Ladies and gentlemen, thank you for standing by. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. Welcome to Avery Dennison's earnings conference call for the second quarter ended on July 3, 2021. This call is being recorded and will be available for replay from noon Pacific Time today through midnight Pacific Time, July 31. To access the replay, please dial eight zero zero-six three three-eight two eight four or plus one four zero two nine seven seven nine one four zero for international callers. The conference ID number is two one nine six nine four two zero. I'd now like to turn the call over to John Eble, Avery Dennison's Head of Investor Relations, p lease go ahead. Thank you, Mladen. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled with GAAP on Schedules A4 to A10 of the financial statements accompanying today's earnings release. We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the safe harbor statement included in today's earnings release. On the call today are Mitch Butier, Chairman, President, and Chief Executive Officer; Greg Lovins, Senior Vice President and Chief Financial Officer; and Deon Stander, Vice President and General Manager, RBIS. I'll now turn the call over to Mitch. Thanks, John, and good day everyone? We delivered another strong quarter ahead of our expectations, raised our outlook for the second half, and announced an agreement to acquire Vestcom, a leader in shelf-edge pricing and branded labeling solutions in the U.S. Vestcom has roughly $400 million in revenue, with a consistent history of strong growth and above-company average margins. Vestcom will further expand our position in high-value categories while adding channel access and data management capabilities that have the potential to further advance our Intelligent Labels strategy. Deon will tell you more about the acquisition, both the strength of the company and how it will accelerate our strategies in a moment. Turning to results. In the second quarter, earnings rebounded significantly as sales grew 29% on a constant currency basis, reflecting a strong rebound in RBIS and IHM and continued strength in LGM. The quarter was even more impressive relative to 2019, with revenue up 14%, EBITDA margins up 80 basis points, and EPS up 30%. Now, while we are pleased with the results, our strong performance comes at a time of continued uncertainty given the global health crisis and constraints within supply chains. While the rate of new cases among our team remains stable, many parts of the world are experiencing an increase in COVID-19 cases. Certain countries, particularly in South Asia, have experienced a significant rise in infection rates, leading to the recent disruptions at a few RBIS manufacturing locations. While this is impacting July, we don't anticipate these disruptions will impact demand in the back half of the year. In addition to the effects of the pandemic, supply chains remain constricted, affecting end markets and adding to inflationary pressures. This constraint on the availability of raw materials, freight, and in the U.S., labor, continues to impact the industries in which we operate. Despite these constraints, we've been able to deliver record volumes as our team continues to leverage our global network and scale to minimize disruptions to our customers. The current environment further reinforces our determination to remain vigilant in protecting the health and wellbeing of our team and agile to ensure we continue to meet customer needs. Now a quick update by business. Label and Graphic Materials posted strong top-line growth for the quarter as demand for consumer packaged goods and E-commerce labels continued to drive strong volume in our label and packaging materials business, while our graphic and reflective solutions business rebounded significantly off prior year lows. As for profitability, LGM margins remained strong despite increasing inflationary headwinds, including costs in the quarter from the supply chain constraints. Given the increasing inflationary pressures, we are redoubling our efforts on material reengineering and again raising prices. We are targeting to close the inflation gap relative to mid-last year by the fourth quarter. Retail Branding and Information Solutions delivered robust growth in the quarter and expanded margins significantly compared to prior year lows. Compared to 2019, margins expanded further as the segment grew 25% on a constant currency basis and 14% organically, driven by strength in both high-value product categories, particularly Intelligent Labels, as well as the core apparel label business as retailers and brands continued to gear up for a strong rebound in end demand. Enterprise-wide, Intelligent Label sales were up 40% compared to 2019. As expected, the strong growth in our RFID business was primarily driven by apparel, while outside of apparel, we continued to see strong momentum building for new applications in all key geographies. In the food segment, for example, a North American restaurant chain recently began rolling out RFID across their network after a successful pilot over the past year. In logistics, we saw positive momentum, including the adoption of an Intelligent Labels Solution at a large global player in the transport of hazardous materials such as batteries, which require special shipping protocols. These are just two examples of programs of what will be many in the years to come. In the Industrial and Healthcare Materials segment, sales rebounded off prior year lows, showing positive growth compared to 2019, as the segment is on pace for its fourth consecutive year of margin expansion. Given our strong performance in the second quarter and our increased expectations for the rest of the year, we have raised our full-year outlook for the company, both on the top and bottom lines. Overall, I am pleased with the continued progress we are making towards the success of all of our stakeholders. Our consistent performance reflects the strength of our markets, our industry-leading positions, the strategic foundations we've laid, and our agile and talented team. We remain focused on the consistent execution of our five key strategies. To drive outsized growth in high-value categories, grow profitably in our base businesses, focus relentlessly on productivity, effectively allocate capital, and lead in an environmentally and socially responsible manner. We are confident