Ladies and gentlemen, thank you for standing by. During the presentation, all participants will be in a listen-only mode. [Operator Instructions]. Welcome to Avery Dennison's Earnings Conference Call for the first quarter ended March 30th, 2019.

This call is being recorded and will be available for replay from 12:00 PM Pacific Time today through midnight Pacific Time April 27th. To access the replay, please dial 800-633-8284 or 1402-977-9140 for international callers. The conference ID number is 21896768.

I'd now like to turn the conference over to Cindy Guenther, Avery Dennison's Vice President of Investor Relations and Finance. Please go ahead..

Thank you, Tina. Today we'll discuss our preliminary unaudited first quarter results. 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 with GAAP on schedules, A-4 to A-7 of the financial statements accompanying today's earnings release and the Appendix of our supplemental presentation materials.

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 made subject to the safe harbor statement included in today's earnings release.

On the call today are Mitch Butier, President and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Mitch..

Thanks, Cindy, and good day everyone. We delivered adjusted EPS in line with our expectations for the first quarter, a roughly 10% increase over prior year on a constant currency basis, despite organic revenue coming in a bit lower than usual, as continued strong performance in RBIS was partially offset by soft volume in our two materials businesses.

Label and Graphic Materials posted roughly 1.5% organic growth for the quarter, driven by pricing. Volumes were down as growth in our high value categories was offset by declines in our base businesses as we ceded some share in lower margin, less differentiated categories due to our disciplined approach to raising prices to offset inflation.

We expect to win much of this business back over the course of a few quarters. As for underlying market trends for Label Materials, conditions appear to have been relatively soft over the past couple of quarters not only in Europe and China, as we've discussed previously, but in North America as well.

We expect our organic growth rate to improve as we move through the year, driven by gradual focused share gain as well as a modest improvement in underlying market demand.

Despite the soft top-line, productivity efforts supported a healthy operating margin for LGM in the quarter, particularly in light of transition costs associated with the European restructuring. We expect LGM's operating margin to improve through the course of the year, driven largely by benefits from the completion of this project in Europe.

Retail Branding and Information Solutions, once again, deliver both strong top-line growth and significant margin expansion. The base business grew by roughly 3% on an organic basis, while enterprise wide RFID, once again, grew by more than 20%.

As you know, apparel represents the vast majority of RFID sales and was again the key driver of most of our growth here in the quarter. And our pipeline continued to expand, already up roughly 15% from the beginning of this year, with engagements in categories outside of apparel principally, food, beauty and aviation leading the way.

Given the strength of our position, strategies and team, we are confident in our ability to achieve our long-term target for RFID solutions; that is 15% to 20% plus growth.

We continue to increase our level of investment to support this growth as we build out our Intelligent Labels platform to enable a future where every item can have a digital twin and digital life.

In Industrial and Healthcare Materials, sales declined modestly on an organic basis, driven by the decline in global automobile production, which more than offset solid growth in other industrial categories as well as strong growth in medical. And, as for margins, we made good progress in the quarter toward achieving our target for this business.

In short, another solid quarter, and we are reaffirming our earnings guidance for the year. While the year is starting off more challenging, we are prepared for it.

Our relentless focus on productivity continues to enable us to increase our pace of investment in high value segments, increase our competitiveness, and grow profitably in our base businesses, while importantly, continuing to expand operating margin, which we were able to do again in the first quarter and expect to deliver for the full year.

We remain confident in our ability to achieve our long-term objectives and we will continue to seek opportunities to leverage our positions of strength commercially, operationally, and financially, and lean forward even as others may pull back. Now I'll turn the call over to Greg..

Thanks, Mitch, and hello everyone. We delivered a solid start to the year with adjusted earnings per share of $1.48, in line with our expectations. As expected, pension settlement charges, almost entirely non-cash, drove a loss in reported income.

Reported earnings per share was a negative $1.74, including a $3.13 per share hit from the pension settlement charges, net of tax. We grew sales by 2.4% on an organic basis, as currency translation reduced reported sales growth by 4.4 points in the quarter. And adjusted operating margin increased by 30 basis points to 10.9%.

