CCL Industries Announces 2023 Third Quarter Results

Third Quarter Highlights

• Per Class B share⁽³⁾: $0.95 adjusted basic earnings even to 2022; $0.95 basic earnings up 2.2%; currency translation positive $0.05 per share
• Sales increased 2.0% on 2.6% acquisition growth, 5.4% positive currency translation partially offset by 6.0% organic decline
• Operating income⁽¹⁾ improved 3.8%, with a 15.1% operating margin⁽¹⁾ up 20 bps

Nine-Month Highlights

• Per Class B share⁽³⁾: $2.79 adjusted basic earnings up 1.8%; $2.77 basic earnings up 3.4%; currency translation positive $0.15 per share
• Sales increased 4.0% on 2.2% acquisition growth, 5.0% positive currency translation partially offset by 3.2% organic decline
• Operating income⁽¹⁾ improved 4.5%, with a 15.2% operating margin⁽¹⁾ up 10 bps

TORONTO, ON / ACCESSWIRE / November 8, 2023 / CCL Industries Inc. ("the Company") (TSX:CCL.A)(TSX:CCL.B), a world leader in specialty label, security and packaging solutions for global corporations, government institutions, small businesses and consumers, today reported 2023 third quarter results.

Sales for the third quarter of 2023 increased 2.0% to $1,690.5 million compared to $1,658.1 million for the third quarter of 2022, with an organic decline of 6.0% offset by acquisition-related growth of 2.6% and a 5.4% positive impact from foreign currency translation.

Operating income⁽¹⁾ for the third quarter of 2023 improved 3.8% to $256.1 million compared to $246.8 million for the comparable quarter of 2022. Operating income⁽¹⁾ declined 1.7%, excluding currency translation. Included in the 2022 third quarter operating income was an $11.9 million gain on disposition of excess real estate for the Checkpoint Segment.

The Company recorded expenses for restructuring and other items of $1.9 million, primarily severance charges for CCL Design and Checkpoint as well as transaction costs associated with the acquisitions completed in 2023 compared to $3.3 million for restructuring costs in the 2022 third quarter.

Tax expense for the third quarter of 2023 was $53.3 million compared to $47.6 million in the prior year period. The effective tax rate for the 2023 third quarter was 24.5%, compared to 22.9% for the 2022 third quarter due to higher foreign dividend withholding taxes and a larger portion of the Company's taxable income earned in higher tax jurisdictions.

Net earnings increased 3.2% to $169.1 million for the 2023 third quarter compared to $163.9 million for the 2022 third quarter. Basic and adjusted basic earnings per Class B share⁽³⁾ were $0.95 for the 2023 third quarter, compared to basic and adjusted basic earnings per Class B share⁽³⁾ of $0.93 and $0.95, respectively, in the prior year third quarter.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "The Company posted another solid quarter despite soft demand from customer destocking initiatives, the impact of inflation and higher interest rates on consumers plus the geopolitical uncertainties unfolding around the world. Excluding an $11.9 million gain on the sale of excess real estate recorded at Checkpoint in the 2022 third quarter, I am pleased to report all Segments reported operating income gains compared to the prior year period. Consolidated, the Company posted $0.95 basic and adjusted basic earning per Class B share for the third quarter of 2023, equal to the record prior year period."

Mr. Martin continued, "Sales declined 3.6% organically in the CCL Segment with softer end markets compared to very strong double digit growth for the 2022 third quarter. Home and Personal Care profitability improved on productivity initiatives and some deflation in raw materials, while sales slowed across product categories and regions with the notable exception of Latin America; foreign exchange translation more than offset the organic sales decline. Healthcare & Specialty profitability increased on strong results in North America and good performance at the recent German acquisition, offsetting declines in soft AgChem markets globally and start-up costs for new plants across the business. Food & Beverage results improved on substantial gains for Sleeves in North America and first time contributions from the newly acquired European in-mould label and flexible pouch businesses on top of stable results for pressure sensitive labels globally. At CCL Design, sales declines resulting from much slower electronics markets reduced profitability more than offsetting solid gains for industrial and automotive markets globally. We expect to lap the difficult comparatives in electronics this coming quarter. Passport component volumes were robust as international travel markets rebounded driving improved results for CCL Secure, despite slower currency volumes due to high levels of inventory at central bank customers. Our label joint ventures posted strong earnings growth. Avery posted improved profitability, driven largely by gains in legacy product categories and a solid back-to-school season in North America. Excluding the 2022 real estate transaction mentioned above, Checkpoint profitability improved entirely on the back of MAS sales gains in all regions while strong RFID driven growth for apparel labels continues. Innovia modestly improved results compared to the third quarter of 2022 as productivity and cost cutting initiatives offset low demand in a still highly depressed pressure sensitive label materials industry globally."

