Good morning, ladies and gentlemen. Welcome to CCL Industries Third Quarter Investor Update. Please note that there will be a question and answer session after the call. The moderator for today is Mr. Jeff Martin, President and Chief Executive Officer and joining him is Mr.
Sean Washoepp, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.
Thank you, Crystal. Just before we get begin, I'll draw everyone's attention to Page two of our presentation, a disclaimer regarding forward looking statements. I'll remind everyone that our business faces known and unknown risks and opportunities. For further details of these key risks, please take a look at our 2019 annual MD and A or in our quarterly MD and As for updates, particularly the section Risks and Uncertainties. Our annual and quarterly reports can be found online at the company's website, cclind.com or on sedar.com.
Jeff?
Thank you, Sean, and good morning, everybody. I'm very happy to be here this morning reporting record quarterly results for the company. Not a situation we expected to be in
in the in the depths
of despair. We were all in in April and May this year in the middle of the worst of the pandemic, but we are now where we are. So I'd like to take this opportunity to thank all CCL employees throughout the world for the monumental efforts they've put on to place these numbers. And Sean is now going to take you through them point by point.
Thank you, Jeff. Moving to Slide three. For the third quarter of twenty twenty, sales increased 1.2%, including the 1.5% positive impact of currency translation, 2.2% acquisition related sales growth, partially offset by a consolidated organic decline of 2.5%, resulting in sales of $1,370,000,000 compared to $1,360,000,000 in the third quarter of twenty nineteen. Operating income increased 16%, excluding currency translation, to $246,300,000 for the twenty twenty third quarter compared to $209,800,000 for the third quarter of twenty nineteen. Importantly, income increased almost 51% sequentially from the second quarter of this year when the full impact of the COVID-nineteen initially took hold globally.
Jeff will expand on the segmented operating results of our CCL, Avery, Checkpoint and Innovia segments momentarily. Included in the third quarter results was a $5,800,000 reduction in corporate expenses due to decreases in short term and long term variable compensation expenses for the comparable periods. Consolidated EBITDA for the twenty twenty third quarter, excluding the impact of foreign currency translation, increased approximately 16% compared to the same period in 2019. Net finance expense was $16,400,000 for the 2020 compared to $19,500,000 for the twenty nineteen third quarter. The decrease in net finance costs is attributed to lower average interest rates and lower average debt outstanding for the comparable periods.
The overall effective tax rate was 25.1% for the twenty twenty third quarter, less than the 25.7% effective tax rate recorded in the third quarter of twenty nineteen. The effective tax rate may change in future periods depending on where the taxable income is earned. Net earnings for the twenty twenty third quarter was $153,300,000 up 17.6 excluding foreign currency translation compared to $127,700,000 for the twenty nineteen third quarter. For the nine month period, sales declined 4.1%, operating income declined 0.8% and net earnings increased 2.5% compared to the nine months period in 2019. 2020 included results from 15 acquisitions completed since 01/01/2019, delivering acquisition related sales growth for the period of 1.8%, organic sales decline of 5.9% and foreign currency translation tailwind of 0.3 to sales.
Moving to Slide four, earnings per share. Basic earnings per Class B share increased 21.1% to $0.86 for the 2020 compared to $0.71 for the third quarter of twenty nineteen. Net loss from restructuring and other items amounted to $07 for the twenty twenty third quarter compared to $01 in the twenty nineteen third quarter. I'll get into these details momentarily. Adjusted basic earnings per Class B share were a record $0.93 up 29.2 percent compared to adjusted basic earnings per Class B share of $0.72 for the third quarter of twenty nineteen.
This record adjusted basic earnings per Class B share of $0.93 exceeds the previous record of $0.83 posted in the fourth quarter of twenty seventeen. The increase in adjusted basic EPS to $0.93 is primarily attributable to an increase in operating income of $0.13 a decline in corporate and interest expenses, etcetera, for $02 Equity earnings and tax changes each accounted for zero one dollars The twenty twenty nine month period $0.12
improvement in adjusted basic earnings per Class B share was principally attributable to a decrease in corporate expenses, net interest expense amount partially offset by a reduction in operating income that resulted in adjusted basic earnings per share of $2.24 for the twenty twenty nine month period compared to $2.12
for the twenty nineteen nine month period. Moving to Slide five, the restructuring and other items. These included an additional accrual of $9,400,000 for a long standing legal matter that was settled during the quarter. It also included $6,800,000 of restructuring that is expected to generate $18,000,000 annually. This is largely at the Adrian Checkpoint segments.