And we realized $5 million of net restructuring savings in the quarter. And note that we are still incurring transition costs associated with the European restructuring with savings ramping up in the second half of the year.

Turning now to cash generation and allocation, we generated $7 million of free cash flow in the quarter, which was up roughly $27 million compared to the prior year, and recall that free cash flow in the first quarter is typically negative, driven primarily by the timing of employee incentive and customer rebate payments.

In the first quarter, we effectively settled the liabilities associated with the termination of our US pension plan. The cash cost to complete this transaction was significantly better than expected, reflecting competitive market conditions for the purchase of annuities.

As we've discussed, we've increased our pace of fixed capital and IT-related spending for a couple of year period, with gross capital spending expected to be up by about $25 million this year compared to last year, to support our organic growth and margin expansion plans.

We do expect capital spending to then moderate over the next few years, consistent with our long-term capital allocation strategy. And we continue to return cash to shareholders as we repurchased roughly 0.9 million shares at an aggregate cost of $89 million and paid $44 million in dividends in the quarter. Our balance sheet remained strong.

Our current leverage position gives us ample capacity to continue executing our disciplined capital allocation strategy, including investing in organic growth and acquisitions, while continuing to return cash to shareholders. We are well positioned to take advantage of any dislocations in the market should they occur over the next few years.

So turning to the segment results for the quarter, Label and Graphic Material sales increased by 1.4% on an organic basis, driven by prior year pricing actions, as the volume mix declined modestly.

LGM's high value segments continued to outpace growth of the base business, led by specialty and durable categories which were collectively up high-single digits on an organic basis. Breaking down LGM's organic growth in the quarter by region, North America was up low-single digits while Western Europe was roughly flat.

Emerging markets also grew modestly as strength in South Asia and Latin America was largely offset by organic sales declines in China and Eastern Europe.

Operating margin for the segment was down 50 basis points on an adjusted basis to 12.5%, due to the margin impact of raising prices to offset raw material inflation combined with transition costs associated with the European restructuring.

Ongoing productivity initiatives, including material reengineering offset the impacts of lower volume and higher employee-related costs. At this point, we've covered the cumulative effects of the roughly 18 months of raw material cost inflation that we've experienced through a combination of both pricing actions and material reengineering.

Globally, raw material costs were down modestly on a sequential basis in the first quarter and our outlook assumes relative stability through the balance of the year. Shifting now to Retail Branding and Information Solutions; RBS delivered another quarter of strong topline growth, up 7% on an organic basis, driven by both RFID and the base business.

Total RFID sales were up by more than 20% for the quarter. The vast majority of which benefited the RBIS segment, with faster growth among European brands and retailers.

Adjusted operating margin for this segment expanded by 220 basis points to 12.4%, as increased volume and lower currency related costs more than offset higher employee-related costs in the quarter.

Turning to the Industrial and Healthcare Materials segment, sales declined by 1% on an organic basis, driven by the decline in global auto production as automotive applications globally represent about a third of IHM's total sales. Outside of automotive, Industrial categories were up mid-single-digits on an organic basis.

And Healthcare categories grew at a low-single-digit pace with mid-teens growth in medical applications. And we made good progress on the margin front in IHM. Adjusted operating margin increased by 200 basis points to 9.5%, driven by productivity improvements.

Focusing now on our outlook for 2019, we have maintained our guidance for adjusted earnings per share to be between $6.45 and $6.70. We have trimmed our outlook for organic sales growth to roughly 3.5% in light of the softer start to the year.

With the midpoint of our EPS guidance range assuming that organic growth for LGM comes in below the long end of its long-term target range, while we continue to expect that RBS will come in above the high end of its long-term range, reflecting continued strength in RFID.

We've outlined some of the other key contributing factors to this guidance on Slide 9 of our supplemental presentation materials.

In particular and just focusing on the changes from our assumptions in January, at recent exchange rates, currency translation represents a roughly 2.5 point headwind to reported sales growth for the year, with a pre-tax operating income hit of $27 million. This is up modestly from the $25 million we anticipated previously.

