from CCL Industries Inc. (isin : CA1249003098)
CCL Industries Announces Record Results for 2024 Second Quarter
Second Quarter Highlights
Per Class B share(3): $1.13 adjusted basic earnings up 25.6%; $1.56 basic earnings up 77.3%; $0.44 revaluation gain included in basic earnings
Sales increased 12.2% on 8.5% organic growth, 3.0% acquisition growth and 0.7% positive currency translation
CCL, Avery, Checkpoint and Innovia posted organic sales growth of 9.0%, 1.1%, 17.5% and 6.2%, respectively
Operating income(1) improved 25.4%, with a 16.4% operating margin(1) up 170 bps
Six-Month Highlights
Per Class B share(3): $2.21 adjusted basic earnings up 20.1%; $2.64 basic earnings up 45.1%; $0.44 revaluation gain included in basic earnings
Sales increased 8.7% on 5.3% organic growth, 3.0% acquisition growth and 0.4% positive currency translation
Operating income(1) improved 17.2%, with a 16.3% operating margin(1) up 110 bps
TORONTO, ON / ACCESSWIRE / August 8, 2024 / CCL Industries Inc. (TSX:CCL.A)(TSX:CCL.B)("the Company"), a world leader in specialty label, security and packaging solutions for global corporations, government institutions, small businesses and consumers, today reported 2024 second quarter results.
Sales for the second quarter of 2024 increased 12.2% to $1,845.6 million, compared to $1,644.5 million for the second quarter of 2023, with organic growth of 8.5%, acquisition-related growth of 3.0% and a 0.7% positive impact from foreign currency translation.
Operating income(1) for the second quarter of 2024 improved 25.4% to $303.5 million compared to $242.0 million for the comparable quarter of 2023. Foreign currency translation had a 0.4% positive impact on operating income for the comparable quarters.
The Company recorded an expense for restructuring and other items of $2.1 million, primarily attributable to transaction costs associated with the Pacman-CCL acquisition compared to $2.9 million for reorganization costs in the 2023 second quarter.
The Company recorded a revaluation gain of $78.1 million, in conjunction with the acquisition of the final 50% interest of Pacman-CCL in June 2024. In accordance with IFRS 3 - Business Combinations, the Company was required to re-measure to fair value its previously held 50% interest in Pacman at the acquisition date resulting in the recognition of the revaluation gain through net earnings.
Tax expense for the second quarter of 2024 was $63.6 million compared to $47.7 million in the prior year period. The effective tax rate, excluding the aforementioned revaluation gain, for the 2024 second quarter was 24.5%, higher than the 24.0% for the 2023 second quarter due to a higher portion of the Company's taxable income earned in higher tax jurisdictions.
Net earnings increased 79.3% to $279.5 million for the 2024 second quarter compared to $155.9 million for the 2023 second quarter. Net earnings for the 2024 three-month period included a $78.1 million non-cash revaluation gain associated with the Pacman-CCL acquisition. Basic and adjusted basic earnings per Class B share(3) for the 2024 second quarter were $1.56 and $1.13, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $0.88 and $0.90, respectively, in the prior year second quarter. Foreign currency translation had no impact on earnings per share.
For the six-month period ended June 30, 2024, sales, operating income(1) and net earnings improved 8.7%, 17.2% and 46.3% to $3.6 billion, $585.5 million and $471.6 million, respectively, compared to the same six-month period in 2023. Net earnings for the 2024 six-month period included the aforementioned $78.1 million non-cash revaluation gain. The 2024 six-month period included results from nine acquisitions completed since January 1, 2023, delivering acquisition-related sales growth of 3.0%. Organic sales growth was 5.3% and foreign currency translation had a positive 0.4% impact. For the six-month period ended June 30, 2024, basic and adjusted basic earnings per Class B share(3) were $2.64 and $2.21, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $1.82 and $1.84, respectively, in the prior year six-month period. Foreign currency translation had no impact on earnings per share.
Geoffrey T. Martin, President and Chief Executive Officer, commented, "Record quarterly adjusted earnings were driven by excellent results from our CCL, Avery and Checkpoint segments; each posting organic growth and strong profitability improvement, albeit compared to a slow quarter in 2023. Innovia smoothly completed the closure of its Belgian operations and subsequent business transitions to the U.K. and Australia this quarter, remaining on track to deliver good results progress for the 2024 full year. All-in, the Company posted a record quarter of $1.13 adjusted basic earnings per Class B share(3) compared to $0.90 in the 2023 second quarter."