that the consistent execution of these strategies, both organically and through M&A, such as the Vestcom acquisition, will enable us to achieve our long-term goals, including consistently delivering GDP plus growth and top-quartile returns. Once again, I want to thank our entire team for their tireless efforts to keep one another safe while continuing to deliver for our customers during this challenging period. Now, I'll turn the call over to Deon to provide more color on the high-performing and high-potential acquisition we announced today. Deon? Thanks, Mitch. Turning to slide 14, Vestcom is a market-leading provider of pricing and branded labeling solutions for the retail shelf edge, powered by its advanced data management capabilities. It's a high-growth, high-margin business generating roughly $400 million in annual revenue. Vestcom is a highly synergistic adjacency to RBIS, building on our pricing and data management capabilities in adjacent markets and increasing our presence in high-value categories. Vestcom, led by an excellent management team, has been consistently growing at a high single-digit rate organically over the long term, with strong track records across cycles and highly accretive EBITDA margins. As you may recall, back in March at the Investor Day, we outlined RBIS's key strategies, which include delivering outsized growth in high-value categories, unlocking growth and value in food and logistics, growing profitably in the base business, and strengthening our digital capabilities and solutions. Vestcom is an accelerator for all of these strategies. In particular, Vestcom provides an opportunity to help accelerate our Intelligent Labels ambitions in food through their additional access to end users in retail, grocery, drug, and dollar in particular, and to consumer packaged goods companies who are key decision-makers in the food ecosystem, as well as their sophisticated and complementary data management capabilities. Turning to how Vestcom delivers for its customers. As you can see on slide 15, Vestcom solutions create real value for retailers and brands, and they do so by combining data management with outstanding customer service delivery. Vestcom solutions start with taking multiple data files, including price, promotion, planogram, and brand content files, and merging these to create uniquely integrated shelf edge labels that have impact at the point where the majority of consumers make their purchase decisions. Their solutions, which provide both productivity and consumer engagement benefits, include stackz, which delivers integrated price and promotion labels to each store in time for store associates to label the shelf with the latest pricing and promotion updates in-walk sequence that is sorted and ready to walk and tag based on the exact planogram layout for that particular store. As slide 16 indicates, the reduction in store labor time to execute these weekly price and promotion changes so efficiently is significant. In addition, the improved level of pricing and planogram compliance drives greater consumer impact and commensurate higher sales lift for the retailer. Vestcom then builds on this effective productivity and pricing solution by uniquely leveraging the same label real estate to add branded content from CPGs or the retailer to support their time-specific marketing campaigns. These consumer engagement solutions include shelfAdz, which allows for highly effective in-store shelf edge advertising with the unique advantage of combining all three elements in front of the consumer, the price, the promotion, and the brand message or content. This solution provides real value in both sales lift and return on advertising spend for both CPGs and retailers. The strong return on investments delivered by both their productivity and consumer engagement solutions position Vestcom as a strategic partner to their customers, reflected in the deep relationships they have across the grocery, drug, and dollar segments they serve. It is these relationships and solutions, in combination with our own, that will help complement our strategy to accelerate IL adoption beyond apparel. This is particularly true in food, where we are already investing in our IL and digital capabilities, and where the need for visibility and provenance through the supply chain, inventory and date freshness accuracy on shelf, pricing effectiveness, and managing an increasingly omni-channel environment are key success factors for retailers. Additionally, the combination of our businesses provides the opportunity to create a unique end-to-end inventory management and pricing solution for retail in the next evolution of our data solutions and digital journey, building on the acquisition of ZippyYum and the launch of our atma.io platform. Lastly, we are pleased to add this high-performing business to our portfolio, and I am personally looking forward to both welcoming the Vestcom team and the future prospects of the combined businesses. With that, I'll hand the call over to Greg. Thanks, Deon. Hello everybody? I'd like to first add a few points about Vestcom, and I'll be referring to the transaction summary on slide 17 of our supplemental materials. As Mitch and Deon already mentioned, Vestcom's annual revenue is roughly $400 million, with strong historical growth and EBITDA margins above our company average, including synergies. The purchase price of $1.45 billion represents an EBITDA multiple below our overall company multiple, and we expect this deal to be accretive to EPS by 2022. We're currently planning to fund the acquisition through a combination of cash and debt. If the deal closes in Q3 as anticipated, we expect our leverage ratio to be near the low end of our target range at the end of this year, giving us ample capacity to continue executing our capital allocation strategy. Jumping back to our Q2 results. As Mitch said earlier, we delivered another strong quarter with adjusted earnings per share of $2.25, which was above our expectations by about $0.10, and roughly $1 per share above prior year, driven by significant revenue growth. Sales were up 29% ex currency and 28% on an organic basis compared to prior year, driven by strong, broad-based demand and the benefit from easier comparisons, given that the pandemic had the biggest impact on our results in Q2 of last year. Compared to 2019, our growth has also been strong, with organic sales