We estimate incremental pre-tax savings from restructuring, net of transition costs, will contribute about $40 million to $45 million, up from our January estimate of $35 million, as we have now completed planning that was still in process at the start of the year.

Due to the timing of these actions and related transition cost, roughly 70% of the full year net savings from restructuring will be realized in the back half of the year.

And as I mentioned, total pre-tax charges associated with the settlement of pension liabilities came down to roughly $450 million, with an after-tax EPS hit of roughly $3.15, almost entirely in the first quarter.

In summary, we delivered another solid quarter and remain confident on our ability to deliver on our long-term goals to achieve GDP plus growth and top quartile return on capital. And we'll now open up the call for your questions..

[Operator Instructions]. And our first question comes from Anthony Pettinari of Citigroup Global Markets. Please go ahead..

I'm wondering if it's possible to say how LGM volumes kind of trended through the three months of the quarter and maybe what the exit rate looked like and how April volumes have looked like. And I think there was a comment about; you expected modest improvement in underlying demand I think in 2Q.

What's driving that specifically around Europe or China?.

Yes, thanks Anthony. So I think back half of the quarter, particularly March was marginally better, I think, than where we started at the beginning of the first quarter. So overall, a little bit of improvement, as we're exiting the first quarter, at least on a marginal basis.

As we look into April, we only have a few weeks so far and we also of the timing of the Easter year-over-year, which is different. So little hard to tell based on those trends. We do seem to be a little bit marginally better in April from where we were in the first quarter with some -- a bit of improvement in Europe.

It looks like it's a continuation of the trends from Q1 in North America..

Okay, that's helpful. And then you talked about potentially gaining back some of the business in the next few quarters that you lost in 1Q.

is that -- can you just -- what's driving that? Is that basically material reengineering just kind of taking its course and readjusting to the marketplace or how do you plan to get back that business?.

Yes. So Anthony, we've discussed in the past, some periods of inflation with multiple price increases like we've gone through.

What we've experienced is similar to what we've seen in the past and it will have elements of share moving between different players as you go through that period and we are willing to take some share risk to be able to make sure we move our market position to where we needed to be for the long-term health of the business and the industry.

And so that's what we did and we saw some of the share loss and it's pretty consistent with what we saw actually in the last wave of inflation a number of years ago. So we just work through by showing continued differentiated service and quality, and through that we can regain the share over time..

Thank you. Our next question comes from Edlain Rodriguez with UBS Securities. Please go ahead..

Kind of like a related question, so you had expected Q1 to be soft volume-wise.

So, what really changed from the end of January when you had -- when we reported earnings between now for the reduction in volume outlook that 3.5% versus 4%, like what really changed in between?.

Yes. So, I think, across the segments, it's really LGM just coming in a little bit softer than our expectations were for the first quarter. And as Mitch said, we'll take a measured approach at regaining some of that share back, and we expect some improvement as we move through the year on the overall market trends.

So we expect some improvement as we go, but overall, the first quarter did come in a little bit softer than we had expected it to in LGM..

And one quick one on IHM, I mean clearly you're still having some volume issues there, but when do you expect that to kind of correct itself or is it that mainly dependent on auto-related markets to come back?.

Yes, so as I mentioned earlier, outside of automotive, our business was pretty good in the quarter. So outside of automotive, our Industrial categories grew kind of mid-single digits. Our Medical business grew in the mid-teens, we feel good about that. Automotive, as you said, is really the driver of the challenge we had in the quarter.

And that's about 30% of our overall IHM revenue.

So the expectations in the automotive market, I think, globally as we move through this year is still a little bit of a challenge in Q2, maybe a little bit better than it was in the first quarter with some improvements in the back half of the year, so, generally looking to improve in line with the overall expected improvement in automotive as we go over the next couple of quarters..

Thank you. Our next question comes from Scott Gaffner of Barclays Capital. Please go ahead..

Thanks, good morning, Mitch. Good morning, Greg.

Just want to continue on LGM for a second, Mitch, if I heard you right, you said you thought there'd be some modest end market improvement at the end of the year, but I'm just trying to understand that, because it sounded like more of the weakness in Europe and China was a little bit more macro related and so I'm just trying to figure out what's driving that commentary?.

