will have to come up to the same, or the U.S. will have to ease off a bit. I do expect to see that ease a bit as the second quarter and the summer unfolds. Okay. A couple other questions here that have come through on Innovia. Sure. On the margin side, you know, Innovia had a very strong year in 2020. Mm-hmm. with, you know, over 20% EBITDA margins. What margins do you believe are sustainable in the Innovia business? Well, you know, since we've owned this business, they vary between 12 and 20. How flat we can make it so we don't have that degree of volatility, I think, will depend on how we perform in our plants and how good we are at the pass-through mechanisms. I think we will demonstrate this year we've got a lot better at that than we have been in the past. Time will tell. Okay. Secondly, you've owned the Innovia, Treofan, Innovia and then subsequently Treofan now for several years. Do you have any reflections on how the business has performed versus when you bought them? Has anything surprised you to the upside or the downside, I guess? Yeah. Well, we had a tough start with it, as you know, and but it's now got back to where it was. We're pleased to see that, and we're still fundamental believers in we need to control film technology. It'll be very important for us in the sustainability world to have product offerings for our customers. We are still big believers that our company needs to have, you know, prima facie control over the kind of face materials we use, you know, in a business, broadly speaking. We haven't changed our minds on that. Yeah. Okay, great. Maybe moving away from the operations and a couple questions around capital allocation here. You've increased your dividend 17% with the Q4 results. Yeah. How do you see capital allocation evolving coming out of the pandemic, or is it just- Yeah. You know, back to where it was before? Yeah. Well, we had a record year last year, and our earnings were up 10% I think, so I don't think we were doing anything terribly untoward with the dividend. I think it was- Yeah. Certainly, what we could afford, and our dividend payout ratio is still very much in line with its historical norms. I think that's just a reflection of the company's performance through the pandemic. We're big believers that dividends are important to shareholders. We've had only increases and no omissions for three decades now, and we believe that will continue. We haven't bought back our own stock for a very long time now, and we're still big believers that M&A is the best use of excess free cash flow in the business, but time will tell. Yeah. Okay. Maybe turning to M&A. Sure. A couple of questions. You know, in the past you've indicated. Well, certainly through the pandemic, you've indicated that due diligence was difficult to do, can't do due diligence over Zoom. With travel opening up, I know you and I've spoken some about the business, some of your senior managers have begun to travel more frequently. Is it any easier to execute on M&A in this environment, given that? No, not really. I mean, if we had a U.S.-only business we were able to buy, that probably would be doable. But I mean, right now, our managers can't go from one country in Europe to the next. I mean, that's how difficult it is. Right. Managers of our business in Germany can't go to Switzerland and vice versa. It's still pretty difficult. Aside from that, you know, valuations are still, you know, cheap money is still out there and a lot of competition from private equity firms for some of these assets that, in my view, pretty ridiculous valuations. Until we see some return to norm in that regard, I think big M&A, you know. Well, who knows? Time will tell, Stephen, but we don't have anything immediately on our horizon for those two reasons. You know, valuations still being tough. Even if we could get over that, how do we actually take on something that's large and global in scale in the middle of a pandemic, which we don't even know if it's even over yet. Yeah. Right. I'd say this year will be the repeat of last year. You can expect us to do bolt-ons because they're done in country by and large. We've got boots on the street in most places in the world, so we're able to do the bolt-ons and but a large-scale transformative M&A transaction, you never know. The current environment's not easy to do those. Yeah. The reasons I've explained ad nauseam. Yeah. Absolutely. A couple of questions here on coming in from the line, and these are more high level. You know, you mentioned sustainability packaging. Mm. as a mega trend coming from your customers and also consumers. How do you see it evolving from here? You know, does it have any impact on margins as it becomes a bigger part of mix? Any impact on M&A strategies? Or is it, you know, you do it in your existing businesses and without looking outside, I guess? Well, our job is to support our customers, and that's what we're doing. We have a whole suite of sustainable product lines that we offer our customers. It's their decisions whether they take them or not ours. In some cases they do, in some cases they don't. I think there's still a degree of marketing to the sentiment going on in the consumer world in general. For example, in the apparel industry, there's a lot of focus on making paper tags that you buy with a garment, you know, sustainable and recyclable, even though quality isn't by and