CCL Industries Reports Record Quarterly Results
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E-mailTORONTO, ON -- (Marketwired) -- 05/07/15 -- CCL Industries Inc. (TSX: CCL.A) (TSX: CCL.B)
First-Quarter Highlights
- Record quarterly adjusted basic earnings per Class B share(3) of $1.99, up 27.6%,
basic earnings per Class B share of $1.97, up 27.9% - Robust operating income(1) improvement in all Segments totaled 32.2%
- Sales increased 15.8%, supported by organic sales growth of 5.5%
- Board approves 2015 second quarter dividend of $0.375 per Class B share
CCL Industries Inc. ("CCL" or "the Company"), a world leader in specialty label and packaging solutions for global corporations, small businesses and consumers, today reported 2015 first quarter results.
Sales for the first quarter of 2015 increased 15.8% to $705.9 million, compared to $609.7 million for the first quarter of 2014, with 5.5% organic growth, 4.3% positive currency translation impact and 6.0% from the seven acquisitions completed over the previous fourteen months.
Operating income(1) for the first quarter of 2015 was $117.1 million, an increase of 32.2% compared to $88.6 million for the comparable quarter of 2014. Excluding the impact of currency translation operating income improved 28.3%.
Restructuring and other items were $0.9 million for the first quarter of 2015, largely due to severance costs associated with the September 2014 acquisition of Bandfix A.G. The 2014 first quarter included restructuring and other items of $0.9 million primarily related to the Sancoa acquisition.
Net earnings improved 29.5% to $68.1 million for the 2015 first quarter compared to $52.6 million for the 2014 first quarter. Basic and adjusted basic earnings per Class B share(3) were a record $1.97 and $1.99, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $1.54 and $1.56 in the prior year first quarter.
Geoffrey T. Martin, President and Chief Executive Officer, commented, "Performance for the first quarter of 2015 was stronger than expected, with all Segments delivering improved sales and profitability resulting in record quarterly earnings per share. The benefit from foreign currency translation totaled $0.08 per share with the stronger U.S. dollar somewhat offset by the weaker euro and real. Foreign currency transaction challenges continued in certain international markets but at reduced levels from the 2014 fourth quarter. Solid organic sales growth in all Segments, including Avery, totaled 5.5% globally."
Mr. Martin concluded, "We continued to execute our growth initiatives, acquiring pc/nametag and INT America as well as announcing a multi-million dollar greenfield expansion plan for CCL Design in Mexico this quarter and planning our first operation in Korea. Our balance sheet remains in outstanding condition with the Company's leverage ratio(4) coming in at 1.1 times EBITDA(2) and undrawn credit facilities at $250 million leaving considerable capacity to execute growth plans for 2015 and beyond. Given the Company's expectation of sustained strong free cash flow, the Board of Directors declared a continuation of the $0.375 per Class B non-voting share and $0.3625 per Class A voting share dividend, payable to shareholders of record at the close of business on June 16, 2015, to be paid on June 30, 2015."
2015 First Quarter Highlights
CCL Label
- Sales increased 14.7% to $486.1 million, up 3.8% organically, 7.2% acquisitions, 3.7% currency translation.
- Regional sales growth: high single digit in Europe, strong double digits in Latin America, low single digit in Asia Pacific partly offset by low single digit decline in North America.
- Operating income margin(1) up 40 basis points to 16.8%. Gains in all regions except Asia (new plant start-up costs and currency transaction challenges); improving contributions from acquisitions.
- Robust results in Food & Beverage and CCL Design globally, Healthcare & Specialty and Home & Personal Care steady compared to prior year in sluggish end markets.
- Label joint ventures added $0.02 earnings per Class B share.
Avery
- Sales increased 20.5% to $160.2 million with 10.1% organic growth, 4.4% acquisitions, 6.0% currency translation.
- Sales in Q1 2015 benefited from the complete cessation of trade pre-buys in the U.S. in Q4 2014. Comparisons to a soft prior year were therefore easier. Canadian and international business declined low single digit.
- Operating income(1) doubled on higher sales, new marketing and product initiatives plus restructuring, cost and productivity gains.
- Acquisitions: Label Connections, Nilles and pc/nametag contributed as expected.
CCL Container
- Sales increased 12.5% to $59.6 million with 6.8% organic growth on higher Mexican volume and North America wide mix/price, 5.7% currency translation.
- Strong U.S. dollar boosted export profits in Canada; impact on imported aluminum in Mexico offset by U.S. export sales and price increases.
- Capacity consolidation project yielded cost reductions and productivity improvements contributing to a 45% increase in operating income(1).
- Small start-up loss at Rheinfelden Americas aluminum slugs joint venture.