These two items amounted to the $07 adjustment to earnings per Class B share. There'll be modest restructuring in the upcoming fourth quarter. Moving to Slide six, free cash flow from operations. For the third quarter of twenty twenty, free cash flow from operations improved $45,100,000 compared to the third quarter of twenty nineteen. The improvement can be primarily attributed to improved operating income and a decline in capital spending for the comparative quarters.
For the last twelve months ended 09/30/2020, free cash flow from operations improved $140,300,000 compared to the last twelve months ended September 3039. This comparative improvement is attributable to a change in working capital and reduced capital spending for the comparable periods. Moving to Slide seven. Net debt as of 09/30/2020, was $1,650,000,000 a decrease of approximately $65,000,000 compared to December 3139. This decrease is primarily due to an increase in cash and capital cash equivalents which is attributable to an improvement in free cash flow.
The company's balance sheet closed the quarter in a strong position. Our balance sheet leverage ratio was approximately 1.51x, declining from 1.9 times at the end of the first quarter twenty twenty. Liquidity was robust with $760,200,000 of cash on hand and an additional US1.2 billion of available and undrawn capacity on our revolving credit facility. Furthermore, the company does not have any significant debt maturities until its term loan comes due in 2022. The company's overall average finance rate was 2.1% at 09/30/2020, lower than the 2.3% average finance rate at December 3139, due to a decrease in interest rates on the company's variable drawn debt.
In absence of any significant acquisitions, management expects to continue deleveraging the company's balance sheet through the final quarter of twenty twenty. Jeff, over to you.
Thank you, Sean. And we're now on Page eight, the highlights of capital spending. We look like coming in about EUR $290,000,000 for the year, slightly below annual depreciation and amortization and about EUR 60,000,000 under our original EUR $350,000,000 budget for the year. Moving to Slide nine, results for CCL. Best quarter we've had in this part of the company for quite some time, 4.2% organic sales growth, which very good to see.
Regionally, that was up in low single digits in North America, mid single digits in Europe. Latin America was up double digits, although a lot of that was eaten away by inflation. A modest decline in Asia Pacific, which was really driven by Australia and South Africa. Asia itself was up like Europe in the mid single digits. The profit gains really were led by CCL Secure and Home and Personal Care.
In CCL Secure, we benefited from the run on cash in many central banks around the world during the pandemic. Slightly counterintuitive, know, but it is the case. So that's benefited us for sure. And we had, very good results in, with all the moves in the HPC companies to add cleansers and hand sanitizers to their product range. Our Healthcare and Specialty business continues to do well as did CCL Design, and that improved significantly on an automotive rebound, which was much faster and much quicker than we expected it to be.
We're very pleased to see that. Food and beverage profits were also up modestly, but on premise demand for a lot of our customers remains curtailed. Moving on to Slide 10, results of our two joint ventures. There's two label businesses. Left in this line on the P and L, one in Russia and one in The Middle East.
Both had exceptional quarters in Q3 despite many challenges in Russia with the devaluation of the ruble. We still had excellent results there. Slide 11, results for Avery. A mixed story here. Our direct to consumer business is strong in labels, but that was more than offset by very steep declines in badges.
A lot of the badges business we do in this part of Avery is driven by events, so sports events, business conventions, rock concerts, and and the like. So they're all down pretty significantly. The back to school selling was good, but the consumer pull through faded as the quarter progressed and the chaotic school return in North America and workplace related demand remains down. We did have solid results internationally, which were an offset, and cost savings globally boosted profitability. Moving on to Slide 12, results of Check Point.
Another good quarter here, too. Our merchandise availability business faced very tough comps this quarter. We had a record quarter in The U. S. This quarter last year.
Considering that, I think we did pretty well. And we sequentially improved quite significantly from the downs of Q2. Our apparel label business was up on a demand rebound and strong growth in RFID, and cost savings everywhere boosted results. Moving on to Page 13, results for Innovia. Volume here did soften after the QT pantry hike that we experienced that benefited the previous quarter, but it was still reasonable.