large. Yeah. Whether that's rational behavior in the long term, I think remains to be seen. I think that we're in the very early days of this sustainability journey. I think over the next four or five decades, 50 years from now, we'll look back at this time and reflect quite differently on how we're reflecting on it today. Mm-hmm. The role of our company is to support our customers and Mm-hmm. We are working diligently on everything they're asking us to do. We have a whole suite of technologies in recyclable films, recyclable labels that help customers recycle bottles more easily. Like I said, a whole suite of products. Yeah. The extent to which they are adopted is their decisions, not ours. Yeah. Probably they're working through their own challenges in this regard, too, and finding out for themselves what their future world looks like. Maybe they don't have all the answers to those problems just yet either. Yeah. Everyone's on the same journey. Yeah. Yeah. Yeah. Okay. Do you see any potential margin impact? Like, are you able to- No. I think, you know, right now, it's bizarre, you know, but recycled resin costs more than virgin resin. There's a limited availability of recycled resin. Everybody wants it. Until there's a lot more ability for the world to reprocess plastics into recycled resin and the price point gets to the point where it's gonna have more widespread adoption. These are all chicken and egg situations that have to be thought through. Yeah. There's a lot of discussions in the packaging industry about sustainability. The metal packaging guys and the glass guys say, "Well, our packages are less found in waste streams, they're more recycled." This is of course true, but they also give out four or five times the amount of greenhouse gases that plastics do. Yeah. We have a whole series of dichotomies in this sort of whole packaging supply chain, none of which nobody has any answers. There's a lot more questions than there are answers. Yeah. We are in there like everybody else, trying to be realistic and work on real end solutions that bring benefit to the consumer and benefit to the customer. Yeah. Yeah. Okay. You know, you talked about a whole suite of technologies so- Sure. Lots of things that your customers can leverage your expertise on with respect to sustainability. Are you able to give, like, any examples of things that have led to, you know, things that have been more popular with your customer base? Yeah. Well, we invented post-consumer plastic tubes made out of post-consumer resins 20 years ago, and only two customers wanted it. Now every single customer in the world wants their plastic tubes made out of post-consumer recycled resin content. That's probably the biggest thing we would see. Our tube business is CAD 200 million. I would have said, if you had asked me this question five years ago, we'd have said, well, our PCR tubes, tube sales out of that CAD 200 million five years ago was probably 5% or 10% of the revenues. Today, it's gonna have to be significantly more than that. Okay. Couple of minutes left here and. Sure. Just wanna remind everyone who's listening online, you can have an opportunity to submit questions. Covered a lot of ground. I'm just gonna ask a couple of these questions that have come in. I hadn't heard of this before, but one participant is asking on the CCL segment, is there a new sleeve product for aluminum cans that you're aware of? Yes. I mean, we've been putting sleeves on aluminum cans for many years. That's not a new idea. Okay. We've done it for our customers, and they do it in their premises rather than we do it in ours. We sell them a blank can; they put a sleeve over it. The idea was developed in Japan, to my knowledge, more than 20 years ago. Okay. I thought most of the cans were decorated, but okay. Most of the cans are decorated, but there are some that are sleeved out there. If people want to have multiple SKUs and have one shape of can and have 50 variants- Right. You can do that quite easily with sleeving, as it's done in Japan. We do that for a few of our customers already today. Okay. Another question here on RFID, which is, you know, obviously very, very topical now, is, are you seeing any price competition from new entrants coming in from China or anywhere else in the world? Well, the vast majority of RFID inlays are made in China, and that's where we make ours, too. Mm-hmm. The 20 billion inlays made in the world today, I would guess 90% of them are made in China. That's where we make all of ours. Will there be more capacity added to the current players? I think the answer to that is yes. Will there be new entrants? There's some barriers to entry today in terms of the scale you need. I don't know how many big new entrants there'll be, but Yeah. I expect all the current players to be investing heavily in it as we are to build capacity. Yeah. to customers. Okay, well, we just turned to 12 o'clock on the hour. No more questions have come in. So, Jeff, I lost you on my video, but you're still there. I appreciate your time today. Very insightful, very timely to get an update on the business. Thank you for your time for this last intra-quarter fireside chat. Yeah. Thank you, Stephen. Thank you for everybody who called in. Anyone who wants to ask more questions directly of us, you know you can call Sean Washchuk at our office in Toronto. Be glad to take your calls. Great. Thanks.