Ladies and gentlemen, thank you for standing by. [Operator Instructions] Welcome to Avery Dennison’s Earnings Conference Call for the Second Quarter Ended July 3, 2021. This call is being recorded and will be available for replay by noon Pacific Time today through midnight Pacific Time July 31. To access the replay, please dial 800-633-8284 or +1-402-977-9140 for international callers. The conference ID number is 21969420. I’d now like to turn the call over to John Eble, Avery Dennison’s Head of Investor Relations. Please go ahead.

Thank you, Moladin. 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; and 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, raise 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 label strategy. Deon will tell you more about the acquisition, both the strengths 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 in markets and adding to inflationary pressures. This constraint on the availability of raw materials, freight and in the U.S. labor continues to…

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 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’ 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 complimentary 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 stats, which…

Thanks, Deon. Hello everybody. I’d like to add – first add a few points about Vestcom and I’ll be referring to the transaction summary on Slide 17 of our supplemental materials. As mentioned, 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. Now, 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 increase in 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…

Thank you very much. [Operator Instructions] And our first question comes from the line of George Staphos with Bank of America Securities, Inc. Research. Please go ahead.

Thanks, Operator. Hi, everyone. Good morning. Thanks for the details. Congratulations on the progress so far this year. I guess my first question is on Vestcom, obviously, pretty big topic today. And, 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 and mention, how the brand owners and retailers would like it, how does it really leverage Avery’s core capabilities and smart labels? And why did you need this? In your view, what were the one or two primary issues? And can you comment a bit on what the competitive landscape is, how does Vestcom rate versus its nearest peers? And I don’t know if there’s even a share, if you could market share, you could offer there. Thanks.

Thanks, George, for the question. So, let me just start by saying from our – 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 the high performing, high value business as it is. And second is highly synergistic, as you pointed out George to our RBIS business, with complimentary channel access, and strong variable data management capability. And the third thing is it really helps to leverage and grow our IL ambitions in particularly in food, where they specifically have access and deep relationships in a channel that we are just starting to build traction in. And secondarily, in combination with our variable data management capabilities, we’re able to execute more efficiently. And then finally, I think, more importantly, in the longer term, is that the combination of both businesses I think will help acceleration – accelerate the innovation that really needed at retail level to provide better and more integrated inventory management, pricing and consumer engagement solutions. And some of the stuff that we started to build on already with ZippyYum and atma.io platform launch. From a competitive position there are clearly the market leader in their segment by some distance. And we believe that the complementary skill sets that we both have both in variable data management and the access that will create from an Intelligent Labels perspective, will be value added to all of our stakeholders.

Okay, thanks that’s 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 second half? Thanks. And I’ll turn it over.

Yes, George, as I mentioned that being there relative to the guidance from the first half to second half perspective, just as you said, we’ve seen inflation increasing throughout the year, increasing throughout the second quarter really, at the end of Q2, beginning of the third quarter really starting to see some more increases in some of the regions. So, we have been announcing new pricing, it will take a little bit of time for that new pricing and or finding new ways to take costs out of raw materials to kick in. So, 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 plus or minus range, so that I talked about a little bit earlier. So, somewhere in that range is what we would expect from our sequential first half to second half gap.

And our next question comes from Ghansham Panjabi with Baird. Please 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? And then the volume piece, which segment and regions are sort of driving that upside?

Yes, Thanks, Ghansham. So I think when you look at that, kind of five point increase at the midpoint, roughly 40% to 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. So the rest of that being, kind of 2.5 points is assuming some continued strength and volume and a little bit of incremental price from what we had assumed before. So, 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 and then my second question on Vestcom, can you just share, the historical growth rates, the margin profile over time? And also, is it mostly North America in terms of sales? And also if that is the case, the transferability of the solution to some of the overseas markets, including in Europe? Thanks.

Yes, Ghansham on that one Vestcom is very quickly, 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 plus years. So, very consistently delivering that level of growth and the margins are above the company average both pre-synergy and obviously post-synergy. So great business, highly synergistic with RBIS, I actually – 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. So just in a new adjacency link the food, which we see as an opportunity to accelerate the Intelligent Labels strategy. So that’s the short of it Ghansham.

Our next question is from Anthony Pettinari with Citigroup Global Markets Inc. U.S. Please go ahead.