Mr. Martin stated, "Sales increased 9.0% organically in the CCL Segment with growth in all vertical markets and geographic regions. Home & Personal Care sales increased modestly in North America but posted stronger gains internationally, most notably in Latin America and South East Asia, both up double digit. Pressure sensitive labels grew organically in all regions and unit volumes for aluminum aerosols and bottles also increased driven by higher output in Mexico. Healthcare profitability improved despite new plant start-up costs, due to strong results for the recently acquired Faubel clinical trials business and better Specialty sales in recovering lawn and garden and agricultural chemical markets in the United States and Europe.Food & Beverage recorded very strong organic sales growth across all product lines with notably robust profitability improvement in pressure sensitive operations internationally. Rebounding demand and new business wins in electronics markets, particularly in China and Mexico, drove very significant results improvement for CCL Design, including modest progress in automotive markets. CCL Secure posted strong sales and profitability growth in North America from passport components alongside modest gains for banknotes compared to a slow prior year. At the beginning of June, we acquired our partner's 50% equity interest in Pacman-CCL, now fully consolidated with strong results for the stub quarter that met expectations."
Mr. Martin continued, "Avery posted significantly improved profitability on solid demand in the Direct-to-Consumer badging and RFID wristband and card businesses as well as an earlier than expected start to the back-to-school season that aided profitability. Checkpoint posted solid results in MAS products and exceptional 40% organic sales growth at ALS, both in RFID and traditional product categories, as retailers continue to rebuild inventory and, in Europe, manage Red Sea supply chain disruption. Innovia's six-month results remain ahead of the same period in 2023 and we now expect the previously announced $17 million to $20 million of annual operating income improvement to commence in the back half of this year. Label films growth including volume gains from the new Eco-Float product line should also underpin better 2024 performance."
Mr. Martin added, "Foreign currency translation had no impact on earnings per Class B share for the second quarter of 2024. At today's Canadian dollar exchange rates, currency translation impact would be benign to earnings, if sustained, for the third 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) of 1.23 times Adjusted EBITDA(2), $665.9 million of cash-on-hand and US$0.9 billion undrawn capacity on its syndicated revolving credit facility leave us well placed to fund global expansion initiatives. During the quarter, the Company returned $92.6 million to shareholders in dividends and share repurchases under its Normal Course Issuer Bid. The Board of Directors declared the quarterly dividend at $0.29 per Class B non-voting share and $0.2875 per Class A voting share, payable to shareholders of record at the close of business on September 13, 2024, to be paid on September 27, 2024."
2024 Second Quarter Highlights
CCL
Sales increased 14.5% to $1,139.8 million on 9.0% organic growth, 4.6% acquisition contribution and 0.9% positive impact from foreign currency translation
Regional organic sales growth: mid-single digit in Europe and North America and double digit in Asia Pacific and Latin America
Operating income(1) $190.8 million, up 32.5%, 16.7% operating margin(1) up 220 bps
Label joint ventures added $0.03 earnings per Class B share
Avery
Sales increased 3.3% to $276.9 million on 1.1% organic growth, 1.3% acquisition contribution and 0.9% positive impact from foreign currency translation
Operating income(1) $60.7 million, up 20.7%, 21.9% operating margin(1), up 310 bps
Checkpoint
Sales increased 16.1% to $244.3 million on organic growth of 17.5% partially offset by 1.4% negative impact from foreign currency translation
Operating income(1) $36.7 million, up 30.6%, 15.0% operating margin(1), up 170 bps
Innovia