Part of it is just comping the fact that we started to see some of that decline in growth rates in the second half of last year, as we've talked about Scott. So that's a big impact of it and just reading the same macroeconomic forecast and everything else that you all can see as well. So, we don't have limited forward visibility, as you know.

So it's not something specific related to what we're seeing within our market other than comps get a little bit easier as well as just macro trends that we're seeing..

Okay. And then if I look at the quarter itself, you said earnings came in as expected. Clearly we've talked about some LGM weakness, but if I look at RBIS, I would think maybe that's where you kind of got back to even on -- relative to your expectations because the base business is up 3%.

I can't remember the last time that the base business outside of RFID has been up that much. And so can you just, is that -- is that what was driving the -- what got you back to EPS as expected and what was driving that RBIS base business growth? Thanks..

Yes. So, overall, RBIS, another strong quarter, as you pointed out and we've highlighted and that was definitely part of the offset.

The other element here is we did expect to start the year a bit soft and that we knew that the -- it would be more of a challenging volume environment in LGM this year, and we were going to be able to leverage the strengths of what RBIS is going be able to deliver, but also our focus around productivity.

We take -- lay out these numbers and these we see as commitments and that's what we're focusing on delivering, and so we've been driving productivity while continuing to execute our strategies commercially across the portfolio, but particularly leveraging our areas of strength within intelligent labels and RBIS in general..

Thank you. Our next question comes from George Staphos with Bank of America Merrill Lynch, please go ahead..

Thanks for the details. My first two questions, first of all, Mitch, can you talk a bit about how you anticipate improving your market share while also maintaining margin? You mentioned the normal strength and tactics that you pursue and in the long-term those actually do lead to margin improvement, as we've seen over the years.

But one way you can gain market share back is by becoming more and you had said it, competitive which could initially lead to some lower margin.

So, if you could have us get a little bit more of a glimpse in terms of how you plan to attack both of those goals, and then, I had a follow-on?.

Sure.

Yes so primarily, it's basically by focusing our points of differentiation and servicing quarter key points of differentiation, particularly the service, even in the less differentiated product categories and we will engage our customers and it's not just going back after the customers where maybe we lost some shares, it's going after other customers as well, and working with them to gain share.

And there is -- we have thousands of customers within each region, as you know. So it's really just a broad strategy of engagement with the marketplace.

We are starting to see a little bit of material deflation, so if we -- if that does actually materialize, that would be something that we wouldn't be looking to hold on to in this environment necessarily, obviously different customer or customer depending where the margins and product -- product and customer margins are, but that's how we'll look at it.

It's basically managing the volume, price and mix dynamics customer by customer product-by-product exactly. We've been talking about for the last few years, which has been a key driver for enhancing our growth rate as well as improving our margins. We'll be executing that strategy going forward..

So the other thing on LGM margins would be the restructuring for Europe which is transition costs here in Q1 and Q2. We'll see that transition to savings in the back half. And as we said before, about 70% to 75% of our restructuring savings will be back-half loaded this year.

So that's another reason we feel good about continuing to grow margins as we progress across the quarters..

Thanks, Greg. And that's kind of a good set up from my second question.

So first part, Mitch, when should we begin to see visible improvement, not that this quarter was anything to be concerned with, but when do you think you'll be in a position to say yes our goals, our objectives in terms of gaining share and gaining back some of the business that we wanted to gain back will be visible.

Is that a 2Q or a 4Q timeframe? And then on the restructuring, is the additional savings a function of reacting to the market and it being a bit more challenging. You made it seem like it was just more savings that you found through your planning process? So thank you for your thoughts on those two points..

Yes. So as far as when we should start to see on the market share perspective, we should take a couple of quarters to start seeing it, and a couple of quarters beyond that effort to be recovered, if you will. So that's what you should generally expect to see and what we've seen in the past.

As far as the restructuring and having additional restructuring dollars we basically -- as we were entering the year, we wanted to make sure that we had multiple levers to pull and we've had a number of restructuring actions and ideas over the coming few years and we look to see how can we accelerate those actions, given the -- what we thought might be a more challenging environment.