Hi, good morning. In LGM, I think you indicated North America was up high single digits and Europe was up mid teens, is that kind of 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?

Anthony if your question is, why did Europe outpace North America, but if you look at last year, they both had periods, early in the spring, have some high levels of growth in the teams, and then things go off in June and July for both regions. So they’re both comping, actually, in the second quarter pretty strong demand on all from Q2 of last year. Within Europe, we basically if you recall, last year, we said, in both regions that we had like we had seen in some share during that period, we’ve recovered that fully within Europe, we have not yet in North America. And that’s basically just because we got very long, just or a lot big order book, we’re going be 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 disproportionally in North America. So that’s a little bit of a distinction between the two. As far as how it plays out to 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 end market, those remain strong, they’re clearly softening. And I’m talking about the end market with the CPGs are reporting, their softened growth from where it was last year, when you had a lot of the pantry loading and so forth. But overall consumption looks to be pretty high from that standpoint. So 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. So that’s something in the range of our guidance that we have and why midyear – midway through the year, we still have a relatively wide range on our guidance on the top-line.

Okay, that’s very helpful. And then on Vestcom, is there anything you can say about how long you’ve been working at the company is maybe a potential acquisition target? And then 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, I’m just trying to understand, what you do versus what they do?

Yes. So in general, we’ve been looking – 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 space, or adjacent to that. And this fits both of those criteria. So we’ve got, as we’ve talked about before, quite a few companies we have on our radar from M&A pipeline perspective. So that’s what I’ll say about that. Yes, as far as direct overlap, this is an adjacent market to RBIS with, as I said, very synergistic, very similar as far as what they do and how they do it. But it’s as far as selling to dollar stores and grocery stores and drug stores 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 and we’re working with restaurants which Vestcom doesn’t focus on of course. So that’s where I think the emerging territory receive with IL, Intelligent Labels, sorry, and Vestcom is where we have the opportunity to have so. Deon anything you want to add to that?

No. I think the other piece Mitch, just we emphasizes as it 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 there in different channels.

Our next question is from Neel Kumar of Morgan Stanley Investment. Please go ahead.

Great, thanks for taking my question. You mentioned 2Q being about $0.10 above your expectations or budget, U.S [indiscernible] specifically performance in better versus expectations are with a generally broad-based, and then your $0.20 full year guidance increase in five, second half numbers that are about $0.10 above your prior expectations, is that concentrate in any particular segment?

Good, Neel. So, I think in the second quarter is relatively broad-based, I think, as we talked about demand was strong across all 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. And we continued to see strong growth in the apparel business as we talked about as well as Intelligent Labels business within RBIS, and continue to see strong growth in IHM. So our back half guide assumes a little bit of those continued trends as well, some of that strengthened volume demand across the businesses that we’ve seen in the second quarter.

Right, that’s helpful. And then just a couple of questions on Vestcom, could you quantify the potential synergies from the deal? And then I was just wondering, you can touch on the cash flow characteristics, any sense of the capital intensity and free cash flow conversion of the business?

Yes, so 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. And as far as the cash flow levels and Greg, you want to comment on that?

Yes, I think overall to 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. So we expect a pretty solid cash contribution in 2022 from this business.

Our next question is from Josh Spector of UBS. Please go ahead.

Yes. Hey, guys, thanks for taking my question. And just when you talk about raw material constraints in North America and 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?

Yes, so it’s chemicals and films, largely. But in addition to that, it’s just freight. So there’s longer lead times and bolt-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. So those are the two primary areas. Overall, it’s a lot of – this is still just the further upstream than us working through all the capacity limitations that existed because of the storm in Texas, the industry slowly working through those backlogs from what we see. We also think that’s what’s driving some of this demand quite high of people building some inventories, and so forth. And so it might be a bit elevated across multiple industries. And as that, you see some abatement of that that should ease on the supply chain. So, we don’t have clear visibility. Overall, when these will end its broad-based, but we would expect looking here as we get towards the end of this year, things start to ease up.

Okay, thanks. And just on the raw material inflation sequentially. Can you characterize how that inflation would look different between LGM and RBIS and when you talk about recovering that in fourth quarter, is that across both segments? Or when will we expect one to be ahead of the other?

Yes, 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. And we started to see some paper increases in late Q2, specifically in Europe. So, we’ve seen increases really on the LGM and IHM side. It progress 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. So that’s our – how we’re seeing the inflation environment evolve right now.

