Ladies and gentlemen, thank you for standing by. During this presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. Welcome to Avery Dennison's Earnings Conference Call for the Second Quarter Ended on June 29, 2024. This call is being recorded and will be available for replay after 4:00 p.m. Eastern Time today and until midnight, Eastern Time, July 30, 2024. To access the replay, please dial + 1-800-770-2030 or + 1-609-800-9909 for international callers. The conference ID number is 5855706. I'd now like to turn the call over to John Eble, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, sir.

Thank you, Angela. 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 from GAAP on schedules A-4 to A-9 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 subject to the safe harbor statement included in today's earnings release. On the call today are Deon Stander, President and Chief Executive Officer; and Greg Lovins, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Deon.

Thanks, John. And hello everyone. We delivered another strong quarter with EPS of $2.42 in the second quarter above our expectations and are raising our full-year guidance. We now expect earnings of $9.30 to $9.50 per share for the year, and are targeting roughly 20% earnings growth compared to prior year. The materials group continues to demonstrate its resilience in the second quarter, again delivering significant volume and margin expansion as we lap the impact of downstream inventory destocking last year and drive productivity across the business. Label volumes in Europe and Asia were above our expectations, while slightly below expectations for North America. Broadly, retail volumes remain soft relative to long-term trends. As consumers continue to deal with the cumulative effects of high inflation, we are not anticipating this to change in the second half of the year. The solutions group delivered strong top-line growth in the second quarter driven by both the base and high-value categories and expanded margins. The retail apparel channel was stronger than we expected. Despite retailers and brands remaining cautious in their near-term sourcing plans, most have now met their targeted inventory levels following more than a year of destocking, and volume has normalized quicker than we anticipated for the upcoming back-to-school season. Year to date, enterprise-wide intelligent labels grew mid to high teens. In the second quarter, strong growth in general retail and logistics continued, while apparel was also strong as customers normalized order volumes and new rollouts continued. For the year, we are now targeting to deliver more than 20% volume growth and mid-teens sales growth in our intelligent label platform driven by a rebound in apparel and adoption in new categories. We anticipate sales growth in the third quarter will be similar to the rate we delivered in the first half. As for the fourth quarter, while likely a record revenue quarter, we expect growth in the quarter will be lower than previously anticipated primarily due to the timing of customer rollouts. As we have shared in the past, new customer rollouts can be uneven, particularly in new categories, as well as by comparison to initial volume builds for new program adoption in prior years. I have high conviction in the significant long-term growth of our intelligent labels platform as we connect physical items with digital identities. In the near term, we are focused on accelerating adoption in key verticals such as food and logistics. The ability of our solutions to help address inventory challenges such as labor efficiency, waste, transparency, and consumer connection in very large volume categories like logistics, retail, and food is increasingly resonating with customers. Key pilots and rollouts are delivering significant value and compelling proof points for broader segment adoption. We continue to invest to capture the significant opportunity ahead as we grow the size of the overall industry, further advancing our leadership position at the intersection of the physical and digital. Stepping back, the underlying fundamentals of our business are strong. We're exposed to diverse and growing markets with clear catalysts for long-term growth. We are industry leaders in our primary businesses with clear competitive advantages in scale and innovation. We have a clear set of strategies that we continue to evolve over time and which are key to our success over the long term and across a wide range of business cycles. Those strategies are to drive outsized growth in high-value categories, grow profitably in our base businesses, lead at the intersection of the physical and digital, effectively allocate capital, and focus relentlessly on productivity while leading in an environmentally and socially responsible manner. We remain confident that our strategies, along with our team's ability to execute in dynamic environments will enable us to continue to generate superior value creation through a balance of GDP plus growth and top quartile returns over the long term. In summary, we delivered another strong quarter and raised our guidance for the year to deliver nearly 20% earnings growth in 2024. And while we are increasing our outlook for the year, the environment remains uncertain and warrants some degree of caution as we move through the second half. I want to thank our entire team for their continued resilience, focus on excellence, and commitment to addressing the unique challenges at hand. With that, I'll hand the call over to Greg.