up 11% versus Q2 2019. Our strong growth, combined with productivity gains, more than offset the headwind of last year's temporary cost reduction actions, as well as an increasing inflation and new organic investments to deliver an adjusted operating margin of 12.8%, up 210 basis points from last year. We realized $17 million of net restructuring savings in the quarter, the majority of which represented carryover from projects we had pulled forward into 2020. We also recorded two items which largely offset each other in our GAAP results in the quarter. The first is a gain related to the recovery of Brazilian indirect taxes paid in previous years. The second is a liability related to the previously disclosed ruling in the ADASA legal matter, which the company disputes and remains confident in the prospects of a more favorable outcome upon appeal. Now, as Mitch mentioned, supply chains remain tight and input costs have been increasing. Both raw material and freight inflation were above our initial expectations, and we have continued to see costs rise as we enter the third quarter, with expected sequential inflation in Q3 at a mid- to high single-digit rate, with variations by region and product category. We are addressing the cost increases through a combination of product re-engineering and pricing and have announced additional price increases in most of our businesses and regions across the world. Turning to cash generation and allocation. Year-to-date, we've generated $388 million of free cash flow, with $206 million in the second quarter, up significantly compared to previous years. In the first half of the year, we paid $108 million in dividends and repurchased over 500,000 shares at an aggregate cost of $95 million, for a total of $203 million returned in cash to shareholders so far this year. As I said earlier, our balance sheet is strong, with a net debt to adjusted EBITDA ratio of 1.3 at quarter- end. This gives us ample capacity, even after the Vestcom acquisition, to continue executing our capital allocation strategy. Now turning to the segment results. Label and Graphic Materials sales were up 17% ex currency and 16% on an organic basis, driven by higher volume and pricing. Compared to 2019, sales were up 11% on an organic basis. Label and packaging material sales were up roughly 12% organically, with strong volume growth in both the high-value product categories and the base business. Graphics and reflective sales continued to rebound nicely compared to the trough we saw in Q2 of last year and were up 49% organically. Similar to last quarter, we do believe that Q2 benefited from customers pulling forward some volume from Q3 ahead of new price increases. Looking at the segment's organic sales growth in the quarter by region, North America sales were up high single digits. Western Europe, sales were up mid-teens, as demand in both regions increased from Q1. Emerging markets overall, were up roughly 20%, continuing their strength from the first quarter. Asia Pacific region grew roughly 20%, led by significant growth in India and the ASEAN region, with easier comps given the pandemic impacts we saw in Q2 last year. We had low double-digit growth in China. Latin America grew over 30% with particular strength in Brazil. While LGM's adjusted operating margin remained strong, it decreased slightly from last year to 14.5%. This was partially driven by the impact of supply constraints, which led to both increase in inflation and some incremental costs in the quarter, such as expedited freight and overtime to ensure we had supply to service our customers' needs. Shifting now to Retail Branding and Information Solutions. RBIS sales were up 73% ex currency and 72% on an organic basis. As growth was strong in both the high-value categories and the base business, due in part to lower prior year comps. Compared to 2019, organic growth was 14%. The apparel business continued its strength as retailers and brands prepared for increasing demand, with particular strength in the value and performance channels and continued double-digit growth in external embellishments. Intelligent Labels sales were up organically roughly 65% and up 40% compared to 2019. Adjusted operating margin for the segment increased to 13.1% as the benefits from higher volume and productivity more than offset the headwind from prior year temporary cost reduction actions, higher employee-related costs, and growth investments. The RBIS team has continued to deliver, increasing their top-line growth and margin significantly over the last four years, with margin expansion of more than 4 points since 2016. Turning to the Industrial and Healthcare Materials segment, sales increased 39% ex currency and 33% on an organic basis, reflecting strong growth in industrial categories, particularly in automotive applications, which more than offset a decline in personal care tapes due to tougher comps. Compared to 2019, sales are up 6% on an organic basis. Adjusted operating margin increased 490 basis points to 11.7%, as the benefit from higher volume more than offset the headwind from prior year temporary cost reduction actions and higher employee-related costs. Shifting to our outlook for 2021, we have raised our guidance for adjusted earnings per share to be between $8.65 and $8.95, a $0.20 increase to the midpoint of the range. The increase reflects the strong performance in Q2, as well as an increased expectation for the rest of the year, driven by continued strong organic sales growth. As a reminder, this guidance does not yet include the impact of the Vestcom acquisition, which is expected to close later in the third quarter. We now anticipate 14%-16% ex- currency sales growth for the full year above our previous expectations, driven by both higher volume and the impact of higher prices. We've outlined some of the other key contributing factors to this guidance on slide 12 of our supplemental presentation materials. In particular, the extra week in the fourth quarter of 2020 will be a headwind of a little more than one point to reported sales growth and a roughly $0.15 headwind to EPS in 2021. We estimate Q1 benefited by roughly $0.15 based on the shift of the calendar, and then anticipate a roughly $0.30 headwind in Q4. The anticipated tailwind from currency translation is now roughly 3.5 points to sales growth and $35 million in operating income for the year based on current