COMMUNIQUÉ DE PRESSE

par CCL Industries Inc. (isin : CA1249003098)

CCL Industries Announces Record Results for 2024 First Quarter

Stock Symbols: TSX - CCL.A and CCL.B

First Quarter Highlights

  • Record earnings per Class B share (3) : $1.08 basic and adjusted basic earnings up 14.9%; currency translation negligible
  • Sales increased 5.2% on 2.0% organic growth, 3.0% acquisitions and 0.2% positive currency translation
  • Operating income (1) improved 9.4%, with a 16.2% operating margin (1) up 60 bps

TORONTO, ON / ACCESSWIRE / May 8, 2024 / CCL Industries Inc. ("the Company"), a world leader in specialty label, security and packaging solutions for global corporations, government institutions, small businesses and consumers, today reported 2024 first quarter results.

Sales for the first quarter of 2024 increased 5.2% to $1,737.2 million, compared to $1,652.1 million for the first quarter of 2023, with organic growth of 2.0%, acquisition-related growth of 3.0% and 0.2% positive impact from foreign currency translation.

Operating income (1) for the first quarter of 2024 increased 9.4% to $282.0 million compared to $257.7 million for the comparable quarter of 2023. Operating income (1) improved 9.1%, excluding currency translation.

The Company did not record any expense for restructuring and other items in the first quarter of 2024 compared to an expense of $0.8 million for the first quarter of 2023. Restructuring and other items for the 2023 first quarter were mainly comprised of severance costs associated with the CCL Design electronics business.

Tax expense for the first quarter of 2024 was $60.4 million compared to $54.3 million in the prior year period. The effective tax rate for the 2024 first quarter was 24.7% compared to 24.9% for the 2023 first quarter, reflecting a higher portion of taxable income earned in lower taxed jurisdictions.

Net earnings increased 15.4% to $192.1 million for the 2024 first quarter compared to $166.4 million for the 2023 first quarter. Basic and adjusted basic earnings per Class B share (3) were $1.08 for the 2024 first quarter, compared to basic and adjusted basic earnings per Class B share (3) of $0.94 for the prior year first quarter.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "I am very pleased to report our best ever quarterly results for the first period of 2024 with momentum expected to continue into the second quarter. All Segments increased profitability with Checkpoint and Innovia both posting substantial gains, as expected. All-in, basic and adjusted basic earnings improved 14.9% to $1.08 per Class B share (3) , compared to $0.94 per Class B share for the first quarter of 2023."

Mr. Martin continued, "The CCL Segment delivered 3.1% organic sales growth and solid profitability gains. Home & Personal Care results were driven by stronger label and aluminum container demand in the Americas, alongside more moderate gains in tubes compared to a weak prior year period; Europe and Asia also contributed to improved label profitability. Healthcare profitability softened in many markets on mix changes and new plant start-up costs, partially offset by strong results for the newly acquired Faubel clinical trials business and recovering Specialty sales in lawn and garden and agricultural chemical markets in the United States and Europe. Food & Beverage recorded strong organic sales growth and profitability gains with notably robust improvement in pressure sensitive operations internationally. Rebounding demand and new business wins in electronics markets, particularly in China, drove significant gains for CCL Design, partially offset by mixed results in automotive markets. CCL Secure results declined, despite strong sales and profitability growth in North America from passport components. After a soft 2023 fourth quarter, earnings from our label joint ventures rebounded dramatically, aided by significantly easing foreign currency markets in Egypt. Avery posted modestly improved profitability despite a 4.5% organic sales drop, as legacy product line declines more than offset growth in the direct-to-consumer and horticultural categories. Checkpoint posted solid results in MAS products and outstanding gains at ALS, both in traditional product categories and RFID; over 25% ALS organic growth was likely aided in part by call forward orders to avoid Red Sea supply chain disruption for European retailers. Results for Innovia improved dramatically on returning demand in the label materials industry, which is expected to continue into the second quarter of this year. The $17 million to $20 million of annual profitability gains associated with the previously announced plant closure in Belgium will begin to be realized once the transition completes at the end of the 2024 second quarter."

Mr. Martin noted, "Foreign currency translation had a negligible impact on earnings per Class B share for the first quarter of 2024. At today's Canadian dollar exchange rates, currency translation would be a slight tailwind, if sustained, for the second quarter of 2024."