CCL will hold a conference call at 2:30 p.m. EDT on May 7, 2015, to discuss these results. The analyst presentation will be posted on the Company's website.
To access this call, please dial:
416-340-2218- Local
1-866-223-7781 - Toll Free
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, 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 after-effects of the global financial crisis and its impact on the world economy and capital markets; 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 CCL'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 recovery 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; the Company's continued relations with its customers; general business 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 2014 Management's Discussion and Analysis, particularly under Section 4: "Risks and Uncertainties." CCL'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 CCL'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 statements of financial position
Unaudited
In thousands of Canadian dollars
As at As at
March 31 December 31
2015 2014
Assets
Current assets
Cash and cash equivalents $ 205,993 $ 221,873
Trade and other receivables 464,523 380,965
Inventories 217,182 192,286
Prepaid expenses 14,549 14,949
Income taxes recoverable 5,441 11,810
----------------------------------------------------------------------------
Total current assets 907,688 821,883
----------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 992,678 925,512
Goodwill 616,859 563,730
Intangible assets 240,439 226,567
Deferred tax assets 4,621 4,183
Equity accounted investments 59,709 54,652
Other assets 23,011 21,848
----------------------------------------------------------------------------
Total non-current assets 1,937,317 1,796,492
----------------------------------------------------------------------------
Total assets $ 2,845,005 $ 2,618,375
----------------------------------------------------------------------------
Liabilities
Current liabilities
Trade and other payables $ 537,206 $ 519,440
Current portion of long-term debt 203,563 59,058
Income taxes payable 27,076 21,419
Derivative instruments 734 280
----------------------------------------------------------------------------
Total current liabilities 768,579 600,197
----------------------------------------------------------------------------
Non-current liabilities
Long-term debt 537,954 600,011
Deferred tax liabilities 51,396 43,453
Employee benefits 146,471 138,594
Provisions and other long-term liabilities 20,745 19,413
Derivative instruments 655 488
----------------------------------------------------------------------------
Total non-current liabilities 757,221 801,959
----------------------------------------------------------------------------
Total liabilities 1,525,800 1,402,156
----------------------------------------------------------------------------
Equity
Share capital 252,510 248,087
Contributed surplus 27,792 26,241
Retained earnings 993,723 938,526
Accumulated other comprehensive income 45,180 3,365
----------------------------------------------------------------------------
Total equity attributable to shareholders of the
Company 1,319,205 1,216,219
----------------------------------------------------------------------------
Total liabilities and equity $ 2,845,005 $ 2,618,375
----------------------------------------------------------------------------
CCL Industries Inc.
Consolidated income statements
Unaudited
Three months ended March 31
In thousands of Canadian dollars,
except per share information 2015 2014
Sales $ 705,870 $ 609,700
Cost of sales 507,648 448,743
----------------------------------------------------------------------------
Gross profit 198,222 160,957
Selling, general and administrative expenses 94,489 78,625
Restructuring and other items 940 946
Earnings in equity accounted investments (518) (69)
----------------------------------------------------------------------------
103,311 81,455
----------------------------------------------------------------------------
Finance cost 6,706 6,874
Finance income (396) (151)
----------------------------------------------------------------------------
Net finance cost 6,310 6,723
----------------------------------------------------------------------------
Earnings before income tax 97,001 74,732
Income tax expense 28,855 22,170
----------------------------------------------------------------------------
Net earnings $ 68,146 $ 52,562
----------------------------------------------------------------------------
Attributable to:
Shareholders of the Company $ 68,146 $ 52,562
----------------------------------------------------------------------------
Net earnings $ 68,146 $ 52,562
----------------------------------------------------------------------------
Earnings per share
Basic earnings per Class B share $ 1.97 $ 1.54
----------------------------------------------------------------------------
Diluted earnings per Class B share $ 1.93 $ 1.51
----------------------------------------------------------------------------
CCL Industries Inc.