Thanks Deon. Hello everybody. In the second quarter, we delivered adjusted earnings per share of $2.42, up 6% sequentially and up 26% compared to prior year, driven by benefits from higher volume and productivity. Compared to prior year, sales were up 8% excluding currency and 7% on an organic basis, as higher volume was partially offset by deflation-related price reductions. Adjusted EBITDA margin was strong at 16.4% in the quarter, up 170 basis points compared to prior year with adjusted EBITDA dollars up 19% compared to prior year and up 5% sequentially. We generated strong adjusted free cash flow of $201 million in the first half of the year, up $137 million compared to prior year. Our balance sheet is strong with a net debt to adjusted EBITDA ratio at quarter end of 2.2 times. We continue to execute our disciplined capital allocation strategy, including investing in organic growth and acquisitions while continuing to return cash to shareholders. In the first six months of the year, we returned $177 million to shareholders through the combination of share repurchases and dividends. In April, we announced a 9% increase to the company's quarterly dividend to $0.88 per share, a dividend we've now grown 10% annually over the past decade. Turning to the segment results for the quarter, materials group sales were up 6% excluding currency and on an organic basis compared to prior year, driven by low double-digit volume growth, including a slight customer pull forward in Europe and Asia, partially offset by deflation-related price reductions. Looking at labeled materials, organic volume trends versus prior year in the quarter, mature markets were up significantly as we continued to lap downstream customer inventory destocking that took place last year. As you'll recall, destocking in Europe was a bit more exaggerated than in North America, resulting in a larger rebound this year. Europe was up more than 25% and slightly ahead of our expectations, and North America was up high single digits. Emergent regions delivered strong volume growth above our expectations with Asia up mid-single digits with particular strength in India and ASEAN and Latin America up mid-teens. Compared to prior year, graphics and reflective sales were up low single digits organically. Performance tapes in medical were down low single digits organically as strength in industrial categories was more than offset by a decline in medical and personal care, partially driven by inventory destocking in those categories. The materials group delivered a strong adjusted EBITDA margin of 17.9% in the second quarter, up more than two points compared to prior year, driven by higher volume and benefits from productivity, partially offset by higher employee-related costs. Regarding raw material costs, globally, we saw low single-digit inflation sequentially in the second quarter. The increase was driven by higher paper prices, primarily in Europe. We have been addressing the cost increases through a combination of product re-engineering and pricing actions as we discussed last quarter. We've continued to see paper prices increase as we move through the second quarter and are expecting modest inflation sequentially in the third quarter. We're monitoring this dynamic closely and will continue to evaluate further pricing actions as appropriate as we move through the back half. Given this dynamic and the typical volume seasonality from Q2 to Q3, we expect materials group margins will sequentially moderate in the third quarter. Shifting to the solutions group, sales were up 11% on an organic basis and 14% excluding currency, with high-value solutions up low double digits and base solutions up mid to high teens as apparel volume normalized ahead of expectations. Year to date, enterprise-wide intelligent label sales were up mid to high teens with strong growth in apparel and non-apparel categories, particularly logistics and general retail. The solutions group adjusted EBITDA margin of 16.8% was up 100 basis points compared to prior year, driven by benefits from higher volume and productivity, partially offset by higher employee-related costs and continued growth investments. Margin improved 70 basis points sequentially, and we anticipate further sequential margin improvement in the second half, driven largely by productivity initiatives and higher volume. Now, shifting to our outlook for 2024, we have raised our guidance for adjusted earnings per share to be between $9.30 and $9.50, a $0.15 increase to the midpoint of the range, despite a roughly $0.5 headwind from currency translation, which is largely in the second half. At the midpoint, our outlook reflects 19% growth versus prior year. This increase reflects our strong second quarter and a modest increase to our operational outlook for the second half. Our outlook includes four key drivers of earnings growth for 2024, which are all on track. The normalization of label volume early in the year; the normalization of apparel volume midyear; significant growth in intelligent labels; and ongoing productivity actions. We've outlined additional key contributing factors to our guidance. We continue to expect high single-digit volume growth partially offset by deflation-related price reductions. We expect incremental savings from restructuring actions of more than $50 million, up $5 million from our previous outlook, and we now anticipate a headwind from currency translation of roughly $10 million in operating income for the year compared to our previous outlook of a roughly $5 million headwind. As you may recall, we've historically seen lower sequential volume seasonally in the third quarter, driven by the August holiday period in Europe, the timing of back-to-school shipments in apparel, which historically has resulted in a mid-single-digit sequential decline of EPS in Q3 from Q2. We anticipate Q3 EPS this year will be consistent with that historical pattern. In summary, we delivered another strong quarter, increased our outlook for earnings growth, and remain confident in our ability to continue to deliver exceptional value through our strategies for long-term profitable growth and disciplined capital allocation. We look forward to sharing more about our long-term objectives and strategies with all of you at our Investor Day in September and hope to see you there. And now we'll open up the call for your questions.