And profitability was really driven by much improved mix. So that's the CCL Secure impact. It was something to do with that. But across the board, right across the business, we had much improved mix. Cost savings in the business, better productivity and asset utilization definitely helped.
Resin was not our friend this quarter. It was stable in Europe, and it increased actually quite significantly in North America from June lows. The better than expected contribution from the Polish acquisition continues. So we're very pleased with the performance of that acquisition. Page 14, just a few outlook comments on Q4.
October results came in consistent with the results we've seen during the summer months. We had one less workday in October than we had this time last year, so a pretty reasonable month overall. We do expect Avery and Checkpoint still to be down in Q4, but we also expect CCL and Innovia segments to progress. Commodities are beginning to rise. We do have a modest FX tailwind at today's rates, and we're now expecting fiscal year twenty twenty free cash flow to exceed $500,000,000 So with that, operator, we'd like to open up the call for questions.
Thank
you.
And our first question comes from Adam Josephson from KeyBanc.
Thank you, Adam.
Jeff, you mentioned that the run on cash during the pandemic as well as auto having been much better than you expected. Was that were those factors principally why CCL segment results were so much better than what you were expecting just three months ago? Or were there a number of other factors as well?
Well, the businesses that did really well in the quarter were in order how well they did. The best performing business was CCL Secure by far. The next best performing business was Home and Personal Care. So we have very good results in the label and tube businesses in that part of the company. Aerosols was a negative, but labels and tubes were strong.
And then Healthcare and Specialty. So Healthcare and Specialty did also continue to do well in the quarter. And then the CCL Design also had a good quarter. And the automotive rebound was the main reason. So automotive was actually up on prior year, which surprised us.
It came back very, very fast.
Got it. I appreciate that. You mentioned in the release
So for that perspective, it's automotive is $300,000,000 out of the billion dollars in change revenue.
Is Yes. In your commentary in the release, Jeff, you talked about the second wave of the virus as a reason for some caution regarding November and December. I'm just wondering if it's possible or probable that the lockdowns and the related changes in behavior are, in fact, benefiting many parts of your business and that they're leading to exceptionally strong demand for all manner of at home goods. I just ask, obviously, because your organic sales growth in CCL was the best you've had since 1Q 'nineteen, which is obviously well before the pandemic hit and amid.
What was a reasonable economy at that point?
Yes. Well, the organic sales growth was very heavily driven by CCL Secure and heavily driven by health care. So our consumer packaged goods business was okay. I wouldn't certainly go below the average. So we just don't know.
The problem with telling you about the Q4, it's always a difficult quarter with the two short months in November and December. So and who knows? I mean, it's it's in The U. S, I think we haven't seen much change so far. But if you talk about people in Europe, it's a very different environment over there.
Yes. Yes. And relatedly, Jeff, when the pandemic hit, you saw your earnings wouldn't exceed 2019 levels until 2022. Now you just reported a record quarter. Your earnings are actually up nicely year to date.
So obviously, the year has played out, I think, dramatically better than what your worst fears were in April, May. So given that, what lessons, if any, do you draw for next year?
I I think it's still uncertain. I I think what we know is it's very difficult to predict anything. We said no no one would have predicted in December what happened in in March, April and May. And no one in in March, April, and May would have predicted what's happened in the third q three. So how we spoke to predict what's gonna happen next year
Right.
I think it's very hard to say.
Yep. Understood. Thank you.
Yep.
Thank you. Our next question comes from Walter Spracklin from RBC Capital Markets. Your line is open.
Yes, thanks very much and yes, great quarter everyone. I want to focus on your margins here. And I know, Jeff, when I asked you last time about operating leverage, your job shop comment sort of suggested that there wasn't any, but clearly margins are going up. Is this really a mix? They're going up in areas that tend to just be higher margin?
Or are you indeed now seeing new ways to operate or efficiencies to take advantage of that's allowing your margins to go up?
It's all mix.
Yes, yes.
It's all mix. The businesses that did well this quarter are higher margin businesses. So it was a very mix driven result.