rates. We now estimate that incremental pre-tax savings from restructuring, net of transition cost, will contribute $60 million-$65 million, down somewhat from our April estimate, as the strong demand environment has led us to delay certain projects. Given the increased outlook for earnings and working capital productivity, we are now targeting to generate over $700 million of free cash flow this year, which is up roughly 30% from last year and 40% from 2019. Given the distortion in our year-over-year comparisons due to the pandemic last year, let me provide you with some color on our second half outlook in relation to the first half of this year. There are four primary drivers which are each worth roughly $0.15 ± in the second half compared to the first half. First item is the calendar shift I just mentioned a minute ago. Secondly is the impact from the pre-buy volume from Q3 into Q2. Third, there is a sequential price inflation gap in the third quarter, which we expect to close in Q4, driven by the timing of passing new price increases through. Lastly, given our continued confidence in our business, we are ramping up our pace of investments to drive our long-term strategies. In summary, we delivered another strong quarter in a challenging environment, and we remain on track to deliver on our long-term objectives to achieve GDP plus growth and top quartile returns on capital, which together drive sustained growth in EVA. We'll now open up the call for your questions. Thank you very much. Ladies and gentlemen, if you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. If you are using a speakerphone, please lift your handset before entering your request. To accommodate all participants, we ask that you please limit your questions to one and one follow-up, and then return to the queue if you have additional questions. One moment for the first question. Our first question comes from the line of George Staphos with Bank of America Securities, Inc, Research, p lease go ahead. Thanks, operator. Hi, everyone, g ood morning? Thanks for the details. Congratulations on the progress so far this year. I guess, my first question is on Vestcom. Obviously, a pretty big topic today. Given the rundown, Deon, that you gave, I understand why the customer would like it, I understand how it utilizes data management and so on. I understand how the brand owners and retailers would like it. How does it really leverage Avery's core capabilities and Intelligent Labels, and why did you need this? In your view, what were the one or two primary issues? Can you comment a bit on what the competitive landscape is? How does Vestcom rate versus its nearest peers? I don't know if there's even a market share you could offer there. Thanks. Thanks, George, for the question. Let me just start by saying, for us, the acquisition is perfectly aligned with our strategic initiatives and our strategies overall. It firstly increases our exposure to high-value categories, given that the high-performing, high-value business that it is. Second, it's highly synergistic, as you pointed out, George, to our RBIS business, with complementary channel access and strong variable data management capability. The third thing is it really helps leverage, and grow our IL ambitions, and particularly in food, where they specifically have access, and deep relationships in a channel that we are just starting to build traction in. Secondarily, in combination with our variable data management capabilities, we're able to execute more efficiently. Finally, I think more importantly in the longer term, is that the combination of both businesses, I think will help accelerate the innovation that's really needed at retail level to provide better and more integrated inventory management, pricing, and consumer engagement solutions. Some of the stuff that we started to build on already with the ZippyYum and atma.io platform launch. From a competitive position, they are clearly the market leader in their segment, by some distance. We believe that the complementary skill sets that we both have, both in variable data management and the access that we'll create from an Intelligent Labels perspective, will be value additive to all of our stakeholders. Okay. Thanks, Deon. A really good rundown. I just want to switch gears. Given that we've seen inflation and cost increases pretty much climb steadily throughout 2021, second half earnings would likely be burdened by additional inflation that didn't hit the P&L in the first half. Now, I know that's in your guidance, but is there a way to quantify if you agree with that premise, what that burden that you're getting over roughly equates to in the second half? Thanks, and I'll turn it over. Yeah, George. As I mentioned at the end there, relative to the guidance from a first half to second half perspective, just as you said, we've seen inflation increasing throughout the year, increasing throughout the second quarter, and really at the end of Q2, beginning of the third quarter, really started to see some more increases in some of the regions. We have been announcing new pricing. It'll take a little bit of time for that new pricing and/or finding new ways to take costs out of our materials to kick in. We have a little bit of a gap from the first half to the second half from that timing of passing that through. We think that's roughly in that $0.15± range that I talked about a little bit earlier. Somewhere in that range is what we would expect from a sequential first half to second half gap. Our next question comes from Ghansham Panjabi with Baird, p lease go ahead. Thank you. Good day, everybody. On the incremental core sales increase relative to prior guidance, I think it's about 500 basis points at the midpoint. Can you sort of disaggregate for us how much of that is incremental pricing relative to volume? The volume piece, which segment and regions are sort of driving that upside? Yeah, thanks, Ghansham. I think when you look at that kind of five-point increase at the midpoint, roughly 40%-50% of that came in the second quarter, with the second quarter volumes coming in a bit stronger, of course, as we already talked about. The rest of that comes in the back half. The rest of that being kind of 2.5 points is assuming some continued strength in volume and a little bit of incremental price from what we had assumed before. Probably a little bit more on the volume side versus price