Your first question comes from John McNulty with BMO Capital Markets. Please go ahead.

I guess the question would be on the solutions business, particularly tied to the intelligent label side. Obviously, you pulled down or it looks like the revenue contribution for this year and it sounds like a lot of it's going to be tied to just the timing of rollout. Does that just mean something got pushed out to the beginning of next year or are you just not seeing the pilot programs necessarily move to the next step as quickly as you were thinking? Maybe you can give us a little bit of color on that. And then I guess the other question tied to that would just be around the solutions margin. If we go back to kind of the past of pre-destocking that we saw in the apparel markets, you were in the ‘18 and change kind of EBITDA margin range. You are obviously coming in below that right now. Any reason now that it looks like some of that destocking is over that to think that you shouldn't be able to get back to that 18% plus range as we kind of look out over the next 12 months?

Yes. Hi John, this is Deon. Thanks for the question. I'll handle the first part, and I'll ask Greg just to comment on the second. I will just say that our original outlook for the year, when we planned the year called for lower revenue growth relative to the volume growth that we planned. We are now targeting, as I said in my notes, 20% volume growth this year with mid-teens revenue growth. We anticipate in Q3 that we are going to see a similar growth rate for revenue as we've seen in the first half of the year. We expect revenue growth in the fourth quarter to be lower than previously anticipated, largely on volume changes as it relates to customer rollout timing. There's a small element of mix, and you'll recall that we have different price points across different segments and products and use cases, but they all typically have the same margin profile, which I'll remind everyone is still above the segment average. And then finally, there will also be some deflation-related pricing impacts. I will say on that point that if you recall during ‘22 and ‘23 during the supply chain shortages, we did see inflation across the business including intelligent labels which we are now addressing in the last few quarters. If I turn to specifically the customer rollout pieces, there are two elements to this. This is ongoing rollout with the existing customers and also anticipated rollouts from pilots that have moved slightly in their timing. This is not unusual. We've spoken in the past about when you have new adoptions in new categories, timing can tend to be uneven move intra-quarter. On our existing customers, there are two elements where we are seeing some volume impacts now as it relates to our existing customers with existing rollouts. One is, the comparison with inventory builds in the launch phase in the prior year. It's largely a fourth quarter issue on logistics. Secondly, as our customers move through their adoption journey, taking into account things like new category adoptions, mostly in general retail and also infrastructure readiness, are they ready to take on the next elements of their journey? Sometimes that's just a timing issue, mostly in logistics. I will say, John, that with all of our customers, whether they be in pilot trial or rollout, they're continuing to see significant value and returns on investment in leveraging this technology. I would argue that having spoken to them, their conviction in the adoption of the technology is even higher. Additionally, we continue to see real strength in our pipeline across all segments, underpinning my conviction that this long-term growth opportunities in this platform are significant.

Thanks Deon, and John, to answer your question on margins, as we've shown over the last couple quarters, as the apparel segment and categories are normalizing, we've seen margins improve. We saw about a 70 basis point improvement here in Q2 versus Q1. I think I talked about in my prepared remarks and in our slides that we expect that to continue improving as we move through the back half. The short answer is yes, we would expect to get back to those 18% plus margins that we had, like you've mentioned, a year or two ago. That's an area we'd like to get back to, and we expect to be able to deliver as we said.

Your next question comes from the line of Ghansham Panjabi with Baird. Please go ahead.

Good morning. I guess going back to the second quarter and some of the variances that drove the upside relative to your previous guidance, was it as simple as just Europe and maybe apparel was a little bit better? On the apparel improvement, how are you sort of disaggregating between some of the shipping challenges and some of the pull forwards that we read about in the headlines in the context of just the retailer earnings that have been out recently on the apparel side? Just I'm not showing any signs of real improvement.