Okay. That makes sense. When you look at your acquisition pipeline and you see the divisions and what COVID-nineteen did to the divisions that are doing well and those that are doing less well, are you changing at all your focus on where you want to build up scale when you're looking at acquisitions? And are those acquisition opportunities becoming more plentiful because of COVID-nineteen? I know you've gradually gotten warmer and warmer to the idea as the quarters have unfolded.
Just love to get your take there on the pipeline now for acquisitions.
Yes. Well, we've done $170,000,000 $180,000,000 worth of deals so far this year. And, you know, multiples we wanted to pay, and they've all been bolt on, but most of them have worked out. And they're not they're not we haven't changed our approach in any shape, way or form. We're still looking in the areas we've talked about in the past, direct to consumer at Avery, some small bolt ons in Checkpoint, the TCL design in the TCL space.
So we're looking at anything and everything, but there's been no change in approaches as a result of COVID.
All right. Thank you very much. That's all my questions.
No problem.
Thank you. Our next question comes from Stephen MacLeod from BMO Capital Markets. Your line is open.
Thank you. Good morning, guys.
Good morning, Steve.
Good morning. Just in regards to the color on the CCL outlook, I was just wondering if characterize you talked about October being okay. Did you characterize the the movements being similar to how they were in q three by segment in terms of
I'm not gonna get into that. I I just we have to just comment that October was one workday shy of last year. That's the only thing I would I would just point out. So the the calendar this year is not a replica of the calendar last year. But the the overall trends in October were broadly similar.
We don't expect to repeat the calls that we had in CTO Secure in q four, so that will have an impact. But beyond that, I wouldn't have anything I could add.
Okay. That's helpful. In the past, you've been able to quantify kind of when CCL was lumpy, even though to quantify what the impact has been within a quarter. Are you able to do that for Q3?
In what respect?
In respect to the dollar contribution on a relative year over year basis since it was so strong in Q3.
Well, the big driver of it was CTL Secure. So I'd say close to half of the profit improvement in the quarter came from CTL Secure in the CTL segment.
Okay. Okay. And then maybe just finally, you made an interesting comment on Check Point with respect to growth in RFID. And I know that's a smaller business that you've always sort of driven an R
and D engine with. Are
you seeing more RFID adoption in the pandemic?
Do you
think you'll see more adoption coming out of the pandemic?
I don't know. We did get one new rollout with a large customer in China, so that had an impact. But, I think what we saw in apparel labeling this quarter was just a big bounce back. So after after the, you know, what happened, you know, between February and, and May in China and, in South Asia, you know, with the with the impact on, just being able to get supply to retailers from there, there was a big bounce back in the in the summer months. So I think we felt some benefit from that.
And we can you know, our our RFID inlay factory in China is now running full bore, so we're getting the benefit of insourcing all of the inlays we used to buy on the outside. So the combination of those two things, but just to keep it in perspective, the power and laboring is less than $200,000,000 for us. It's not a huge business, but we're quite optimistic now about continuing to improve this for the coming quarters.
Okay. That's great. Thanks, Jeff, and congratulations.
Thank you.
Thank you. Our next question comes from Mark Neville from Scotiabank. Your line is open.
Hey, good morning, guys.
Hey, Mark.
Great quarter. Yes, great
quarter. Impressive time to put up a record quarter. So it's all good for you. I just want to follow-up on, I guess, some of the questions. I appreciate, again, October sounds like it was trending well.
I appreciate I'm just I guess I'm just trying to get a sense of a real time, like there's a lot happening, thinking about Europe and sort of lockdowns and other economies. Is there anything to speak to? Again, I appreciate it's only a few weeks into November, but anything sort of to speak to materially sort of just
No. I don't really If we had anything, I I would have said something, Mark.
It's Sure.
I mean, in Europe now, we've got the we've got the whole of The UK locked down, many other countries in some form of lockdown. So what what what the impact of that for us is not clear. You know? When it when it happened in April and May, it was the same all the way around the world. This time, it's it's it's much more prevalent in Europe.
So what what the impact of that so far is is not very clear. It's only running five, six weeks into it. And we're into it in a in a very difficult time, you know, because it's just coming up to the holiday season. So we have the Thanksgiving holiday in The US. We have the early shutdown in December.