when I think about that raise in the back half, but it's a combination of both of those in the second half from a growth perspective. Great. Terrific. For my second question on Vestcom, can you just share the historical growth rates, the margin profile over time? Also, is it mostly North America in terms of sales? Also, if that is the case, the transferability of the solution to some of the overseas markets, including in Europe. Thanks. Yeah, Ghansham, on that, on Vestcom, just very quickly, yeah, the growth rate has been above the average as well as the margins. The growth rate, I think we commented, in high single digits over 10+ years. Very consistently delivering that level of growth. The margins are above the company average, both pre-synergy and obviously post-synergy. Great business, highly synergistic with RBIS. You don't see very many businesses that are close to what RBIS does as far as integrating, managing variable information to be able to deliver promotional, pricing, and branded solutions. Just it's in a new adjacency linked to food, which we see as an opportunity to accelerate the Intelligent Labels strategy. That's the short of it, Ghansham. Our next question is from Anthony Pettinari with Citigroup Global Markets Inc., p lease go ahead. Good morning? In LGM, I think you indicated North America was up high single digits and Europe was up mid-teens. Is that a function of mix or last year's comp or maybe the timing of pull forward ahead of some of these price increases or some share shift? I'm just wondering if there's anything you can tell us about how the recovery that you're seeing is kind of playing out regionally and how that might play out in the second half. Yeah, Anthony, if your question is, why did Europe outpace North America? If you look at last year, they both had periods early in the spring of some high levels of growth in the teens, and then things fell off in June and July for both regions. They're both comping actually in the second quarter, pretty strong demand all in all from Q2 of last year. Within Europe, we basically, if you recall last year, we said in both regions that we thought we had ceded some share during that period. We've recovered that fully within Europe. We have not yet in North America. That's basically just because we got very long, just a big order book. We're seeing a tremendous amount of orders from the demand levels. We've got longer lead times in North America than we usually do because of the surge in demand, as well as the supply constraints that are disproportionately in North America. That's a little bit of the distinction between the two. As far as how it plays out through the rest of the year, when we look at it, E-commerce demand remains robust. We expect that to continue. As far as the demand for branded labels at the end market, those remain strong. They're clearly softening, I'm talking about the end market, what the CPGs are reporting. They're softened growth from where it was last year, when you had a lot of the pantry loading and so forth. Overall consumption looks to be pretty high from that standpoint. There is a question, and we talked about this last quarter at some point, is some of the high levels of demand, is any of that around inventory building and so forth? There is a potential for that. That's something in the range of our guidance that we have and why midway through the year, we still have a relatively wide range on our guidance on the top line. Okay. That's very helpful. On Vestcom, is there anything you can say about how long you've been looking at the company as maybe a potential acquisition target? I don't know if you've partnered with them or competed with them in the past. Understanding there's some clear synergies between the two, is it accurate to say that there's very little apples-to-apples overlap between Avery and Vestcom right now? Just trying to understand what you do versus what they do. In general, when we look at and think about capital allocation, our investments are focused, as you know, disproportionately towards higher value categories, and we're obviously looking for spaces within things within Intelligent Labels or adjacent to that, and this fits both of those criteria. We've got, as we've talked about before, quite a few companies that we have on our radar from an M&A pipeline perspective. That's what I'll say about that. As far as direct overlap, this is an adjacent market to RBIS. It's, as I said, very synergistic, very similar as far as what they do and how they do it, but as far as selling to dollar stores and grocery stores and drugstores here in the U.S., that is not something we do a lot of. Where the synergistic overlap is on customers is really around our pipeline development and business development we're doing for Intelligent Labels and food. We are working with grocery stores, some at business case, some at pilot. We're working with restaurants, which Vestcom doesn't focus on, of course. That's where I think the emerging territory we see with IL, Intelligent Labels, sorry, and Vestcom is where we see the opportunity there. Deon, anything you want to add to that? No, I think the other piece, Mitch, and I'll just reemphasize this as well, both businesses have this strong similarity of managing highly complex data from multiple sources and being able to turn that data into demonstrable value solutions for their customers, be they in different channels. Our next question is from Neel Kumar of Morgan Stanley, p lease go ahead. Great. Thanks for taking my question. You mentioned 2Q being about $0.10 above your expectations or budget. Can you discuss where specifically performance came better versus your expectations or was it generally broad-based? Your $0.20 full-year guidance increase implies second half numbers that are about $0.10 above your prior expectations. Is that concentrated in any particular segment? Good, Neel. I think in the second quarter, it was relatively broad-based. I think as we talked about, demand was strong across all of the segments in Q2. I think particularly probably in RBIS and IHM is where we saw a little bit more upside in the quarter versus our own expectations, as we've continued to see strong growth in the apparel businesses we've talked about, as well as Intelligent Labels business within RBIS, and continue to see strong growth in IHM. Our back half guide assumes a little bit of those continued