Our next question is from Jeffrey Zekauskas with JPMorgan Securities U.S. Please go ahead.

Thanks very much. In your RBIS business, how much did the non-Intelligent Label solutions area growth?

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 contrasts 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.

Okay. On Vestcom in your release, you said that 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?

So overall, Jeffrey, the way that the business works is they are highly efficient and taking in data, as I said earlier on and transforming that into unique shelf-edge labeling solutions. And in a very short rapid time, they’re able to assimilate the data from different sources, and then print it typically on digital assets are very similar to our own. Then those printed labels are effectively taken and boxed by individual store across the vast network that they serve for their customers. And there is – in certainly in that area, a number of labor component pieces they have across the 11 DC they operate. And that DC network give them the ability to reach customers in a geographic radius in a very, 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.

And if I can just add to that, Jeff, in addition to what Deon said, it’s the relative to RBIS, I’d say it has more information technology experts, relative level of revenue, and then less, as far as a lot of the production, much less level – more automation some of that, but then 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 unique pack for every single store, if you will in the U.S. of the customers and so forth, if that gives you a relative sense.

Our next question is from John McNulty, BMO Capital Markets U.S. Please go ahead.

Yes, thanks for taking my question. Just on the acquisition, if I’m 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 kind of the mid to upper 20s. Are we thinking about that right? Or is there something else that we need to be factoring in here?

Yes, John, given the relative size of this business, we’re not going to get into a bunch of specifics around that. But 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, and so – and the multiple that we’re paying being less as both before and after synergies, of course.

I think just 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 the any amortization within the second year. So, we’re literally looking at this being pretty quickly EVA accretive. And we’ve thought about this and relative to our long-term targets we just issued a few a few months ago, we’re talking about continuing are strong growth rates. Continuing to expand our margins, continue to deliver double-digit EPS growth, and deliver top quartile returns on capital. And 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 and we think we continue to deliver top quartile capital and meet our long-term target for our history with this acquisition. So it really fits and helps us accelerate, all of our key financial, long-term targets that we communicated a couple 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 a COVID is completely in the rearview mirror? But it seems to – 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 basis that’s starting to accelerate at this point, now that – workers can be in place, et cetera? How should we be thinking about that?

Sure, John, so I’ll let Deon comment on your question on Intelligent Labels and patent level of pilots and what we’re seeing. Before doing that you just mentioning COVID, in the rearview mirror, I mean, it’s still – there’s still an uncertain environment. And particularly when you get out of the U.S. and maybe Western Europe and China, is its still, depending on which region you’re in, they are experiencing an increase in infection rates. And so as we call it out, specifically, there is an impact here in July from some disruptions in RBIS in South Asia, specifically, given our experience in managing through in the past, we expect, especially since demand and demand is strong, that we’ll be able to work that through here in the second half. But 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. So, looking forward to being in a rearview mirror. With that, Deon, do you want to answer the second part of his question?

Sure. John, as related to Intelligent Labels, we continue to see 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. And bear in mind that was during also a period when retailers particularly in apparel were also increasing their interest, as I was thinking about dealing with the COVID crisis, and much more of a touchless environment really. So, specifically in apparel, we continue to see growth and interest in the pilot, 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 too. The second area is just on existing customers, a continued expansion for customers using the technology leverage into new categories, or to promote into new geographies they occupy. And then 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 and both in food and logistics. In food, particularly, the whole drive around provenance and freshness, with also the associated labor saving that will go into making sure that’s clear for the retailer, is starting to resonate and Mitch talked about the rollout that’s not progressing underway in the United States, but we’re seeing similar demand in the Europe and in China. And then 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 routine of that, say, for example, high value or high variable or highly hazardous materials through the supply chain is also attracting a lot of interest and we’re seeing expansion we file and try this.

Yes, I’d say just to build on that interest continues to be strong. And we saw small pause, as we said, in activity in Q2 of last year, because restaurants were closed and that was focused on just COVID at the time, but the interest remains strong. And I’d say that the – we’re balancing the focus of filling the pipeline, but also just converting the pipeline. And 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 of full rollouts outside of the apparel. So the momentum is as strong as we’ve been talking about over the last couple years.