Mr. Martin concluded, "The Company finished the quarter with a strong balance sheet and robust liquidity. The Company's consolidated leverage ratio (5) was 1.18 times Adjusted EBITDA (2) with $747.7 million cash-on-hand and US$0.9 billion undrawn capacity on its syndicated revolving credit facility, leaving the Company well placed to fund global expansion. The Board of Directors approved a dividend of $0.29 per Class B non-voting share and $0.2875 per Class A voting share to shareholders of record as of June 14, 2024, and payable June 28, 2024."

2024 First Quarter Highlights

CCL

  • Sales increased 8.0% to $1,094.1 million, on 3.1% organic growth, 4.5% acquisition contribution and 0.4% positive impact from currency translation
  • Regional organic sales growth: high single digit in Asia Pacific, low single digit in North America, mid-single digit in Latin America, almost flat in Europe
  • Operating income (1) $177.6 million, up 7.4%; 16.2% operating margin (1) down 10 bps
  • Label joint ventures added $0.05 earnings per Class B share

Avery

  • Sales declined 2.9% to $252.8 million, with 4.5% organic decline, 1.5% acquisition contribution and 0.1% positive impact from foreign currency translation
  • Operating income (1) $51.0 million, up 0.8%; 20.2% operating margin (1) , up 80 bps

Checkpoint

  • Sales increased 6.8% to $224.7 million, on organic growth of 9.2% partly offset by 2.4% negative impact from foreign currency translation
  • Operating income (1) $37.0 million, up 20.1%; 16.5% operating margin (1) , up 190 bps

Innovia

  • Sales declined 1.6% to $165.6 million with 3.0% organic decline, partially offset by 1.4% positive impact from foreign currency translation
  • Operating income (1) $16.4 million, up 50.5%; 9.9% operating margin (1) , up 340 bps

The Company will hold a webcast at 7:30 a.m. ET on May 9, 2024, to discuss these results.

The quarterly results review presentation, including outlook commentary, is posted on the Company's website at https://www.cclind.com/investors/investor-presentations/ .

To access the webcast or webcast replay, please use the following link: https://www.webcaster4.com/webcast/page/2807/50373

To access the audio/listen only live webcast, please use the following numbers:

Toll Free: 1-877-545-0320
International: 1-973-528-0002|
Conference Entry Code (CEC): 999410

Replay of the webcast will be available Thursday, May 9, 2024, untilSunday, June 9, 2024.

For more information on CCL, visit our website - www.cclind.com or contact:

Sean Washchuk
Senior Vice President and Chief Financial Officer
416-756-8526

Forward-looking Statements

This press release contains forward-looking information and forward-looking statements (hereinafter collectively referred to as "forward-looking statements"), as defined under applicable securities laws, that involve a number of risks and uncertainties. Forward-looking statements include all statements that are predictive in nature or depend on future events or conditions. Forward-looking statements are typically identified by the words "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. Statements regarding the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of the Company, other than statements of historical fact, are forward-looking statements. Specifically, this press release contains forward-looking statements regarding the anticipated growth in sales, the expectation that the depicted strength of the Company's balance sheet will be able to fund its global expansion initiatives and the impact of foreign currency exchange rates on the 2024 second quarter; the Company's expectation that $17 million to $20 million of annual profitability gains will begin to be realized once the Belgium closure is completed at the end of the 2024 second quarter; income and profitability of the Company's segments; and the Company's expectations regarding general business and economic conditions.

Forward-looking statements are not guarantees of future performance. They involve known and unknown risks and uncertainties relating to future events and conditions including, but not limited to, the impact of competition; consumer confidence and spending preferences; general economic and geopolitical conditions; currency exchange rates; interest rates and credit availability; technological change; changes in government regulations; risks associated with operating and product hazards; and the Company's ability to attract and retain qualified employees. Do not unduly rely on forward-looking statements as the Company's actual results could differ materially from those anticipated in these forward-looking statements. Forward-looking statements are also based on a number of assumptions, which may prove to be incorrect, including, but not limited to, assumptions about the following: global economic environment and higher consumer spending; improved customer demand for the Company's products; continued historical growth trends, market growth in specific sectors and entering into new sectors; the Company's ability to provide a wide range of products to multinational customers on a global basis; the benefits of the Company's focused strategies and operational approach; the achievement of the Company's plans for improved efficiency and lower costs, including stable aluminum costs; the availability of cash and credit; fluctuations of currency exchange rates; fluctuations in resin prices; the Company's continued relations with its customers; and economic conditions. Should one or more risks materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking statements. Further details on key risks can be found in the 2023 Annual Report, Management's Discussion and Analysis, particularly under Section 4: "Risks and Uncertainties." CCL Industries Inc.'s annual and quarterly reports can be found online at www.cclind.com and www.sedarplus.ca or are available upon request.