Consolidated statements of cash flows
Unaudited
Three Months ended March 31
In thousands of Canadian dollars 2015 2014
Cash provided by (used for)
Operating activities
Net earnings $ 68,146 $ 52,562
Adjustments for:
Depreciation and amortization 39,405 35,507
Earnings in equity accounted investments, net
of dividends received (518) (69)
Net finance costs 6,310 6,723
Current income tax expense 22,440 20,265
Deferred taxes 6,415 1,905
Equity-settled share-based payment
transactions 2,423 3,451
(Gain) loss on sale of property, plant and
equipment (316) 150
----------------------------------------------------------------------------
144,305 120,494
Change in inventories (20,807) (15,889)
Change in trade and other receivables (78,972) (41,466)
Change in prepaid expenses 770 3
Change in trade and other payables 12,780 (11,037)
Change in income taxes receivable and payable (737) 2,074
Change in employee benefits 7,877 6,968
Change in other assets and liabilities 1,500 (7,000)
----------------------------------------------------------------------------
67,436 54,147
Net interest paid (10,446) (10,483)
Income taxes paid (9,677) (16,600)
----------------------------------------------------------------------------
Cash provided by operating activities 47,313 27,064
----------------------------------------------------------------------------
Financing activities
Proceeds on issuance of long-term debt $ 46,682 $ 98,261
Repayment of debt (13,833) (2,108)
Proceeds from issuance of shares 3,602 3,738
Dividends paid (13,021) (8,600)
----------------------------------------------------------------------------
Cash provided by financing activities 23,430 91,291
----------------------------------------------------------------------------
Investing activities
Additions to property, plant and equipment (56,665) (59,878)
Proceeds on disposal of property, plant and
equipment 611 5,414
Business acquisitions and other long-term
investments (38,812) (86,924)
----------------------------------------------------------------------------
Cash used for investing activities (94,866) (141,388)
----------------------------------------------------------------------------
Net decrease in cash and cash equivalents (24,123) (23,033)
Cash and cash equivalents at beginning of period 221,873 209,095
Translation adjustments on cash and cash
equivalents 8,243 7,781
----------------------------------------------------------------------------
Cash and cash equivalents at end of the period $ 205,993 $ 193,843
----------------------------------------------------------------------------
CCL Industries Inc.
Segment Information
Unaudited
In thousands of Canadian dollars
Three Months Ended March 31
-------------------------------------------
Sales Operating income
-------------------------------------------
2015 2014 2015 2014
-------------------------------------------
Label $ 486,131 $ 423,740 $ 81,792 $ 69,387
Avery 160,190 132,923 26,560 13,143
Container 59,549 53,037 8,714 6,024
-------------------------------------------
Total operations $ 705,870 $ 609,700 117,066 88,554
----------------------
Corporate expense (13,333) (6,222)
Restructuring and other items (940) (946)
Earnings in equity accounted
investments 518 69
Finance cost (6,706) (6,874)
Finance income 396 151
Income tax expense (28,855) (22,170)
---------------------
Net earnings $ 68,146 $ 52,562
---------------------
Total assets Total liabilities
-------------------------------------------
December December
March 31 31 March 31 31
-------------------------------------------
2015 2014 2015 2014
-------------------------------------------
Label $1,809,763 $1,668,565 $ 461,804 $ 436,527
Avery 571,107 490,337 187,707 189,567
Container 172,294 162,460 59,551 54,701
Equity accounted investments 59,709 54,652 - -
Corporate 232,132 242,361 816,738 721,361
-------------------------------------------
Total $2,845,005 $2,618,375 $1,525,800 $1,402,156
-------------------------------------------
Depreciation and
amortization Capital expenditures
--------------------------------------------
Three Months Ended Three Months Ended
March 31 March 31
--------------------------------------------
2015 2014 2015 2014
--------------------------------------------
Label $ 32,084 $ 28,381 $ 48,110 $ 46,516
Avery 3,327 3,446 6,362 3,750
Container 3,749 3,474 2,193 9,612
Equity accounted investments - - - -
Corporate 245 206 - -
--------------------------------------------
Total $ 39,405 $ 35,507 $ 56,665 $ 59,878
--------------------------------------------
Non-IFRS Measures
(1) Operating income and operating income margin are key non-IFRS financial measures used to assist in understanding the profitability of the Company's business units. Operating income is defined as earnings before corporate expenses, net finance cost, goodwill impairment loss, earnings in equity accounted investments, restructuring and other items, and taxes. Operating income margin is defined as operating income over sales.
(2) EBITDA is a critical non-IFRS financial measures used extensively in the packaging industry and other industries to assist in understanding and measuring operating results. EBITDA is also considered as a proxy for cash flow and a facilitator for business valuations. This non-IFRS financial measure is defined as earnings before net finance cost, taxes, depreciation and amortization, goodwill impairment loss, earnings in equity accounted investments and restructuring and other items. Calculations are provided below to reconcile operating income to EBITDA. The Company believes that this is an important measure as it allows management to assess CCL's ongoing business without the impact of net finance cost, depreciation and amortization and income tax expenses, as well as non-operating factors and one-time items. As a proxy for cash flow, they are intended to indicate CCL's ability to incur or service debt and to invest in property, plant and equipment, and it allows management to compare CCL's business to those of CCL's peers and competitors who may have different capital or organizational structures. EBITDA is tracked by financial analysts and investors to evaluate financial performance and is a key metric in business valuations. EBITDA is considered an important measure by lenders to the Company and is included in the financial covenants of CCL's senior notes and bank lines of credit.