So what how customers are gonna behave in this next six weeks period before the holiday starts. So it's always a difficult and volatile quarter to predict, and this year, it's not been helped by the pandemic.
Sure. Sure. I appreciate that. Just follow-up on to Walter's question. Just on, again, the costs and the efficiencies, is there is there anything to sort of speak to in terms of the structural cost removals?
Or No. No. No? Okay.
It's really a mix it's really a mix story. So the the the area where we've been doing some work on the cost side has been the Checkpoint and A Rigs. They've been the two businesses that have been most challenged. You know, in the CCL business, which is doing well, there's really very little no help there on the cost side at all. So I don't if anything, we've had to spend more money than we wanted to just to deal with the pandemic and some absenteeism in certain places where you've had the factors that have been affected by temporary temporary shortages and and stuff like that.
So I think very little we can really tell you. The story in the CCL segment is really about mix.
Okay. Okay. Maybe just one last one. This one, I don't know, maybe it's more difficult, but there's a lot of different moving parts of the business. And just holistically, like, will there still be sort of 20%, 25% -ish your business sort of still down materially because of the pandemic?
I'm just sort of trying to think about next year a little bit and sort of what might come back and sort of
Well, the ones the businesses to look to focus on that, Mark, are Avery and Checkpoint. Avery, as you've seen, it's still impacted, and we expect it to continue to be impacted for another two or three quarters. I don't think that situation is going to change anytime soon. So just to give you one frame of reference, so our badge business, which I talked about a little bit in the opening remarks, So one of our operations last year in Madison, Wisconsin had sales in the third quarter of $13,000,000 and this quarter had sales of less than 500,000. So, you know, I mean, you've got stuff like that going on in your business, and and there's no sports events, no no convention, no rock concert.
It's not likely to change anytime soon. But when they all come back, as I'm sure they will at some point, maybe even next year, you know, in the back end of next year, you know, our demand there will come back with it. And a little bit the same at Checkpoint. So the MAS business at Checkpoint, it's not as badly affected as Avery is, but there's certainly some impact there. And again, I think we've seen in jurisdictions where things have been more normal, we've seen more normal levels of demand.
So they're the two which we would expect to see some improved demand in when as next year unfolds. And it will take a little while.
Yes, sure. Understood. Again, thanks a lot. And again, very impressed. Thanks.
No problem.
Thank you. And our next question comes from Michael Glen from Raymond James. Your line is open.
Hey, good morning. Jeff, just wondering on CCL Secure, good
results.
How's the new customer pipeline there evolving?
Well, we have a long pipeline of customers there who are all pretty sensitive about their security so that we can never really comment on anything that's going on in this space that's actually happened. But this is a very good pie. There's a lot of interest in polymer notes, and I would say it's accelerated during the pandemic because people are worried about the cleanliness of currency as well as the cost efficiency and all the other aspects of it. So we've got a lot of interest in that field. But it does remain a business that's volatile in terms of quarter to quarter demand.
We've seen the positive side of that this quarter. So that's just a feature of the business.
Okay. And then you touched on the MAS part of Check Point before, and you do have a pretty broad customer mix in that business. Mean, do you see big variances between different groups of customers taking place?
Sure. Yeah, absolutely. So if you look at supermarkets, business is strong. If you look at drugstores, they're down a bit but not much. And you go to apparel, it's down a lot.
Anything which is discretionary retail, we have them in our customer base, that's where you see the impact. So malls in The U. S. Are a real problem.
Okay. And you probably don't want to give me a quantification, but is it kind of like a fifty-fifty type up good things are okay and then 50% is down sort of dynamic? Or is If
it you something you can imagine what the REIT if you I don't know what town you live in, but you drive around the retail environment in your own town, our business looks like that. So where the stores are busy, where busy and where they're shut, we're shut.
Okay. And then circling back to M and A, like when we look at Checkpoint and Innovia and what you've been able to accomplish with those two segments in terms of integrating these acquisitions, like how do you when we look out five years in terms of what those two segments might look like, do you see what type of growth opportunities from an M and A perspective do you see in front of you? Are meaningful? Or is it just a function of tuck ins primarily?