This is a key strategy for us around driving productivity relentlessly and we've got a number of ideas and so it's really around the acceleration of those.

It's not, I would say, in response to the current environment, it's more of an acceleration to ensure we are competitive and can grow profitably in the base, and continue to invest in the high value segments, to be able to drive the outsized growth both there as well as in the emerging markets..

Thank you. Our next question comes from Ghansham Panjabi of Baird. Please go ahead..

I guess, Mitch, on Slide 5 where you kind of break out the organic sales change on a quarterly basis, just looking at last year, clearly 2Q was sort of the high watermark for organic sales, but very, very tough comp, to a lesser extent in 3Q as well.

Should we expect the cadence for this year to kind of mirror the inverse of that, just based on what you're seeing on the macro or -- because presumably pricing would also sort of phase down just the comps and also what you're seeing on raw material costs as well?.

Yes. So, if you look at the -- I think what you're asking is because we had a high level of our organic growth in Q2.

What does that create a tough comp? Is that what you're asking Ghansham?.

Yes..

Yes. So yes and no, that was comping 2017 where we had an abnormally low level of growth. So there is quite a few moving factors, if you recall, around price increases in various regions that caused pull forward as well as timing of holidays particularly impacted '17 which impacts those '18's growth rates.

So I would say that you'd expect as far as going forward, particularly in LGM, to see an increase in the organic growth rate through the year as we go forward..

Okay, was just trying to clarify, thank you. And then just, in your prepared comments, you had touched on RFID and the pipeline already up 15% or so, so far this year.

How should we interpret that in terms of that level of pipeline growth so early in the year versus your guidance for 20% plus growth in that for RFID for -- on an annual basis? Should we expect it to be higher this year or just -- is that just sort of the normal pipeline filled and that's really for future growth, beyond just this year..

Okay. Yes, so the pipeline. I mean, it's up 15% to roughly already just in the first few months, as you said, and it's up more than 50% from where we were a year ago.

This is really around our efforts around the investments we've made in business development in categories outside of apparel, while also continuing to leverage our strength within apparel. So these are early stage. And just like with apparel, the areas outside of apparel will take a few years to really get meaningful revenue.

But that's how you should think about it, is that we see great amount of traction and progress for growth in the coming years around apparel and we're looking to build the next waves beyond that. And as far as specifically the revenue growth, we've said that our target is 15% to 20% plus over the long term.

We deliver more than 20% last year and again in Q1 and our target is to deliver the 20% plus this year as well, for the full year..

Thank you. Our next question comes from Adam Josephson of KeyBanc Capital Markets. Please go ahead..

Mitch or Greg, just question on raw materials, I think you both mentioned they were down I think modestly sequentially in 1Q. And I think Greg you said you're assuming relative stability thereafter. We follow the global paper markets, there has been quite a bit of weakness in paper prices globally year-to-date and chemicals, to a lesser extent.

Can you just help us with what you saw in 1Q sequentially and why you're perhaps not assuming more sequential deflation later in the year, given what's happening to paper prices?.

Yes. So sequentially, as I mentioned, we did see some favorability from Q4 to Q1. And Adam, I think you mentioned it was mostly for us in chemicals and films, a little bit in paper as well, differs depending on the region in paper but globally a little bit of favorability in paper. So we did see -- we start to see some of that sequential favorability.

We expect a little bit more sequential favorability in Q2. Still figuring out exactly how that will land, I think Mitch has mentioned that a few minutes ago. And then right now we're -- right now our projection for the back half is to stay relatively stable. We don't have visibility much past what's happening over the next couple months.

So right now, we're expecting to be relatively stable over the back half with some improvement here in the first half, sequentially..

Thanks, Greg. And just in terms of your organic sales growth guidance of 3.5%. I think last quarter when it was 4%, you said about 2.5% is volume, 1.5% is price, correct me if I'm wrong there.

What is -- what do you expect the composition to be now?.