Reconciliation of operating income to EBITDA
Unaudited
----------------------------------------------------------------------------
(In millions of Canadian dollars)
Three months ended
March 31st
-----------------------------
Sales 2015 2014
-----------------------------
Label $ 486.1 $ 423.8
Avery 160.2 132.9
Container 59.6 53.0
----------------------------------------------------------------------------
Total sales $ 705.9 $ 609.7
----------------------------------------------------------------------------
Operating income
Label $ 81.8 $ 69.5
Avery 26.6 13.1
Container 8.7 6.0
----------------------------------------------------------------------------
Total operating income 117.1 88.6
Less: Corporate expenses (13.4) (6.3)
Add: Depreciation & amortization 39.4 35.5
----------------------------------------------------------------------------
EBITDA $ 143.1 $ 117.8
----------------------------------------------------------------------------
Label operating margin 16.8% 16.4%
(3) Adjusted basic earnings per Class B Share is an important non-IFRS financial measure used to assist in understanding the ongoing earnings performance of the Company excluding items of a one-time or non-recurring nature. It is not considered a substitute for basic net earnings per Class B share but it does provide additional insight into the ongoing financial results of the Company. This non-IFRS financial measure is defined as basic net earnings per Class B share excluding gains on dispositions, goodwill impairment loss, restructuring and other items, and tax adjustments.
Reconciliation of Basic Earnings per Class B Share to
Adjusted Basic Earnings per Class B Share
Unaudited
----------------------------------------------------------------------------
(In millions of Canadian dollars)
Three months ended
March 31st
---------------------------
2015 2014
---------------------------
Basic earnings per Class B Share $ 1.97 $ 1.54
Net loss from restructuring and other items 0.02 0.02
----------------------------------------------------------------------------
Adjusted Basic Earnings per Class B Share $ 1.99 $ 1.56
----------------------------------------------------------------------------
(4) Leverage Ratio is a measure that indicates the financial leverage of the Company. It indicates the Company's ability to service its existing debt. Leverage ratio is calculated as net debt divided by EBITDA.
Unaudited
----------------------------------------------------------------------------
(In millions of Canadian dollars)
March 31, 2015
----------------------------------------------------------------------------
Current debt $ 203.6
Long-term debt 537.9
----------------------------------------------------------------------------
Total debt 741.5
Cash and cash equivalents (206.0)
----------------------------------------------------------------------------
Net debt $ 535.5
EBITDA for 12 months ending March 31, 2015 (see below) $ 506.9
----------------------------------------------------------------------------
Leverage Ratio 1.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EBITDA for 12 months ended December 31, 2014 $ 481.6
less: EBITDA for three months ended March 31, 2014 (117.8)
add: EBITDA for three months ended March 31, 2015 143.1
----------------------------------------------------------------------------
EBITDA for 12 months ended March 31, 2015 $ 506.9
----------------------------------------------------------------------------
Supplemental Financial Information
Sales Change Analysis
Revenue Growth Rates (%)
Three Months Ended March 31, 2015
----------------------------------------------------------------------------
Organic Acquisition FX
Growth Growth Translation Total
Label 3.8 7.2 3.7 14.7
Avery 10.1 4.4 6.0 20.5
Container 6.8 0.0 5.7 12.5
CCL 5.5 6.0 4.3 15.8
----------------------------------------------------------------------------
Business Description
With headquarters in Toronto, Canada, CCL Industries now employs approximately 10,500 people and operates 102 production facilities in 29 countries on six continents with corporate offices in Toronto, Canada, and Framingham, Massachusetts. CCL Label is the world's largest converter of pressure sensitive and extruded film materials for a wide range of decorative, instructional and functional applications for large global customers in the consumer packaging, healthcare, automotive and consumer durables markets. Extruded & laminated plastic tubes, folded instructional leaflets, precision printed & die cut metal components with LED displays and other complementary products and services are sold in parallel to specific end-use markets. Avery is the world's largest supplier of labels, specialty converted media and software solutions to enable short run digital printing in businesses and homes alongside complementary office products sold through distributors and mass market retailers. CCL Container is a leading producer of impact extruded aluminum aerosol cans and bottles for consumer packaged goods customers in the United States, Canada and Mexico.
Audio replay service will be available from May 7, 2015, at 6:00 p.m. EDT until May 21, 2015, at 11:59 p.m. EDT.
To access Conference Replay, please dial:
905-694-9451- Local
1-800-408-3053 - Toll Free
Access Code: 4424006
For more information on CCL, visit our website - Email contact or contact::Sean WashchukSenior Vice President and Chief Financial Officer416-756-8526
Source: CCL Industries Inc.
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