World News: 12:00 GMT Wednesday 15th May 2019. [CCL Industries via Globe Newswire via SPi World News]
TORONTO, May 15, 2019 (GLOBE NEWSWIRE) -- 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 2019 first quarter results.
Sales for the first quarter of 2019 increased 8.6% to $1,332.1 million, compared to $1,227.1 million for the first quarter of 2018, with 2.9% organic growth, 5.2% acquisition related growth and 0.5% positive impact from foreign currency translation.
Operating income for the first quarter of 2019 was $204.8 million compared to $200.6 million for the comparable quarter of 2018. Operating income improved 1.9% excluding currency translation.
Restructuring and other items was a $1.4 million expense for the 2019 first quarter, primarily for severance costs associated with the Innovia UK operations. For the first quarter of 2018, restructuring and other items summed to $3.3 million principally for the Checkpoint restructuring and other acquisition-related transaction costs.
Tax expense for the first quarter of 2019 was $44.6 million compared to $41.4 million in the prior year period. The effective tax rate for the 2019 first quarter was 26.7% compared to 26.0% for the 2018 first quarter, reflecting a higher portion of tax expense in higher taxed jurisdictions.
Net earnings were $123.6 million for the 2019 first quarter compared to $118.7 million for the 2018 first quarter. Basic and adjusted basic earnings per Class B share were $0.70 and $0.71, respectively, compared to basic and adjusted basic earnings per Class B share of $0.67 and $0.69, respectively, in the prior year first quarter.
Geoffrey T. Martin, President and Chief Executive Officer, commented, “First quarter 2019 performance was in line with our expectations. The CCL Segment posted good 4.2% organic growth, especially given tough comparisons to the exceptional prior year in polymer currency at CCL Secure. Resulting lower profit in polymer currency was also largely responsible for the decline in Segment operating margin despite CCL Secure remaining significantly above the average; comparisons ease substantially in the second quarter. Food & Beverage delivered very strong growth and improved profitability. Good results for labels and tubes at Home & Personal Care more than offset a soft quarter in aerosols, while Healthcare & Specialty performance was flat. CCL Design performance included a modest decline in automotive sales more than offset by share gains in electronics. Checkpoint also faced an exceptional comparison with significant chain wide hardware orders for two large retailers driving 16.8% constant currency growth in the prior year period. Excluding sales to these two customers, first quarter underlying performance in the base business was good, while sales of apparel labels and tags, including those with RFID inlays, grew double digit. Avery results had a low prior year hurdle as fourth quarter 2017 buy forwards for legacy product lines ahead of a price increase created a soft 2018 first quarter. Direct-to-consumer product lines continued to grow at double-digit organic rates with strong operating margins. Price increases, productivity, better mix and stable resin cost combined to yield improved profitability at Innovia’s legacy operations. The Treofan acquisition contributed positively to results with the new extrusion line in Mexico planned to start up in June.”
Mr. Martin continued, “Foreign currency translation had a negligible impact on earnings per Class B share for the first quarter of 2019. At today’s Canadian dollar exchange rates, currency translation would be a slight tailwind, if sustained, for the second quarter of 2019.”
Mr. Martin concluded, “The Company finished the quarter with a strong balance sheet. The Company’s net leverage ratio, increased to 2.1 times EBITDA as a result of the new IFRS accounting standard for leases that added $167.5 million of long-term lease liabilities to the balance sheet without a proportionate increase in EBITDA. Impact on cash flow was zero. Combined $495.8 million cash-on-hand and US$428.6 million undrawn capacity on our syndicated revolving credit facility gives ample capacity to continue our strategic tuck-in acquisitions globally. With a strong free cash flow outlook for the balance of the year and beyond, the Board of Directors declared a quarterly dividend of $0.17 per Class B non-voting share and $0.1675 per Class A voting share, payable to shareholders of record at the close of business on June 14, 2019, to be paid on June 28, 2019.”
The Company adopted IFRS 16 on January 1, 2019, using the modified retrospective approach. Accordingly, the comparative information for 2018 has not been restated. The following table illustrates the impact of the new standard on Q1 2019 operating income and EBITDA.
CCL will hold a conference call at 7:30 a.m. EDT on May 15, 2019, to discuss these results. The analyst presentation will be posted on the Company’s website.
To access this call, please dial:
1-844-347-1036 Toll Free1-209-905-5911 International Dial-In NumberOptional Conference Passcode: 4099204
Audio replay service will be available from May 15, 2019, at 10:30 a.m. EDT until May 30, 2019, at 10:30 a.m. EDT.
To access Conference Replay, please dial:1-855-859-2056 Toll Free 1-404-537-3406 International Dial-In NumberConference Passcode: 4099204
For more information on CCL, visit our website - or contact:
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 impact of foreign currency exchange rates for the next quarters; the start-up of the new film line in Mexico in June 2019; the strength of the Company’s cash flow; 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; the Company’s estimated annual cost reductions; 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 2018 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 and 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.
* Upon adoption of IFRS 16 – on January 1, 2019, the Company now recognizes right-of-use assets and lease liabilities within its consolidated condensed interim statements of financial position
Reconciliation of Basic Earnings per Class B Share to Adjusted Basic Earnings per Class B Share
The following table reconciles the measure of free cash flow from operations to IFRS measures reported in the consolidated statements of cash flows for the periods ended as indicated.
* Proforma lease expense represents the estimated lease expenses for the nine months ended December 31, 2018
CCL Industries Inc. employs approximately 21,000 people operating 170 production facilities in 40 countries with corporate offices in Toronto, Canada, and Framingham, Massachusetts. CCL is the world’s largest converter of pressure sensitive and specialty extruded film materials for a wide range of decorative, instructional, functional and security applications for government institutions and large global customers in the consumer packaging, healthcare & chemicals, consumer electronic device and automotive markets. Extruded & laminated plastic tubes, aluminum aerosols & specialty bottles, folded instructional leaflets, precision decorated & die cut components, electronic displays, polymer banknote substrate 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 for short-run digital printing applications for businesses and consumers available alongside complementary products sold through distributors, mass market stores and e-commerce retailers. Checkpoint is a leading developer of RF and RFID based technology systems for loss prevention and inventory management applications, including labeling and tagging solutions, for the retail and apparel industries worldwide. Innovia is a leading global producer of specialty, high performance, multi-layer, surface engineered films for label, packaging and security applications. The Company is partly backward integrated into materials science with capabilities in polymer extrusion, adhesive development, coating & lamination, surface engineering and metallurgy; deployed as needed across the four business segments.
Globe Newswire: 12:00 GMT Wednesday 15th May 2019
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