Yes, Adam, so we still expect, I think from LGM perspective, last quarter we said 1 to 1.5 points of price. We still expect a point or so of price in the year within our guidance range for LGM in particular..

Thank you. Our next question comes from John P. McNulty of BMO. Please go ahead..

With regard to the share loss or share shifts away, where there any regional specifics on that, that you can give us or was it broad-based?.

We saw it in a number of regions and part of this is also, we don't have firm market data for Q1 in all of our regions yet. So we are hypothesizing what we think the market did.

But we think we saw some share loss in a couple of -- in multiple regions because the inflation was kind of happening globally at the same time and our behavior and strategies in each region was consistent around multiple price increases, and we took the risk concurrently.

In North America and Asia, we're comping a little bit -- some higher share that we had in early last year. Again, share points tend to move around a little bit when you go through this period of change, but we saw relatively broad based and some of this is based on hypothesis because we don't have all the firm market data yet for Q1..

Got it, got it. And then, just with regard to uses of cash, I think we haven't seen much in the way of M&A recently from you and I think last quarter you kind of highlighted that, look it's always hard to time these things.

But I guess, can you give us an update on the pipeline in terms of -- in terms of what you see out there and whether it's a target rich environment or if things, maybe given the macro have, have been rolled back a little bit..

We still have a good pipeline from an M&A perspective. The -- I'd say, level of interaction has actually increased pace over the last three to six months. You can't tell the timing of these things, as you said.

But yeah, that's basically more interaction, more discussions and dialog and we've got a full pipeline and we're -- we see attractive opportunities to continue to leverage our core capabilities, expand on our core capabilities, and increase our exposure to high value segments through M&A, but we will be disciplined in our execution of that strategy..

Thank you. Our next question comes from Jeff Zekauskas of JPMorgan Securities, please go ahead..

Thanks very much. Your LTM volumes were down a little bit in the first quarter and you do have a difficult comparison in the second quarter, maybe your volumes last year grew 6%. So my guess is, you're probably going to be flat or down in volumes, again, in the second quarter. And you have a reasonable tough comparison in the third quarter.

So it looks like volume growth in label and graphic materials will be maybe down a little bit or flat or up a tiny bit in 2019.

What makes this year so different than previous years, when you were growing 4% or 5% in volume terms?.

Yes, I think overall there is two factors, the market being a bit softer is what we saw late last year and beginning to see, and so that would be -- made in the markets down and then specifically around our share, is the other position that we've talked through, and it will take us a few quarters to recover that.

So those are the two factors of why our volumes will be down for the year relative to last year. And you're right, Q2 is not an easy comp by any stretch. I was -- my comment earlier responding to Ghansham's question is that we're somewhat comping a little bit easier comps from the previous year.

But it's definitely, I would say, more normalized last year and our growth rate in LGM specifically you'd expect to ramp beginning from where we were in Q1 of 2019..

Driving our growth rate last year and continuing here, as I mentioned in the first quarter is continued strength in our higher value segments within LGM, so we grew roughly mid-single-digits in LGM this quarter on high value segments.

And in some of the categories like our specialty label categories over the course of last year and the course of Q1, we're kind of high single to low-double digits even.

So we feel good about continuing to drive strong growth in the higher value segments within LGM and that's part of what's helped us deliver the stronger growth last year and it gives us some more confidence this year as well..

So I think in March, US box shipments were down about 4%, do you view that as an indicator of that and some way coincides or provides insight into the growth rates of your LGM business in North America, or do you see it as not a relevant indicator?.

No, we'd look at that as one factor. There is not one or two key indicators for the industry, but that's a factor of overall -- it's just shipping activity and business activity and so forth. So we do see that as an indicator.

We also look at what CPG firms are reporting as far as unit volumes and so forth and you're seeing in household and personal care categories, for example, some low revenue growth, but that's actually all price as well and volumes. If you look at the US, they're down modestly particularly in the categories that we feed.

So I'd say the macro indicators, you highlighted one Jeff, and some others are what the other data points we look at to understand what's going on in the macro and how it affects, specifically, our industry and our business..

