Oct 29, 2026 earnings call — Q3 results and Intelligent Labels grocery ramp
Reported Q3 adjusted EPS was $2.42, up 2% year-over-year.
Revenue $2.3B (est $2.3B) · EPS $2.42 (est $2.32)
Key quotes
"While this unwind is taking longer to materialize, destocking is ongoing, and we continue to expect the vast majority of the first half prebuy inventory to unwind by the end of the fourth quarter."
"I'm very pleased that we have a third large grocer now in the early stages of commercial rollout, and we expect that to accelerate as we go through the fourth quarter into next year as well"
"We generated adjusted free cash flow of $246 million in the quarter, bringing year-to-date adjusted free cash flow to $716 million, a conversion rate well above 100% of net income."
Analyst Q&A 13
Margins in Materials and Solutions
Q (George Staphos · BofA): Analyst asked about margin trends in both segments. He wanted detail on Materials mix and destocking and on how durable Solutions productivity gains are.
A: Management said Materials margins were roughly in line with plan but down about 1 point year-over-year, driven mainly by pricing math and some incentive compensation and slight mix effects; destocking was mostly in the base but not a major impact. They said Solutions is driving strong productivity and restructuring benefits and they expect to continue improving Solutions margins.
"Yes, overall, in Materials Group, when we look at margins from a year-over-year perspective, largely in line with our expectations, but down about 1 point from where they were a year ago." — Gregory Lovins (CFO)
Materials end-market outlook
Q (Ghansham Panjabi · Baird): Analyst asked how the end markets for Materials look and what the trend into 2027 might be, given consumer weakness reported by peers.
A: Management said current macro hasn't changed: GDP and retail sales volumes are roughly 2% and 1%, and unit volume expansion in CPGs is muted and below 1%. They noted retailers remain cautious, consumer behavior is bifurcated, and they are watching inflation and geopolitics into 2027.
"If you look at where GDP and retail sales volume, they are roughly at 2% and 1%, respectively." — Deon Stander (CEO)
Intelligent Labels and Walmart timing
Q (John McNulty · BMO): Analyst asked about Walmart ramp timing, 4Q inflection, 2027 outlook, logistics headwinds, food ramp, and new pilots and grocer.
A: Management said they remain highly confident in the Walmart Fresh opportunity and RFID ROI, but large deployments can shift timing. They said start dates moved past the second half and they are expecting the commercial ramp through 2027; they also have a third large grocer in early commercial rollout and more pilots across food and logistics.
"We're expecting really, the commercial ramp as we go through '27." — Deon Stander (CEO)
Price and cost balance in Materials
Q (Joshua Spector · UBS): Analyst asked where they are on the price/cost journey in Materials, how Q3 and Q4 looked, and if pricing now covers costs or if catch-up continues into 2027.
A: Management said sequentially they saw some paper-driven inflation Q2 to Q3 but overall the mix of material cost reengineering and pricing is largely covering the dollar impact of inflation. They feel good about progress, expect a relatively stable raw material basket Q3 to Q4, but acknowledge uncertainty and will adjust pricing as markets move.
"I think overall, when we look at the combination of material cost reengineering and pricing, still largely on a dollar basis covering the impacts of the inflation." — Gregory Lovins (CFO)
IL food growth and cost inflation
Q (Jeffrey Zekauskas · JPMorgan): Analyst asked how fast food and logistics Intelligent Labels will grow next year and the quarterly cadence, and whether cost inflation is continuing and if prices will rise in Q4.
A: Management said Intelligent Labels for food should see robust growth next year with a general ramp through the year, supported by three large grocers and multiple pilots across regions. They also said cost of sales saw mid- to high-single-digit inflation year-over-year in Q3, they have a couple points of price to offset, and they are managing wage and incentive pressures with productivity.
"Just on our IL food growth specifically, we're expecting robust growth as we go through next year." — Deon Stander (CEO)
Destocking in Europe and timing
Q (John Dunigan · Jefferies): Analyst asked if the European destocking seen by peers matches their experience and whether North America might see similar destocking in Q4.
A: Management said destocking was largely in Europe and parts of Asia; Asia is mostly through destocking by end of Q3, while Europe saw some stock build in Q2 and destocking in Q3 with more expected in Q4. They expect the back half of the year to mostly offset the first half stocking.