Let me address that. Yes, at the high level, the variances are largely in our labels business from a volume perspective, largely in Europe, and then from apparel, where we've seen sooner than expected normalization that will continue during the second half of the year. On apparel specifically, I think there are a couple of dynamics at play over here. Certainly, the macro environment still remains very uncertain and apparel is largely driven by consumer sentiment, which is not robust. It's also true that more recently in discussion with our customers, their inventory levels are now at where they would need them to be. This is after a year of continuous destocking. We're starting to see some degree of uptick in import volumes. Typically, our volumes precede those. Our performance in Q2, which is slightly ahead of expectations, suggests we'd see more uptick in import volumes across the two segments in North America and Europe as we move forward. The only other piece I'd call out is that, as always in apparel, you get a vast range of variances in terms of customer performance. Some customers are doing very well, while others are not, and that's probably reflected in some of the earnings releases that you've seen more recently.

Just to answer the first part of your question, yes, the two big drivers of the beat in Q2 were the better performance in materials in Europe as well as the apparel, as Deon just explained.

Your next question comes from the line of George Staphos with Bank of America. Please go ahead.

Thank you for taking my question. My two-parter: one question on solutions. First of all, just piggybacking on the question that Ghansham brought up. From what your customers said or saw, was there any pull forward ahead of any potential tariff-related issues, or do you think that was really a non-event for you in the quarter? If you could provide any color there, and if you did just now, I had missed kind of the nuances there. The discussion you just had on volume versus revenue growth and the implied sort of reduction in ASPs, how much of that, Deon, is actually coming from just learning curve seeing improved manufacturing economics? You are passing that along because that's how you get adoption. Help us parse that versus the other deflation that might be occurring off of the supply chain issues from a year or two ago. Thank you.

Sure, George. Regarding the first one, we've not necessarily seen any visible signs of apparel pull forward as a result of tariffs. There's clearly a lot of discussion among retailers as to what the likely outcome will be of a more tariff-intensive future, if that turns out to be the case. But at the moment, we've not seen anything. If you recall in the second quarter, what we did see was some degree of pull forward from the third quarter as it related more to the Red Sea shipping crisis, where goods had to go around the Cape of Good Hope rather than go through the Suez Canal. There's an element of that, but generally when we look across it, we don't see anything that suggests there's been some degree of pull forward. There may be in tiny bits as well. Our observation in the second quarter suggests a quicker normalization of volume and apparel than we anticipated. As it pertains to volume and revenue passing for intelligent labels, if you look back over the last five years, I would characterize that ASPs have declined in the past typically in the mid-single digits range. That's not unexpected as the technology curve has ramped up and more volume has come into play. Those declines in time have actually helped accelerate new segment adoptions and unlock new opportunities. I believe we will see some moderation in those type of declines largely because some of the bigger gains have already been made. We're continuing to lean into our scale advantages, particularly in our innovation processes, manufacturing, and innovation at the product level, which we think has fundamentally underpinned our competitive advantage over this period. At the end of the day, pricing is one element that has come to bear in the market. I think the more significant element as we move forward is the value creation that customers are experiencing. This is a very pertinent discussion that we are currently having with customers as we consider what value they create which is why the ROI is looking so high. As we enable a broader solution, being that singular point of contact for customers across each node of that ecosystem, the more likely we are to capture more value.

Your next question comes from the line of Mike Roxland with Truist Securities. Please go ahead.

Thank you for answering my questions and congratulations on a strong quarter. I would like to get more details from you, Deon, about the delay in customer deployment in Q4. You mentioned logistics; does this issue extend to other sectors as well? Specifically, regarding general retail, given the variety of SKUs, could that be contributing to a longer deployment process? Can you also provide insight into the deferred flows? When do you anticipate these delays to affect 2025? Lastly, regarding deflation, could you share any strategies you are implementing to lower material costs and enhance productivity to counteract the deflation you are facing?