Well, are meaningful opportunities in both of them. So but I think we're looking at we've looked at deals in both spaces, are looking at deals in both spaces. But they are more of a tuck in nature at the moment. It's very difficult to deal with anything more than that right now, but they both have opportunities to grow by acquisition. I think across our company, you take the five segments of CCL, AV, Checkpoint and the Navy, they all have opportunities to grow through M and A.
Thank you. Our next question comes from Scott Thompson from CIBC. Your line is open.
Thank you. Good morning, gentlemen. Nice quarter. So just thinking about market share gains, what are you seeing in terms of gains in the CCL consumer business? Are you seeing increases with your major global customers?
Are they consolidating suppliers? I guess in other words, advantage of your global footprint.
I wouldn't say that I wouldn't have said that was a factor in most of our packaged goods label customers this quarter for the quarter. So maybe long term, we could say we've got a bit of a trend there. But short term, we didn't see any real share gain that was material to the quarter. Does that answer your question?
Yes. Guess it does. Are you seeing any distress in your some of your larger, smaller competitors?
What's your question, Scott? Do you So
are competitors competing suppliers? Are seeing any financial distress? Like are you seeing any pickup in business that
No. No. I wouldn't say anything out of the norm. You know, I think in the in the label industry in general, because this pandemic has, you know, increased at home purchases. So if you're if you're in the label business, I don't think it's been a stressful time.
So the stress points have been more in the businesses that have had end markets that have had difficulties. You wouldn't say it's been a bad time for consumer packaged goods companies.
Okay. A lot of results will be showing. And are you seeing any inventory building in your customers?
I wouldn't say so.
Okay. Final question, I'm running out of steam here. Are you seeing any specific benefits from increased e commerce, online shopping, work from home, or is it just moving just a whack a mole?
No. I think e commerce is changing the landscape of retail, but I do think the megatrend there is to move towards the omnichannel world where the best retailers in the world will do a bit of both and use their brick and mortar stores to the last mile pickup points. So that's the megatrend we see in the retail landscape. Everyone's focused on that across the consumer goods industry.
Okay, great. Thank you.
Thank you. Our next question comes from David McFadgen from Cormark. Your line is open.
Thank you. A couple of questions. So you talked about CECL Secure, I know it was quite strong in Q3, but you said it won't repeat in Q4. Would it be reasonable to think that CECL Secure performance in Q4 'twenty would be something similar to Q4 'nineteen?
We'll talk about that in the next quarter. I mean, it's not something we can predict.
Okay. So then just looking at your guidance for well, no, sorry. We had your guidance for free cash flow being greater than $500,000,000 When you look at the LTM free cash flow of $6.00 3,000,000 I'm just wondering if there's something unusual that you expect in q four twenty that that would need you to think that it'd be more closer to 500 as opposed to 600?
Well, it's a it's a it's a it's a short call, so so we'll have to wait and see what we actually what the number ends up being. We'll we'll find that out in a couple of months' time. But it is a short quarter, so that's the and so q three is a big cash flow quarter for us because of we collect all of our back to school cash by the end of the quarter. So Q4 is never as good as Q3, so we'll have to wait and see what we collect in the coming weeks.
Okay. And then lastly, just on ABREON Checkpoint, obviously, they were down in the third quarter. And I don't know if you can provide any color here, but would it be reasonable to expect that for the fourth quarter, they'd be down on a similar rate in terms of revenue?
Well, we've commented that both of them will be down. I haven't got anything to add to that.
And our next question comes from Adam Josephson from KeyBanc. Your line is open.
Thanks, Jeff and Sean. Appreciate it. Jeff, perhaps this is a stupid question, but the run on cash that you talked about, is that a global phenomenon? I mean, where did you see this? How significant an impact was it?
And just somewhat related question to that business, which is there are a number of central banks that have talked about evaluating moving to digital currencies. Just wondering any thoughts you might have on that and how that could potentially affect your secure business?
Yes. So there's been a run on cash in every central bank in the world in the pandemic. I mean, isn't a single bank in the world that hasn't seen increased demand for cash. So there's lots of theories about why that might be, which I think are not really worth going into. That's all I can really tell you.