And our next question is from Christopher Kapsch with Loop Capital Markets, LLC. Please 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 progress given how the macro was evolving. And any comments on how those trends may have looked thus far. I guess one month into the third quarter anything notable there?

Yes, Chris, I don’t think from – certainly from a comp perspective, it’s moved around quite a bit from a year-over-year. But 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. So that continued to stay throughout much of the second quarter. Entering the third quarter, we continue to see strong demand and strong shipments out of our LGM business, in the other businesses as well. We also talked a little bit about some of the disruptions from a COVID perspective in South Asia and some of our best facilities early here in July. But other than that, continuing to stay on track with our expectations.

Got it. And then just as a follow-up in China, specifically, that area in IHM in particular, given some overweight 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, so just curious on China specifically. Thank you.

Yes, the overall for us within IHM is, as we said earlier, industrial categories grew about 60% in the quarter with automotive within that we grew about 80% in the quarter. So pretty strong across the globe, we’re a little bit heavier weight on China from an auto perspective. So certainly call continued strong growth in China from an automotive side as well. So, continue to see that at this point. Getting we’re typically a little bit ahead of auto builds just given where we are in the supply chain in automotive, but continued to see strong growth in the second quarter.

And outside of automotive, the revenue growth trends, softened a little bit – softened a bit from Q1, and that was largely the pre-buy that we’d seen into Q1 that we talked about last quarter. So overall, the growth within Asia, we expect and we commented quite high in Q2 year-over-year, the comps get a bit tougher going into Q3. So, we expected to normalize going into Q3 and forward.

Our next question is from George Staphos, Bank of America Securities. Please go ahead.

Yes. Hi. Thanks, everybody. Just a couple of quick ones for me to finish up. So Deon, can you talk at all about what you’re seeing in terms of payback periods and returns to your customers and how that might have from adoption of smart label and RFID. And how that might evolve over the last couple of years, either in aggregate or by channel, recognizing you’re not able to get into ahead of a lot of detail here. But just wanted to see what you might be seeing there in terms of what your customer saying and why that you’re seeing growth in the pipeline? Then the second question, to get back to Chris’s question. We’ve seen some signs from our contacts that there was a bit of a June low, after very strong April, 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 low was that you’re referring to? I’m not sure what business you’re referring to overall. Being come back online. Deon, do you want to talk about Intelligent Label payback, what our customers are experiencing?

Yes, just that specific points, 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. And inclusive, 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 seeing more so for example, we’re in apparel, it might have been much more around inventory access in store, there is now much more use of the same technology or the same labeling, for example, to say, what is the supply chain visibility, and increasingly, how they’re going to start tying that to some degree of consumer engagement as well. And similarly then, in food, for example, where there may be a big focus on productive use of labor, that same quick service restaurants. That’s now extending, using the same technology backwards to so 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.

Yes, George, so maybe just on the well, if I can just comment on the other part, George, I’m not sure exactly what the nature of this other part of your question was around June, but June volumes remain strong for us. If it’s referring last year, we there was a June volume started, but this year, volumes remain strong. As we look at from an end market perspective, we comment about LGM and as well as RBIS, I mean, demand remains strong. Some of it in LGM could be a bit of some inventory building we don’t yet know. But we definitely think end markets remain relatively strong from where there were a couple years ago. And then in 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 pretty big one relative to where we’ve been.

Our next question is from Paretosh Misra with Berenberg Capital Markets. Please 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?

Yes. So just very quickly, Vestcom is focused on the categories of grocery store, drug stores and dollar stores here in the U.S. and do the branded and pricing, labeling solutions at the shelf-edge. A much more beyond 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. So just to be clear, Vestcom is across categories within all those stores. We’ve talked about food really from the lens of our Intelligent Labels strategy.

Got it. Noted. And then are there customers, who currently use Vestcom’s pricing and data management and your RFID products? Or is that an opportunity?

That is actually where the opportunity is? So, we actually some of the companies, that customers that they have, we’re actually already working with food through are in the pipeline, if you will, whether it be business case, or pilots and so forth. And then there’s an opportunity to beyond, who we’ve traditionally been interacting with on the as organically, if you will. So that’s absolutely we’re part of the opportunities 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.

And 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. I want to thank again the team for their tireless efforts and keeping each other safe and continue to deliver for our customers. And we are focused on the success of all of our stakeholders. Thank you very much.

And 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.