Sure, Mike. Let me clarify. Regarding logistics, this is not an impact of rollout. The rollout has largely been completed for our large logistics customers as we went through the back end of last year. The biggest quarter was the fourth quarter in which we both rolled out and deployed. This year has been largely about servicing that, albeit with lower overall parcel demands across the market. As it relates specifically to the timing question, I made the point of saying that we see the greatest variance of timing relative to our expectations, typically in new pilots that are moving to rollout and often in these newer segments. We saw the same in apparel when we first started. You have an estimate of timing. A number of factors come into play at that point, not just the returns that the customer will see, but also the timing of how they adopt that either in the supply chain or in the stores. Sometimes that can change according to their specific dynamics. The typical movements we see are intra-quarter within a year and typically on a 12-month basis. So, anything that may be slightly delayed in one quarter typically tends to move forward to the second or third quarter afterwards. Regarding the deflation, it's been a core strength of our company to drive productivity. I touched on that in my prepared remarks. We've taken that approach significantly in our Intelligent Labels platform. If you think about our Materials business being the world leader in roll-to-roll process manufacturing and the capability that comes with it, we've leveraged that capability to apply to a new segment with enormous volume growth potential in our Intelligent Labels platform. We will continue to leverage our innovation in material science, process innovation, and solutions innovation to create further value and provide a step change in our competitive differentiation in the market.

Next question comes from the line of Josh Spector with UBS. Please go ahead.

I wanted to ask about RFID in a similar vein. Just where now we're talking about volume and pricing a little bit more. Has anything changed on the competitive dynamics within RFID to require greater pricing actions? Or are we now at a phase of rollout where there's any price adjustments that we need to consider? When you talked about historically when you raised the bar and said 20% growth in RFID, is that more volume and we need to think about price separate from that? Or do you think about that more as organic? Thanks.

Thanks, Josh. To your last question, the change is more in volume. As it relates to the competitive dynamics, we clearly see competitive dynamics in the intelligent label market. It's a growth industry that's always going to attract more capital. But our focus has been on maintaining and expanding our leadership share in this. We do this through innovation at a process level, at a product level, and the solution level, and by activating industries. We've invested ahead of the curve to ensure that we can activate industries like logistics and food. You've seen the outcome of that. We're leading the logistics segment industry and doing similar processes with pilots in food, whether it's in grocery or QSR. Looking ahead, I have very high conviction in our capability and the way we uniquely play a role across each node of the Intelligent Labels ecosystem. Our experience has shown that when new customers come on board and consider adopting the technology, they look for credibility, scale, global reach, and experience. This positions us better than anyone else. Our experience shows that we're a disproportionate leader in our share, and we expect to maintain or expand that share this year.

Your next question comes from the line of Matt Roberts with Raymond James. Please go ahead.

Surprise, surprise. I will ask about RFID. So maybe given the timing issue in 2024, could you now envision with that timing growth of more than 20% in 2025? If you could provide any examples, timing, or magnitude of those initial food or QSR rollouts, that would be certainly helpful. Thank you.

Sure, Mike. Let me just start by saying the reason why I think we have such conviction in the long-term growth potential of this platform. If you think about apparel being a 45 billion unit market, we're roughly 40% penetrated with intelligent labels now. In contrast, logistics is 65 to 70 billion units, and we have just one customer in the industry starting to adopt. Food, by comparison, is over 200 billion units and is in an early stage. The runway for this platform in connecting physical items with digital identities is substantial and extends over many years to come. We are engaged in discussions with all logistics providers. In some cases, we're conducting trials and pilots. On the food side, we are driving productive pilots across both brick and mortar restaurants and grocery stores. Regarding the longer-term volume outlook, we have an Investor Day coming up in September where we'll focus on our strategic plans and outlook for the next five years, and we'll provide more details at that point.

Your next question comes from the line of Jeffrey Zekauskas with JPMorgan. Please go ahead.

Thanks very much. I was hoping you would describe a little bit of what's going on in SG&A expense. The SG&A expense was up $55 million year-over-year or about 17%. If you look at Avery for the past five years, the SG&A expense on a sequential basis in the second quarter goes down every year. So, is there something unusual in the second quarter? How did raw materials change year-over-year in the second quarter?

Yes, Jeff. The biggest driver versus last year, obviously, is that in 2023 we did not deliver results in line with our initial expectations. So, our incentive compensation accruals in 2023 were quite low, down to zero for corporate. This year, we're raising our expectations, so incentive compensation accruals are a bit higher. This results in a sizable year-over-year swing. Regarding inflation versus deflation overall, inflation sequentially was very low single digits versus prior year, high single-digit deflation, really about half driven from paper year-over-year and the rest in chemicals and film. A little bit of sequential inflation came from paper largely in Europe, but year-over-year, we still experienced high single-digit deflation.