trends as well, some of that strength in the volume demand across the businesses that we've seen in the second quarter. Right. That's helpful. Just a couple questions on Vestcom. Could you quantify the potential synergies from the deal? I'm just wondering if you could touch on the capital characteristics, any sense of the capital intensity and free capital conversion of the business? Yeah. It's highly synergistic overall from a cost synergy standpoint. Most of those would be around material supply, and there's other areas of opportunity, but we're not going to get into specifics around synergies. We don't do that on our acquisitions in general. As far as the cash flow level, Greg, you want to comment on that? Yeah, I think overall it's a pretty strong cash-generating business. We would expect in 2022 probably more than $60 million of cash after the impact of financing costs and everything else as well. We expect a pretty solid cash contribution in 2022 from this business. Our next question is from Josh Spector UBS, p lease go ahead. Yeah. Hey, guys. Thanks for taking my question. Just when you talk about raw material constraints in North America in the quarter, can you just give us some color on what materials you're seeing more shortages of, and what visibility do you have on that improving over the next couple quarters? Yeah. It's chemicals and films largely. In addition to that, it's just freight. There's longer lead times both in the receipt of our material, just freight companies, things being left in cross-docking stations for an extra day, for example, as well as our outbound freight to our customers. Those are the two primary areas. Overall, a lot of this is still just further upstream than us working through all the capacity limitations that existed because of the storm in Texas. The industry's slowly working through those backlogs from what we see. We also think that that's what's driving some of this demand quite high of people building some inventories and so forth. It might be a bit elevated across multiple industries. As you see some abatement of that should ease on the supply chain. We don't have clear visibility overall of when these will end. It's broad-based. We would expect, looking here as we get towards the end of this year, things start to ease up. Okay, thanks. Just on the raw material inflation sequentially, can you characterize how that inflation would look different between LGM and RBIS? When you talk about recovering that in fourth quarter, is that across both segments, or would we expect one to be ahead of the other here? Yeah. The largest impacts on raw material inflation are really in our materials businesses, so between LGM and IHM. That's where we're seeing the biggest impacts, especially from Q2. We're still in the first half really, driven by chemicals and films increases. We started to see some paper increases in late Q2, specifically in Europe. We've seen increases really on the LGM and IHM side. It progressed probably mid-single digits in Q2 versus Q1. We're looking at kind of a mid to high single digit increase from Q2 to Q3, really driven by continued increases in chemicals and films in the second quarter, and then increases moving into Q3 here on paper. That's how we're seeing the inflation environment evolve right now. Our next question is from Jeffrey Zekauskas, JP Morgan Securities U.S., p lease go ahead. Thanks very much. In your RBIS business, how much did the non-Intelligent Labels solutions area grow? Jeffrey, our growth for non-Intelligent Labels business, which is really the core business, our base business grew at mid-single digits overall. Okay. Thank you. Jeffrey, that context is relative to 2019. Sequentially versus 2020, clearly with Q2 being so low last year, it is significantly up, and the contrast is more appropriate relative to 2019. Right. On Vestcom, in your release, you said its revenues are about $400 million, and it has 1,200 people that work there, which seems quite labor intensive. What are the more labor intensive parts of Vestcom? Overall, Jeffrey, the way that the business works is they are highly efficient in taking in data, as I've said earlier on, and transforming that into unique shelf-edge labeling solutions. In a very rapid time, they're able to assimilate the data from different sources and then print it typically on digital assets that are very similar to our own. Those printed labels are effectively taken and boxed by individual store across the vast network that they serve for their customers. There is, and certainly in that area, a number of labor component pieces they have across the 11 DCs they operate. That DC network gives them the ability to reach customers in a geographic radius in a very short order of time, which is critical so that those stores can complete their pricing and promotional changes that are absolutely required for them. If I can just add to that, Jeff. In addition to what Deon said, relative to RBIS, I'd say it has more information technology experts relative to the level of revenue, and then less as far as a lot of the production, much less. They have more automation on some of that. More, I'd say, on the very back end on the finishing and just before distribution because of the complexity of the actual just delivering and creating a unique pack for every single store, if you will, in the U.S. of their customers and so forth, if that gives you a relative sense. Our next question is from John McNulty, BMO Capital Markets U.S., p lease go ahead. Yeah, thanks for taking my question. Just on the acquisition, if I am understanding the multiple kind of level that you paid, it kind of backs into an EBITDA level of give or take $100 million or so, or EBITDA margins that are in the mid to upper 20s%. Are we thinking about that right, or is there something else that we need to be factoring in here? Yeah, John, given the relative size of this business, we're not going to get into a bunch of specifics around that. Overall, as we said, the multiple that we are paying is below the company average for a business that is higher growth than the average, higher margin than the average. The multiple that we're paying being less is both before and after synergies, of course. I think just to add to that, the way we've thought about this, obviously in terms of capital allocation and our focus on EVA, is we'd expect this business to be EVA accretive, excluding