Except as otherwise indicated, forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made may have on the Company's business. Such statements do not, unless otherwise specified by the Company, reflect the impact of dispositions, sales of assets, monetizations, mergers, acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them and therefore cannot be described in a meaningful way in advance of knowing specific facts. The forward-looking statements are provided as of the date of this press release and the Company does not assume any obligation to update or revise the forward-looking statements to reflect new events or circumstances, except as required by law.

The financial information presented herein has been prepared on the basis of IFRS for financial statements and is expressed in Canadian dollars unless otherwise stated.

Financial Information

CCL Industries Inc.
Consolidated condensed interim statements of financial position
Unaudited

In millions of Canadian dollars
As at
March 31,
2024
As at
December 31,
2023
Assets
Current assets
Cash and cash equivalents
$747.7$774.2
Trade and other receivables
1,245.21,089.3
Inventories
756.7732.3
Prepaid expenses
64.950.6
Income taxes recoverable
25.738.8
Derivative instruments
-0.1
Total current assets
2,840.22,685.3
Non-current assets
Property, plant and equipment
2,597.12,466.4
Right-of-use assets
217.7213.7
Goodwill
2,318.92,293.6
Intangible assets
1,027.01,032.0
Deferred tax assets
101.5105.0
Equity-accounted investments
92.085.0
Other assets
25.725.2
Derivative instruments
28.318.0
Total non-current assets
6,408.26,238.9
Total assets
$9,248.4$8,924.2
Liabilities
Current liabilities
Trade and other payables
$1,354.0$1,329.5
Current portion of long-term debt
5.96.9
Lease liabilities
44.245.0
Income taxes payable
49.335.5
Total current liabilities
1,453.41,416.9
Non-current liabilities
Long-term debt
2,137.82,067.8
Lease liabilities
168.8162.7
Deferred tax liabilities
344.9346.2
Employee benefits
284.5282.5
Provisions and other long-term liabilities
19.213.9
Derivative instruments
4.611.0
Total non-current liabilities
2,959.82,884.1
Total liabilities
4,413.24,301.0
Equity
Share capital
611.4520.5
Contributed surplus
83.1157.9
Retained earnings
4,199.74,056.2
Accumulated other comprehensive loss
(59.0)(111.4)
Total equity attributable to shareholders of the Company
4,835.24,623.2
Total liabilities and equity
$9,248.4$8,924.2

CCL Industries Inc.
Consolidated condensed interim income statements
Unaudited

In millions of Canadian dollars,Three Months Ended
March 31
except per share information
20242023
Sales
$1,737.2$1,652.1
Cost of sales
1,222.01,178.9
Gross profit
515.2473.2
Selling, general and administrative expenses
253.0235.4
Restructuring and other items
-0.8
Earnings in equity-accounted investments
(8.3)(3.1)
270.5240.1
Finance cost
19.320.0
Finance income
(3.6)(2.3)
Interest on lease liabilities
2.31.7
Net finance cost
18.019.4
Earnings before income tax
252.5220.7
Income tax expense
60.454.3
Net earnings for the period
$192.1$166.4
Earnings per share
Basic earnings per Class B share
$1.08$0.94
Diluted earnings per Class B share
$1.07$0.93

CCL Industries Inc.
Consolidated condensed interim statements of cash flows
Unaudited

Three Months Ended
March 31
In millions of Canadian dollars
20242023
Cash provided by (used for)
Operating activities
Net earnings
$192.1$166.4
Adjustments for:
Property, plant and equipment depreciation
74.967.5
Right-of-use assets depreciation
13.311.9
Intangible amortization
17.717.2
Earnings in equity-accounted investments, net of dividends received
(8.3)4.3
Net finance costs
18.019.4
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