I don't think digital currencies will have any impact on us anytime soon. We certainly won't replace cash. They may come, but we certainly won't replace cash anymore than credit cards did or bank checkbooks did or iPay did. But digital currencies are likely to come in at some point in the next, I don't know, ten, twenty years, who knows. But you have to think about cash is used in all countries in the world.
So the continent Of Africa and the continent of South Asia. Cash is a global thing and digital currencies, when they come, are likely to come initially in the more sophisticated economies. And even then, there's no sign that any bank I know is talking about replacing currency with digital cash. It's kind Right. Of a forward
No, thanks, Jeff. On the sustainability front, you signed the new Plastics Economy Global Commitment and announced a $35,000,000 investment in a sustainable film project in the quarter. Have your thoughts or approach to the whole sustainability issue evolved or changed of late, perhaps driven by any recent conversations with customers or announcements from them. I'm just wondering if they've taken recent actions that are consistent with their 2025 pledges about using all recycled resin or what have you.
Yes. There's a lot of interest in the we've had products for for for labels that that aid recycling for for some time. And so there's been a lot more interest in them in the last five years than we had in the previous ten before that. So these are not new ideas we've had. We're just really interested in them.
It's just become a lot more prescient due to what's going on with end consumer. So the big focus in our world is focusing on making packaging circular and making packaging easy to recycle and most of the products we make in that investment that we talked about in Europe is really driven around that, allowing labels to come away from plastic containers so the plastic bottle itself is more easy to recycle.
Yes. Got it. And just last question for me, Jeff. Have the respective performances of your businesses this year caused you to think, I want to, in the years to come, invest more or less in particular segments than you might have thought pre pandemic? In other
words, has it changed the
way you think about the attractiveness of each of your segments?
Yes. Well, the business has done much better than we could have imagined this year at Zenovia. We didn't get any questions about that on the call, that's the business that's seen the biggest change in performance year on year. I mean it's basically made up for the downside of AV and Checkpoint, so it's sort of showing the value of having a portfolio. So we're very pleased with that.
So we're more optimistic about making investments in that space than we would have been, say, a year or two ago.
And just drawing out, what has fundamentally changed in Innovia this year, just a high level?
Well, I think we've got very disciplined on pricing. So we've been very disciplined on the resin pass through. So that's really improved significantly. And we've been much more focused on the value added parts of the portfolio there. So mix management has been a big factor.
Our success in currency is also a factor. I think we've done a very good job with the Treofan acquisition, particularly the plant in Mexico that's really been transformed. And the acquisition in Poland was a home run. So we've done very well out of that.
And our next question comes from Stephen MacLeod from BMO Capital Markets. Your line is open.
Thank you. I just had one follow-up question for you, Jeff. You talked a lot about you talked a little bit about M and A and how you have attractive M and A opportunities across all the portfolios. Has the M and A backdrop changed at all? It sounds as though you're not seeing any distressed sellers, certainly on the label side.
But I'm just curious, has the ability to do M and A improved with economies opening back up, notwithstanding the second wave that we're seeing right now?
I wouldn't have said it's changed a whole lot as the years evolve because we're still very travel restricted. And so we can look at things where we've got people in place to so we we announced the deal that you've seen in Malaysia a couple of days ago. And so one of our sort of more senior guys is based in Singapore, so he's been able to handle that transaction even though the business leader who is based in Europe hasn't been able to travel to Asia. So the ability to travel is still a pretty, pretty heavy constraint on us. And, you know, it improved a bit in the summer, but now it's it's kind of back to where we were.
I mean, it's just very, very difficult to get around. So so that's the constraint we're operating under. But where we've got people in situ, in in country, in place where we can do do the due diligence we need and can have the kind of meetings we need to have, and then we've been able to do what you've been able to say.
Okay. And I guess it would be safe to assume that, until travel opens up, acquisitions would be similar to the ones that you've done more tuck in related?
Correct.
Yeah. Okay. Great. Thanks, Jeff and Sean.
Thank you. And that does conclude our question and answer session for today's conference. I'll now like to turn the call back over to Jeff Martin for any closing remarks.
Okay. Well, thank you very much for calling in, everybody, and we'll look forward to talking to you next quarter. Thanks very much for your time and attention.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect. Everyone, have a wonderful day.