"So overall, we expect the back half to kind of offset the first half destocking for the most part." — Gregory Lovins (CFO)
Expanding IL into beauty and personal care
Q (Michael Roxland · Truist): Analyst asked about potential expansion of Intelligent Labels into beauty and personal care with a large retailer.
A: Management said they have pilots with specific beauty providers to learn if they can achieve apparel-like outcomes (shelf availability and loss visibility). They will share more if traction continues and view beauty as part of a broader general retail opportunity they will pursue with interested retailers.
"As we continue to see some traction there, we'll continue to give -- provide information on the opportunity." — Deon Stander (CEO)
Apparel IL performance details
Q (Matthew Roberts · Raymond James): Analyst asked how Intelligent Labels apparel growth compared to total apparel, how much was new programs versus share gains, and assumptions for apparel into '27-'28.
A: Management said apparel growth in Q3 was robust, driven largely by new programs including one with a very large value retailer, and they expect momentum to continue into next year. They also noted traction on loss visibility solutions and see apparel as a continued growth driver.
"I think overall, our apparel growth in the third quarter was robust, largely on some of the new programs that we've been rolling out." — Deon Stander (CEO)
Restructuring savings carryover
Q (Anthony Pettinari · Citi): Analyst asked about the higher restructuring savings target, whether savings roll into 2027, and any extra cash costs from the higher target.
A: Management said they raised the savings target and have delivered strong savings through Q3, with most costs incurred this year or carried from last year. They said there will be some carryover into next year and estimated that carryover's impact at about $0.20 into 2027.
"When we look at next year, certainly, there'll be some carryover related to the actions that we're driving this year." — Gregory Lovins (CFO)
Food RFID pipeline status
Q (Hillary Cacanando · Deutsche Bank): Analyst asked where the food RFID pipeline stands after the HVC showcase and if pipeline growth continues as opportunities convert to rollouts.
A: Management said their pipeline accounting moves a program's dollar value out of pipeline into rollout when it commercializes, so total dollar in pipeline can fall even as the number of pipeline customers rises. They confirmed the number of customers in the pipeline has gone up since the showcase.
"In our pipeline measurement mechanism, once somebody moves to commercialization, it comes, the dollar denomination for that whole program moves out of the pipeline into rollout." — Deon Stander (CEO)
Walmart IL timing and Vestcom software
Q (George Staphos · BofA): Analyst asked to confirm Walmart rollout timing into 2027 and whether Vestcom's software-led programs will drive long-term growth and retailer willingness to adopt.
A: Management confirmed the Walmart timing moved slightly and the ramp will start in 2027 and said the third grocer plus many pilots support double-digit IL growth next year. For Vestcom, they said a new storeLink software SaaS rollout has begun with a major U.S. grocery retailer, these software programs carry premium margins, and they are not seeing retailers pull back on automation—if anything, interest has increased.
"Yes is the short answer to your question on the Walmart account specifically." — Deon Stander (CEO)
Supply bottlenecks and CapEx timing
Q (John Dunigan · Jefferies): Analyst asked about reported chip supplier shipping constraints and whether they saw bottlenecks causing IL pushouts, and asked why CapEx guide was lowered and if spending was pushed into 2027.
A: Management declined to comment on a supplier's outlook and said they are not seeing bottlenecks; they cited their global scale and ability to balance supply and demand and to meet surges. On CapEx, they said the change is largely timing of projects driven by volume swings from the stocking cycle, not a change in overall investment plans.
"I think it's really just largely timing of projects." — Gregory Lovins (CFO)
Free cash flow cadence and drivers
Q (John McNulty · BMO): Analyst asked why year-to-date free cash is above last year and whether Q4 cadence is normal or affected by one-offs.
A: Management said they are executing well and focused on working capital productivity, with improved inventory turns driving cash. They noted some timing differences from incentive compensation payouts and said they expect to continue to deliver above 100% cash conversion for 2026.
"I would say from a year-to-date perspective, one of the shifts is that I've talked about the headwind we have from a cost perspective on incentive compensation year-over-year." — Gregory Lovins (CFO)