any amortization, within the second year. We're literally looking at this being pretty quickly EVA accretive. We've thought about this in relative to our long-term targets we just issued a few months ago. We're talking about continuing our strong growth rates, continuing to expand our margins, continue to deliver double-digit EPS growth, and deliver top quartile returns on capital. We look at this business, it's accretive to our top-line growth rate. It's accretive to our EBITDA margins. It's also accretive to our EPS growth, of course. We think we continue to deliver top quartile capital and meet our long-term target for ROIC with this acquisition. It really fits and helps us accelerate all of our key financial long-term targets that we communicated a couple of months ago. Got it. Fair enough and helpful color. Maybe you can also, can you give us an update now that, I don't know if COVID's completely in the rearview mirror, but we seem to be progressing at least a little bit past it. Can you speak to what you're seeing in terms of some of the pilot activity around RFID and some of the new initiatives that you're seeing from the customer base? Is that starting to accelerate at this point now that workers can be in place, et cetera? How should we be thinking about that? Sure, John. I'll let Deon comment on your question on Intelligent Labels and level of pilots and what we're seeing. Before doing that, you just mentioning COVID in the rearview mirror. There's still an uncertain environment, particularly when you get out of the U.S. and maybe Western Europe and China, it's still depending on which region you're in, they are experiencing an increase in infection rates. As we called out specifically, there is an impact here in July from some disruptions in RBIS in South Asia, specifically. Now, given our experience in managing through in the past, we expect, especially since demand, end- demand is strong, that we'll be able to work that through here in the second half. I would say that COVID is still something top of mind for the leadership and something we're continuing to manage on a regular basis. Looking forward to it being in a rearview mirror. With that, Deon, do you want to answer the second part of his question? Sure. John, as it relates to Intelligent Labels overall, we continue to see a healthy appetite, interest, and focus on leveraging the technology from our customers. Our overall pipeline has increased by almost 20% year-on-year since last year. Bear in mind, that was during also a period when retailers, particularly in apparel, were also increasing their interest as they were thinking about dealing with the COVID crisis and much more of a touchless environment, really. Specifically in apparel, we continue to see growth and interest in the pilot and in our pipeline across a number of vectors. The first of which is just new customers, apparel retailers and brands that are getting to the point of saying they want to use the technology. There's always been the interest. It's been a relative decision for them as to how they decide and what they allocate their capital to. The second area is just on existing customers, a continued expansion for customers using the technology to leverage into new categories or to promote into new geographies they occupy. On our non-apparel customers broadly, we continue to see a significant uptick in interest. More than 60% of that pipeline increase is largely in non-apparel, and particularly, I think as Mitch touched on earlier on both in food and logistics. In food, particularly, the whole drive around provenance and freshness with also the associated labor savings that will go into making sure that's clear for the retailer, is starting to resonate. Mitch talked about the rollout that's now progressing underway in the United States. We're seeing similar demand in Europe and in China. On the logistics side, the ability to make sure that you can identify clear line of sight throughout the supply chain, and particularly when it comes to routing of, let's say, for example, high value or highly hazardous materials through the supply chain, is also attracting a lot of interest and where we're seeing expansion with pilots and trials. Yeah, I'd say, just to build on that, interest continues to be strong. We saw a small pause, as we said, in activity in Q2 of last year, because restaurants were closed, and everyone was focused on just COVID-19 at the time. The interest remains strong, and I'd say that we're balancing the focus of filling the pipeline, but also just converting the pipeline. That's why we shared a couple of those examples of some important milestones that have occurred and more moving to custom solutions and then partial rollouts, as well as a couple on full rollouts outside of apparel. The momentum is as strong as we've been talking about over the last couple of years. Our next question is from Christopher Kapsch with Loop Capital Markets LLC, p lease go ahead. Yes. Hi. I was hoping you could provide any color on how demand or order patterns trended sequentially during the quarter, maybe with granularity by business or by region. I'm just curious if there's any pockets of strengthening or weakening as the quarter progressed, given how the macro is evolving. Any comments on how those trends may have looked thus far, I guess, 1 month into the third quarter, anything notable there? Yeah, Chris, I don't think from a certainly from a comp perspective, it's moved around quite a bit from a year-over-year. When I think sequentially, I don't think there's much of a change as we move throughout the quarter. I think demand continued to stay strong. As Mitch talked about earlier, we've got longer lead times in our LGM businesses or some of the regions there. That continued to stay throughout much of the second quarter. Entering the third quarter, we've continued to see strong demand and strong shipments out of our LGM business, and the other business as well. We also talked a little bit about some of the disruptions from a COVID perspective in South Asia and some of our RBIS facilities early here in July. Other than that, continuing to stay on track with our expectations. Got it. Just as a follow-up, in China specifically, that area in IHM in particular, given some overweight in auto and market exposure, was really impacted last year. Just wondering how those trends look in that business this