And we’re continuing to see new retailers and brands rollout. And I mentioned four previously, and we have another four in flight right now, large ones as well. They will augment the apparel growth as well. And I think the other piece to really consider is when you think about those non-apparel categories, like logistics though, they are significantly bigger than apparel. If apparel is around, let’s call it, addressable market of 45 billion units, logistics is at least 65 billion to 70 billion and food is in the order of 200 billion units, and we are just at the start of the adoption in those two categories. So the scale of the opportunity, the potential that lies in front of us is tremendous. And that’s the reason, Chris, that we’ve been investing to ensure that we can maintain and expand our market leadership position.
We’re not just here to make sure we’re solving some of these unique challenges for customers, but actually to try and ensure that we’re activating the industries and the segments within. And having seen the impact that we’re having on those customers, and the fact that how much they value our market-leading team, it just — it reinforces the confidence they have in that future growth rate.
Operator: Our next question is from the line of Matt Roberts with Raymond James.
Matthew Roberts : When I think about the investments you’re making in Intelligent Labels as well as you referenced turning some inventory earlier, when I think of the cash conversion cycle for Intelligent Labels, is that different than the rest of the system? Is there a longer lag and when you have to invest in that inventory, to when you’re able to book the revenue versus everything else? If there’s any color you could provide, that would be really helpful.
Greg Lovins: Yes, Matt, I think, in general terms, the answer would be no. It’s relatively similar to what we’ve been experiencing in the Intelligent Labels business over the last number of years. I think over the last few quarters, as I’ve talked about, we had built up some inventory in chips. That’s something we had driven starting last year when we were starting to see some of the inventory challenges there. So that’s why we started that. But overall, I think when we look at that from a normal ongoing process. I wouldn’t expect any difference from what we’ve seen over the last few years.
Deon Stander: And Matt, the only thing I’d add to that is, typically, when we look at some of these large-scale rollouts, our focus is on consistent and flawless execution. We have to make sure that we deliver not only the business case, the proof of economics, but actually the reliance ensuring that we can provide everything they need. And so we typically tend to invest to make sure that we have the capacity to both do that and from a people and from an asset and then from a working capital perspective. But as that program then continues to roll out, we typically end up normalizing relative to all of our other working capital cash collection cycles as well.
Operator: And we have a follow-up question from the line of George Staphos with Bank of America.
George Staphos : Deon, can you talk to what the payback return — payback period is on some of the newer markets relative to — for IL relative to what you’ve seen with apparel, arguably, especially with logistics, perhaps given the value of the products for your customers the payback might actually be quicker and the return higher? Can you talk to that? Can you index it somehow? And then just a quick follow-on. At the end of the day, I wasn’t clear. Are you expecting Label Materials to be up year-on-year in volume in the fourth quarter? I know you’re making sequential improvement. I know the comp was tough in October and then November last year, things dropped off. What would you have us know about your guidance for the fourth quarter in terms of what it means for material volume year-on-year in the segment?
Deon Stander: Thanks, George. The way that I — we’ve seen the payback good, particularly in apparel start there, George, has typically been in that sort of less than a year payback cycle typically. And it varies by retail and brand depending on the complexity of their retail estate depending on the complexity and the length of the supply chain and the diversity of their supply chain as well. And you’re right that in logistics, we will be seeing shorter paybacks because the supply chain is more compressed. It may not be as globally orientated initially in some of the pieces we’ve seen. And that’s — and we’re at the infancy of some of the food work that we’re doing right now. Our anticipation is that the food payback cycle will be similar to apparel, within that year period as well, because there is a supply chain across multiple suppliers that will also have similar resins to the way we’ve seen apparel in the past.
As to your second question, we do anticipate sequential label volume improvement as we go through the fourth quarter, and that reflects both the inventory destocking moderating further and some slight demand improvement as we move as well forward, George.
Greg Lovins: And George, also, I’m not sure of your question — that your last question was year-over-year or sequential. Year-over-year, we also expect to see volumes up in the label business, as Deon said, it’s the same reason we start to lap that destocking last year. We still got some destocking in North America in Q4, a little bit less in Europe, as we’ve already talked about. So we do start to see volumes up in the fourth quarter versus prior year. The other thing I would say when you’re looking at the sales line, as we’ve seen that sequential deflation as we move through the last couple of quarters, we do have some price down as we’ve talked about as well. So it will offset some of that volume increase. But certainly, we expect volume to grow a little bit year-over-year in the fourth quarter.
Operator: Mr. Stander, there are no further questions at this time. I will now turn the call over back to you for any closing remarks.
Deon Stander : Thank you, Carlos, and thank you all for joining us on the call today. While the environment remains dynamic, we are extremely confident in our position and prospects and our ability to generate GDP-plus growth and top quartile returns over the long term. So thank you, all.
Operator: Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