Jeffrey, the only thing I'd also add to what Greg said is, last year, as you recall, when we were going through that more challenging period, we improved and strengthened our cost management, particularly on some of our temporary costs. As volume has recovered and normalized in the second quarter, some of those temporary costs have returned, and you'll see that contrast factored in addition to the incentive compensation basis.

Your next question comes from the line of Anthony Pettinari with Citi. Please go ahead.

I was wondering if you could talk a little bit about Vestcom. Obviously, not the biggest part of your business, but how has that business been performing this year in terms of organic growth, and maybe what's coming from volume or price? We've seen stories of large retailers adopting digital shelf potentially in a big way. Just wondering how Vestcom is set up for a move toward a bigger digital shelf environment?

Sure, Anthony. Our Vestcom business continues to do well overall, and it contributes in several ways, not least the fact that it's a high-value segment business with greater than segment average margins. It also provides access and reach to many food customers that we had limited access to in the past, which has aided our food initiatives around intelligent labels, as well as other sectors like drug stores and dollar stores. This year, particularly in the second quarter, there was some softness related to challenges faced by drug stores. However, we have reaffirmed the value this business delivers in productivity solutions and shelf-edge labeling. We've re-signed a significant U.S. retailer for a multiyear deal, and we anticipate by the end of the year to gain a new large U.S. retail banner as part of our customer portfolio. Regarding digitization, it is an inevitable trend we see moving forward, and this actually serves as a tailwind for us in our solutions business. While our Vestcom business currently utilizes analog shelf labeling, its strength lies in its data composition engine. Our business processes a vast array of data including point-of-sale data, planogram data, pricing information, and advertising data. Through this data composition, we produce outputs currently in analog labels. We are also involved in trials for electronic shelf-edge labeling, positioning ourselves well for both analog and digital shelf environments. I believe this will enhance our ability to navigate the mixed estate as electronic shelf labels become a larger part of retail, catering to specific segments.

Your next question comes from the line of George Staphos with Bank of America. Please go ahead.

In Materials, margins were 50 to 100 basis points higher than we anticipated. How did margins perform compared to your initial forecasts for the quarter? Deon and Greg, can you break down how much of that was due to operating leverage, the cost reduction program, and any impact from your initial round of pricing? Any insights would be helpful as we look ahead for the rest of the year. Thank you.

Thanks, George, for the question. The answer is a little bit of all those buckets that you mentioned. As we said, Europe is our largest region in the Materials business, and that business did have a stronger top line quarter than we had anticipated, which helped from a leverage perspective. We also raised our expectation for restructuring savings this year, which is contributing in our Materials business. Overall, strong ongoing productivity also played into the quarter. I think as I've said, over the last couple of quarters, when we set our long-term targets through 2025, we talked about targeting around 17% EBITDA for our Materials segment. Over the last four quarters, we've shown that we're on track to deliver that or better. Our expectation is to continue delivering at that target or a little above it going forward. We focus on balancing growth with margins and capital efficiency to drive economic value added. We think that's the right approach for strong total shareholder return.

Our final question comes from the line of Jeffrey Zekauskas with JPMorgan. Please go ahead.

If you had to allocate your $50 million in cost savings to cost of goods sold and SG&A, how would you allocate it? For the quarter, if you look at the negative price mix in Solutions, was it about half of the negative price mix in Materials?

On your first question, Jeff, I think it's probably a relatively even split. We're continuing to drive probably a little bit more in cost of sales, as we've driven actions we talked about last year, a large initiative in Europe within the materials business. We've also taken advantage of the lower volumes due to destocking last year to further enhance productivity in the Solutions side. It's a combination, probably a little more heavily weighted on the cost of sales side for the quarter. Regarding price mix, we had double-digit volume growth with top-line growth of about 6%. As you asked earlier, we had high single-digit, close to double-digit deflation year-over-year, with price down in mid-single digits in the Materials business. In the solutions side, price and volume and revenue growth were relatively similar to slightly higher volume growth and revenue growth.

That concludes our question-and-answer session. Mr. Stander, I will now turn the call back to you for the closing remarks.

Thank you all for joining the call today. While the environment remains dynamic, we remain extremely confident in our position and prospects and our ability to deliver GDP-plus growth and top quartile returns over the long term.

That concludes our call today. Thank you for joining. You may now disconnect.