year. There's been some macro data about possibly slowing. Just curious on China specifically. Thank you. Yeah, I mean, overall for us within IHM, as we said earlier, industrial categories grew about 60% in the quarter. With automotive within that, we grew about 80% in the quarter. Pretty strong across the globe. We're a little bit heavier weight on China from an auto perspective, certainly call continued strong growth in China from an automotive side as well. Continue to see that at this point. Again, we're typically a little bit ahead of auto builds just given where we are in the supply chain in automotive, continued to see strong growth in the second quarter. Outside of automotive, the revenue growth trends softened a bit from Q1, and that was largely the pre-buy that we'd seen into Q1 that we'd talked about last quarter. Overall, the growth within Asia, we expect, we commented quite high in Q2 year-over-year. The comps get a bit tougher going to Q3, we expect it to normalize going into Q3 and forward. Our next question is from George Staphos, Bank of America Securities, p lease go ahead. Yes. Hi? Thanks, everybody. Just a couple of quick ones from me to finish up. Deon Stander, can you talk at all about what you're seeing in terms of payback periods and returns to your customers and how that might, from adoption of smart label and RFID, and how that might have evolved over the last couple of years, either in aggregate or by channel, recognizing you're not going to be able to get into a hell of a lot of detail here. Just, wanted to see what you might be seeing there in terms of what your customer is saying and why that you're seeing growth in the pipeline. The second question, to get back to Chris' question. We had seen some signs from our contacts that there was a bit of a June lull after a very strong April and May. I take from your comments, you didn't see that from your product, but just want to affirm that. Thanks, and good luck in the quarter. George, I wasn't sure what the June lull was that you were referring to. I'm not sure what business you're referring to overall. You can come back online. Deon, do you want to talk about Intelligent Labels payback, what our customers are experiencing? Yeah. George, to that specific point, I think the last time we touched on this, the payback continues to be significant and strong for apparel customers and increasingly based on the pilots and trials we've seen for both food and logistics customers. Intuitively, we typically tend to see paybacks within the year from a customer program deployment overall. I'd also say that the ancillary benefits that are starting to accrue at the various end customers are seen more. For example, where in apparel it might have been much more around inventory accuracy in store, there is now much more use of the same technology, the same labeling, for example, to say what is the supply chain visibility? Increasingly, how are they going to start tying that to some degree of consumer engagement as well? Similarly then in food, for example, where there may be a big focus on productive use of labor, let's say in quick service restaurants, that's now extending using the same technology backwards to say, well, how do we also make sure that we have provenance of where products are coming from and ensuring the freshness of those items as well, George. Our next question is from. Yeah, George, maybe Well, if I can just comment on the other part. Oh, sure. George, I'm not sure exactly what the nature of this other part of your question was around June. June volumes remained strong for us. If it's referring to last year, there was a June lull that started. This year, volumes remained strong. As we look at it from an end market perspective, we comment about LGM and as well as RBIS. Demand remained strong. Some of it in LGM could be a bit of some inventory building. We don't yet know. We definitely think end markets remain relatively strong to where they were a couple of years ago. Within RBIS, retailers and brands are focused on getting product available and ready for back to school and thinking through holiday, because they're expecting a rebound, a pretty big one relative to where we've been. Our next question is from Paretosh Misra with Berenberg Capital Markets, p lease go ahead. Thanks. Good morning. Why is food one of the main areas of focus for Vestcom? Is that because food items have shorter expiration dates, so you constantly need to update pricing to promote sales, or is it something else? Just very quickly, Vestcom is focused on the categories of grocery stores, drugstores, and dollar stores here in the U.S. and do the branded and pricing labeling solutions at the shelf edge, but much more beyond food than food. Our comment around food is specifically the link that we see where for our ability to accelerate adoption of Intelligent Labels in the food category. That's one of the areas where we see a high-value strategic option. Just to be clear, Vestcom is across categories within all those stores. We talk about food really from the lens of our Intelligent Label strategy. Got it. Noted. Are there customers who currently use Vestcom's pricing and data management in your RFID products, or is that an opportunity? That is actually where the opportunity is. Actually, some of the companies that the customers that they have, we're actually already working with through are in the pipeline, if you will, whether it be business case or pilots and so forth. There's an opportunity beyond who we've traditionally been interacting with organically, if you will. That's absolutely where part of the opportunity is, as well as bringing the combined capabilities of the two around data management, the data access that Vestcom brings, and obviously just the technological and business development capabilities that we have within Intelligent Labels within RBIS. Mr. Butier, there are no further questions at this time. I'll turn the call back over to you for closing remarks. Very good. Well, thank you, everybody, for joining the call today. Want to thank again the team for their tireless efforts in keeping each other safe and continuing to deliver for our customers. We are focused on the success of all of our stakeholders. Thank you very much. Ladies and gentlemen, that does conclude our conference call for today. We thank you all for your participation and ask that you please disconnect your line.