Sales increased 8.3% to $184.6 million with 6.2% organic growth and 2.1% positive impact from foreign currency translation
Operating income(1) $15.3 million, down 21.9%, 8.3% operating margin(1), down 320 bps
The Company will hold a live webcast call at 11:00 a.m. ET on August 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 webcast link: https://www.webcaster4.com/Webcast/Page/2807/50926
To access the audio/listen only live webcast, please use the following numbers:
Toll Free: 1-877-545-0320
International: International: 1-973-528-0002
Conference Entry Code (CEC): 237729
Replay for the webcast will be available Friday, August 9, 2024, until Sunday, September 8, 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 impact of foreign currency exchange rates on the 2024 third quarter; income and profitability of the Company's segments; and the Company's expectations regarding inflation, supply chain challenges, 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 June 30, 2024 | As at December 31, 2023 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 665.9 | $ | 774.2 | ||
Trade and other receivables | 1,309.9 | 1,089.3 | ||||
Inventories | 798.6 | 732.3 | ||||
Prepaid expenses | 61.4 | 50.6 | ||||
Assets held for sale | 23.3 | - | ||||
Income taxes recoverable | 55.6 | 38.8 | ||||
Derivative instruments | - | 0.1 | ||||
Total current assets | 2,914.7 | 2,685.3 | ||||
Non-current assets | ||||||
Property, plant and equipment | 2,628.5 | 2,466.4 | ||||
Right-of-use assets | 217.5 | 213.7 | ||||
Goodwill | 2,479.8 | 2,293.6 | ||||
Intangible assets | 1,099.5 | 1,032.0 | ||||
Deferred tax assets | 102.2 | 105.0 | ||||
Equity-accounted investments | 60.5 | 85.0 | ||||
Other assets | 30.6 | 25.2 | ||||
Derivative instruments | 39.2 | 18.0 | ||||
Total non-current assets | 6,657.8 | 6,238.9 | ||||
Total assets | $ | 9,572.5 | $ | 8,924.2 | ||
Liabilities | ||||||
Current liabilities | ||||||
Trade and other payables | $ | 1,388.0 | $ | 1,329.5 | ||
Current portion of long-term debt | 6.3 | 6.9 | ||||
Lease liabilities | 44.7 | 45.0 | ||||
Income taxes payable | 51.0 | 35.5 | ||||
Total current liabilities | 1,490.0 | 1,416.9 | ||||
Non-current liabilities | ||||||
Long-term debt | 2,206.5 | 2,067.8 | ||||
Lease liabilities | 168.2 | 162.7 | ||||
Deferred tax liabilities | 366.5 | 346.2 | ||||
Employee benefits | 274.3 | 282.5 | ||||
Provisions and other long-term liabilities | 20.8 | 13.9 | ||||
Derivative instruments | 1.1 | 11.0 | ||||
Total non-current liabilities | 3,037.4 | 2,884.1 | ||||
Total liabilities | 4,527.4 | 4,301.0 | ||||
Equity | ||||||
Share capital | 611.5 | 520.5 | ||||
Contributed surplus | 90.2 | 157.9 | ||||
Retained earnings | 4,399.6 | 4,056.2 | ||||
Accumulated other comprehensive loss | (56.2 | ) | (111.4 | ) | ||
Total equity attributable to shareholders of the Company | 5,045.1 | 4,623.2 | ||||
Total liabilities and equity | $ | 9,572.5 | $ | 8,924.2 |
CCL Industries Inc.
Consolidated condensed interim income statements
Unaudited
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
In millions of Canadian dollars, except per share information | 2024 | 2023 | 2024 | 2023 | ||||||||
Sales | $ | 1,845.6 | $ | 1,644.5 | $ | 3,582.8 | $ | 3,296.6 | ||||
Cost of sales | 1,294.1 | 1,176.4 | 2,516.1 | 2,355.3 | ||||||||
Gross profit | 551.5 | 468.1 | 1,066.7 | 941.3 | ||||||||
Selling, general and administrative expenses | 270.8 | 247.4 | 523.8 | 482.8 | ||||||||
Restructuring and other items | 2.1 | 2.9 | 2.1 | 3.7 | ||||||||
Revaluation gain | (78.1 | ) | - | (78.1 | ) | - | ||||||
Earnings in equity-accounted investments | (5.0 | ) | (5.0 | ) | (13.3 | ) | (8.1 | ) | ||||
361.7 | 222.8 | 632.2 | 462.9 | |||||||||
Finance cost | 20.1 | 20.2 | 39.4 | 40.2 | ||||||||
Finance income | (3.5 | ) | (2.8 | ) | (7.1 | ) | (5.1 | ) | ||||
Interest on lease liabilities | 2.0 | 1.8 | 4.3 | 3.5 | ||||||||
Net finance cost | 18.6 | 19.2 | 36.6 | 38.6 | ||||||||
Earnings before income tax | 343.1 | 203.6 | 595.6 | 424.3 | ||||||||
Income tax expense | 63.6 | 47.7 | 124.0 | 102.0 | ||||||||
Net earnings for the period | $ | 279.5 | $ | 155.9 | $ | 471.6 | $ | 322.3 | ||||
Earnings per share | ||||||||||||
Basic earnings per Class B share | $ |