CCL Industries Announces 2023 First Quarter Results

First Quarter Highlights

• Per Class B share⁽³⁾: $0.94 adjusted basic earnings up 10.6%; $0.94 basic earnings up 11.9%; currency translation positive $0.05 per share
• Sales increased 8.6% on 1.4% organic growth, 3.0% acquisitions and 4.2% positive currency translation
• Operating income⁽¹⁾ improved 12.7%, with a 15.6% operating margin⁽¹⁾ up 60 bps

TORONTO, ON / ACCESSWIRE / May 10, 2023 / 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 2023 first quarter results.

Sales for the first quarter of 2023 increased 8.6% to $1,652.1 million, compared to $1,521.7 million for the first quarter of 2022, with organic growth of 1.4%, acquisition-related growth of 3.0% and 4.2% positive impact from foreign currency translation.

Operating income⁽¹⁾ for the first quarter of 2023 increased 12.7% to $257.7 million compared to $228.6 million for the comparable quarter of 2022. Operating income⁽¹⁾ improved 7.5%, excluding currency translation.

The Company recorded an expense of $0.8 million for restructuring and other items in the first quarter of 2023 compared to an expense of $1.8 million for the first quarter of 2022. 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 2023 was $54.3 million compared to $47.5 million in the prior year period. The effective tax rate for the 2023 first quarter was 24.9% compared to 24.4% for the 2022 first quarter, reflecting a higher portion of taxable income earned in higher taxed jurisdictions.

Net earnings increased 10.8% to $166.4 million for the 2023 first quarter compared to $150.2 million for the 2022 first quarter. Basic and adjusted basic earnings per Class B share⁽³⁾ were $0.94 for the 2023 first quarter, compared to basic and adjusted basic earnings per Class B share⁽³⁾ of $0.84 and $0.85, respectively, in the prior year first quarter.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "I am pleased to report first quarter results ahead of internal expectations. The CCL Segment and Checkpoint both posted organic sales growth and solid improvements in profitability while Avery had an outstanding quarter. Innovia results improved sequentially compared to the fourth quarter of 2022 but were below prior year first quarter. This all summed to a 10.6% increase in adjusted basic earnings to $0.94 per Class B share⁽³⁾, compared to the first quarter of 2022."

Mr. Martin continued, "The CCL Segment delivered 2.7% organic sales growth and modest profitability gains as a number of end markets slowed. Home & Personal Care results benefitted from comparatively stronger label demand internationally and excellent performance at CCL Container, more than offset by softer markets for labels and tubes in the United States, albeit versus a strong prior year. Healthcare sales and profitability improved dramatically globally, only partly offset by mixed results in AgChem with soft lawn and garden markets in North America and start-up costs for a new plant in Germany. Food & Beverage recorded good organic sales growth with modest profitability gains, as cost inflation passed its peak and price increases took hold. CCL Design automotive posted strong sales gains and improved profitability in all markets but could not offset weak global demand in electronics, compounded in China by COVID-related challenges early in the first quarter. After a slow fourth quarter of 2022, CCL Secure rebounded with strong sales and profitability gains. Earnings from our label joint ventures declined modestly on foreign exchange challenges. Avery delivered very strong 14.5% organic sales growth augmented by solid contributions from the recent Adelbras and Floramedia acquisitions. Distribution channel inventory rebuild following a destocking period in the second half of 2022 drove better results for legacy printable media and organization products while direct-to-consumer growth was robust, especially in badges and ID cards. Checkpoint's strong results in MAS products more than offset slower end market demand for apparel labels; nevertheless, RFID volumes continued to grow. Solid sequential profit gains at Innovia, especially in the Americas, could not offset the impact of very weak volume conditions in the label materials industry in North America and Europe. However, resin indices, energy and transportation costs stabilized and eased comparatively."

Mr. Martin noted, "Foreign currency translation had a positive $0.05 impact on earnings per Class B share for the first quarter of 2023. At today's Canadian dollar exchange rates, currency translation would be a tailwind, if sustained, for the second quarter of 2023."

Mr. Martin concluded, "The Company finished the quarter with a strong balance sheet and robust liquidity. The Company's consolidated leverage ratio⁽⁵⁾ was 1.25 times Adjusted EBITDA⁽²⁾ with $787.1 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 $0.265 per Class B non-voting share and $0.2625 per Class A voting share to shareholders of record as of June 16, 2023, and payable June 30, 2023."

2023 First Quarter Highlights

CCL

• Sales increased 7.5% to $1,013.1 million, on 2.7% organic growth and 4.8% positive impact from currency translation
• Regional organic sales growth: double digit in Europe and Latin America, modest decline in North America, double digit decline in Asia Pacific
• Operating income⁽¹⁾ $165.4 million, up 8.2%; 16.3% operating margin⁽¹⁾ up 10 bps
• Label joint ventures added $0.02 earnings per Class B share

Avery

• Sales increased 44.4% to $260.3 million, with 14.5% organic growth, 24.9% acquisition contribution and 5.0% positive impact from foreign currency translation
• Operating income⁽¹⁾ $50.6 million, up 49.3%, 19.4%; operating margin⁽¹⁾, up 60 bps

Checkpoint

• Sales increased 3.6% to $210.4 million, on organic growth of 1.5% and 2.1% positive impact from foreign currency translation
• Operating income⁽¹⁾ $30.8 million, up 15.8%; 14.6% operating margin⁽¹⁾, up 150 bps

Innovia

• Sales declined 14.3% to $168.3 million with 17.5% organic decline, partially offset by 3.2% positive impact from foreign currency translation
• Operating income⁽¹⁾ $10.9 million, down 28.8%; 6.5% operating margin⁽¹⁾, down 130 bps

The Company will hold a webcast at 7:30 a.m. ET on May 11, 2023, 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/2807/48149

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): 454833
Replay of the webcast will be available Thursday, May 11, 2023, until
Sunday, June 11, 2023.

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 2023 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 2022 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.sedar.com 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.
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CCL Industries Inc.
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CCL Industries Inc.
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