Mr. Martin added, "So far, fourth quarter outlooks for the CCL, Avery and Checkpoint Segments appear stable, largely in-line with the trends of 2023 third quarter while Innovia is expected to post significant improvement compared to a weak 2022 fourth quarter. Foreign currency translation had a positive $0.05 impact on earnings per Class B share for the third quarter of 2023. At today's Canadian dollar exchange rates, currency translation would be a tailwind, if sustained, for the fourth 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⁾ at 1.37 times Adjusted EBITDA⁽²⁾ with $773.1 million of cash-on-hand and US$0.8 billion undrawn capacity on its syndicated revolving credit facility, leaves us well placed to fund global expansion initiatives. The Board of Directors declared the quarterly dividend at $0.2650 per Class B non-voting share and $0.2625 per Class A voting share, payable to shareholders of record at the close of business on December 15, 2023, to be paid on December 29, 2023."

2023 Third Quarter Highlights

CCL

• Sales increased 6.4% to $1.1 billion, on 3.6% organic decline, offset by 4.0% acquisition contribution and 6.0% positive impact from foreign currency translation
• Regional organic sales growth: almost flat in the Americas, mid-single digit decline in Europe and double digit decline in Asia Pacific
• Operating income⁽¹⁾ $169.7 million, increased 5.9%, 15.9% operating margin⁽¹⁾ down 10 bps
• Label joint ventures added $0.03 earnings per Class B share⁽³⁾

Avery

• Sales increased 4.9% to $269.5 million, on 0.7% organic decline, offset by 1.2% acquisition contribution and 4.4% positive impact from foreign currency translation
• Operating income⁽¹⁾ $50.7 million, up 13.4%, 18.8% operating margin⁽¹⁾, up 140 bps

Checkpoint

• Sales increased 7.2% to $210.1 million, on organic growth of 4.1% and 3.1% positive impact from foreign currency translation
• Operating income⁽¹⁾ $28.8 million, down 17.9%, 13.7% operating margin⁽¹⁾, down 420 bps. Excluding the $11.9 million gain on sale of excess real estate in China in 2022, operating income⁽¹⁾ up 24.1%

Innovia

• Sales declined 28.4% to $146.3 million with 34.4% organic decline partially offset by 6.0% positive impact from foreign currency translation
• Operating income⁽¹⁾ $6.9 million, up 1.5%, 4.7% operating margin⁽¹⁾, up 140 bps

The company will host a live webcast at 7:30 a.m. ET on November 9, 2023, to discuss these results.

The quarterly results review presentation, including outlook commentary, are 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 webcast link:
https://www.webcaster4.com/Webcast/Page/2807/49225

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): 697942

Replay for the webcast will be available Thursday, November 9, 2023, until
Sunday, December 10, 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 geopolitical uncertainties around the world; the expectation that CCL Design electronics in the fourth quarter of 2023 will exceed the results of fourth quarter 2022; the expectation that within the Checkpoint Segment there will be continued strong growth in RFID related products; the expectation that for the CCL, Avery and Checkpoint Segments fourth quarter results will be stable and in-line with the trends of the 2023 third quarter; and the expectation that the Innovia Segment results for the 2023 fourth quarter will exceed the results of the 2022 fourth quarter.

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.
Consolidated condensed interim statements of financial position
Unaudited

CCL Industries Inc.
Consolidated condensed interim income statements
Unaudited