One important point, Jeff, on the box shipments is that variable information -- material for variable information labels is less than 20% of LGM sales, so important to keep that in mind..

[Operator Instructions]. Our next question comes from Chris Kapsch of Loop Capital. Please go ahead..

Yes. So a question, sort of follow up to some of the commentary, but just in terms of the where you saw the business when you provided guidance at the end of January relative to the way the first quarter has developed.

Is there a region that is -- and this is focused on LGM, but a region that where weakness is more pronounced than other areas, relative to prior expectations?.

Yes, Chris, I don't know that it's any one region in particular, I think we saw a little bit of softness, as we mentioned, across the US, across Europe, and across China. So just -- each of them are little bit softer than we had probably expected at the beginning of the quarter. I don't think it's one region specific..

Okay. And then the follow-up is focused on this.

The market share that you ceded in LGM and I guess more in the commoditized roll-label materials, is there -- as you plan to pick some of that market share back up, is there a region that you're more motivated to gain share back relative to other regions and/or is there a region where the share loss was just more pronounced than other regions? Thank you..

So overall, I'd say our focus is broad based. We are the market leader in each region of the world and we've -- given the scale advantages that affords, we will -- we are focused on building upon our position of strength here. And that's -- so that's broad based.

As far as any particular region, there is not a particular region I would say played out one more than the other. And again, we don't yet have all the market share data and that will obviously be input as we work through that and determining the exact precise strategy region by region.

But even, when you break it down further, we have thousands of customers. There is lots of different product segments. So when you breakdown down Europe, it's -- Northern Europe is very different from Southern Europe and so forth, and so we look at it at a micro level to work through the strategy.

But at a high level, broad based we're going to be deploying, broadly the same strategy globally..

Thank you. We now have a follow-up question from George Staphos, Bank of America Merrill Lynch, please go ahead..

Hi, thanks for taking the follow-ons. Mitch, to the extent that you can comment; Greg, to the extent you can comment, the incremental restructuring savings, were they -- are they sourced from different buckets, the proverbial term or they -- how would you have us think about this additional amount relative to what was planned for this year.

That's question number one. And then, same area in terms of margin, when we look at IHM, the margin expansion was better than our model, it's neither here nor there.

But was the margin expansion that you saw in the quarter ahead of your expectations? Was it in line and what in particular has been two or three tactics that has been helping you in that segment in terms of recovering profitability? Thank you..

Sure George, this is Greg. So on the incremental restructuring I think it's probably largely in SG&A and pretty much spread across the Materials businesses.

So, at the beginning of the year, as Mitch talked about, we had some ideas and plan that we accelerated, some of that in IHM which kind of feeds into your second question about part of why we're continuing to be confident in growing the margin there and hitting the 10% target we have for this year, and then, some of that in LGM really across the region.

So it's not one specific action and it's a number of smaller actions spread across both of our materials businesses and regions. In IHM, as you said, we feel good about the margin trajectory we had in the first quarter, we continue to target 10% margin for the full year this year and it's a combination of things helping us deliver that.

I think we talked about before. Maybe that's we're following tactics we used in RBIS a few years ago, around simplifying organization structure, moving decision-making closer to our customers in the regions where we have that contract with the customer, improving our speed, improving our efficiency from that perspective and improving our cost.

So we're focused on that in addition to some of the segmentation initiatives, looking at pricing and complexity reduction where necessary, so really a combination of factors helping us -- giving us confidence in our ability to grow the IHM margins as we move through the year..

In some ways it's a playbook from RBIS. Anyway, thanks. I'll turn it over..

Yes, exactly..

Indeed..

Thank you. Mr. Butier, there are no further questions at this time. I'll turn the call back to you for any closing remarks..

Okay. Well, thank you everybody for joining the call.

Again, another solid quarter, a quarter of -- despite the some soft top line in the materials business, I think we've demonstrated the resiliency of the business and our ability to deliver on our commitments and we are committed to delivering our long-term objectives and confident in our ability to do so, given our exposure to high value segments and ability to drive outsized growth there as well as the emerging market exposure and to continue to deliver top quartile returns.

So thank you very much..

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. Thank you and have a good day..