“We continue to deliver solid profit growth despite soft market demand,” says Mitch Butier, chairman, president and CEO. “Our focus in this slower growth environment has been to protect our margins in the base business, while driving faster-than-average growth in high value categories like RFID, and we’re executing well on both fronts.
“For the quarter, Label and Graphic Materials delivered modest organic growth, as volumes improved relative to the first half of the year, and operating margin was strong; Retail Branding and Information Solutions delivered solid organic growth, as continued strength in RFID more than offset a slowdown in the base business, and operating margin remained strong; and IHM outperformed expectations on both the top and bottom lines, delivering solid organic growth and strong margin expansion.
“We have revised the high end of our guidance range for 2019 earnings per share, reflecting the incremental negative impact from currency translation, largely offset by stronger operational results and a modestly lower tax rate,” added Butier. “We’re confident in our ability to achieve our long-term targets, reflecting the resilience of our business and ability of our team to adapt to changing market conditions.”
Third Quarter 2019 Results by Segment
Label and Graphic Materials
- Reported sales declined 0.8 percent; on an organic basis, sales grew 1.2 percent, as volume/mix improved modestly. On an organic basis, sales were up low-single digits in both Label and Packaging Materials and the combined Graphics and Reflective Solutions businesses.
- Reported operating margin increased 60 basis points to 13.4 percent, reflecting the benefit from productivity initiatives, including restructuring and material re-engineering, partially offset by higher restructuring charges, net of reversals, and increased employee-related costs. Adjusted operating margin increased 120 basis points to 13.5 percent.
- Reported sales increased 2.1 percent; on an organic basis, sales grew 4.1 percent, driven primarily by continued strength in sales of radio frequency identification (RFID) solutions, which increased by approximately 20 percent.
- Reported operating margin increased 60 basis points to 11.2 percent, as productivity, higher volume, and lower restructuring charges more than offset higher employee-related costs and growth-related investments. Adjusted operating margin increased 10 basis points to 11.5 percent.
- Reported sales increased 1.4 percent; on an organic basis, sales increased 3.7 percent, driven by a low-to-mid single digit increase in industrial categories and a high-single digit increase in healthcare categories.
- Reported operating margin increased 120 basis points to 10.4 percent, as the benefits from higher volume/mix and productivity more than offset higher restructuring charges and employee-related costs. Adjusted operating margin increased 180 basis points to 11.0 percent.