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Press release from Marketwire

CCL Industries Reports a 39% Increase in First Quarter Net Earnings and Declares Dividend

Thursday, May 06, 2010

CCL Industries Reports a 39% Increase in First Quarter Net Earnings and Declares Dividend08:32 EDT Thursday, May 06, 2010TORONTO, ONTARIO--(Marketwire - May 6, 2010) - CCL Industries Inc. (TSX:CCL.A)(TSX:CCL.B) - Results Summary For periods ended March 31 Three months (Unaudited) ---------------------------- (in millions of Cdn dollars, except per share data) 2010 2009 % Change ---------------------------------------------------------------------------- Sales $ 307.1 $ 314.1 (2.2%) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- EBITDA (Note 1) $ 62.5 $ 59.5 5.0% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating Income (Note 2) $ 43.6 $ 39.3 10.9% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Restructuring and other items - net loss $ - $ (1.7) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net earnings $ 23.3 $ 16.8 38.7% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Per Class B share Basic earnings per share $ 0.71 $ 0.52 36.5% Diluted earnings per share $ 0.70 $ 0.51 37.3% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Restructuring and other items- net loss $ - $ (0.04) Adjusted basic earnings per Class B Share (Note 3) $ 0.71 $ 0.56 26.8% ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Number of outstanding shares (in 000's) Weighted average for the period 32,748 32,154 Actual at period end 33,089 32,697 CCL Industries Inc., a world leader in the development of labelling solutions and specialty packaging for the consumer products and healthcare industries, announced today its financial results for the first quarter ended March 31, 2010, and the declaration of its quarterly dividend.Sales for the first quarter of 2010 were $307.1 million, down 2%, from $314.1 million for the same period in 2009. Foreign currency translation had a significant unfavourable impact of 11% due to the strengthening of the Canadian dollar compared to other major currencies. Excluding foreign currency translation, sales increased by 9%.Operating income (a non-GAAP measure; see note 2 below) in the first quarter of 2010 was $43.6 million, up 11%, from $39.3 million in the first quarter of 2009. Excluding the significant unfavourable currency translation effect, operating income increased by 26%. The increase in operating income, excluding currency translation, at Label ($8.9 million) and Tube ($1.6 million) was offset by a decrease of $1.5 million at Container. EBITDA (a non-GAAP measure; see note 1 below) for the first quarter of 2010 was $62.5 million, up 5% from the $59.5 million in the comparable 2009 period. Excluding the unfavourable impact from currency translation, EBITDA increased by 19% compared to the prior year period.Corporate expenses of $4.8 million were up by $0.4 million due primarily to higher variable incentive compensation accruals in the current period. Net interest expense of $6.5 million in this year's first quarter was down by $1.7 million reflecting lower debt levels and favourable currency translation on U.S. dollar-denominated debt.In the first quarter of 2010, no restructuring and other costs were incurred. In the first quarter of 2009, net earnings were unfavourably impacted by restructuring and other costs of $1.7 million ($1.3 million after tax) related to a loss of $1.4 million ($1.0 million after tax) to settle pension obligations to certain members of the U.K. pension plan and $0.3 million (with no tax affect) as additional costs to shutdown the Avelin, France, plant. Tax expense in the first quarter of 2010 was $9.0 million compared to $8.2 million in the prior year period. The first quarter's tax expense reflects a benefit on Canadian tax losses related to unrealized foreign exchange gains on the Company's U.S. dollar-denominated debt. The current year's effective tax rate was also positively impacted by the internal debt transaction in our North American business completed in early 2010 and improved income earned in lower taxed international jurisdictions.Net earnings in the first quarter of 2010 were $23.3 million, up 39%, compared to $16.8 million in last year's first quarter, reflecting the items discussed above.Earnings per Class B share were $0.71 in the first quarter of 2010 compared with the $0.52 per Class B share in the first quarter of 2009. Restructuring and other items in the first quarter of 2009 reduced earnings per Class B share by $0.04. The negative impact of currency translation and transactions on basic earnings per Class B share was $0.08 in the first quarter of 2010 versus the first quarter of 2009. Adjusted basic earnings per Class B share (a non-GAAP measure; see note 3 below) were $0.71 in the first quarter of 2010, up 27% from $0.56 in the corresponding quarter of 2009.Geoffrey T. Martin, President and Chief Executive Officer commented, "Despite the significant effect of currency translation on our results, I am pleased to report a strong first quarter driven by better than expected demand levels in all regions of the world. Our Home & Personal Care customers, in particular, demonstrated returning confidence to rebuild inventories and increase marketing initiatives as consumers resume retail spending globally as the economic crisis seems to subside. Our Label and Tube Divisions both delivered record quarterly results while the Container Division's performance, although sequentially improving from a poor second half of 2009, continues to face challenges."Mr. Martin also noted, "Local currency sales in our Label business were up 8% for the first quarter of 2010 with solid growth in North America, a significant rebound in Europe over a weak prior year period and continuing double digit growth from Emerging Markets. The Division posted its highest recorded operating income margin of 17% for a quarter. Our larger global business segments in Home & Personal Care, Healthcare & Specialty and Sleeves all reported solid growth rates. Our smaller markets in alcoholic beverages and alkaline batteries remained soft but our relatively new Automotive & Durable Goods unit in Europe had an exceptional quarter."Mr. Martin added, "Results in the Container Division improved over the poor second half of 2009 as sales volume returned, particularly in the aerosol category. This helped our U.S. operation return to profitability and our Mexican business post solid results. Our Canadian operation, however, faced a significant currency headwind compounded by weak product mix and escalating aluminum costs resulting in a significant loss for the quarter. Industry wide price increases are now necessary in view of tightening capacity and commodity cost escalation. We hope to see the business build on its early improvement in the coming quarters."Mr. Martin continued, "The Tube Division had its best ever quarter driven by double digit sales gains in its local currency, the U.S. dollar, and very solid operational performance driving excellent profitability improvement, particularly at the new Los Angeles facility. Order intake levels at Tube were also the strongest for the quarter across all our North American businesses."Mr. Martin stated, "Our outlook for the coming quarter is positive as orders remain solid and comparisons in Europe will be against a weak period in 2009. Assuming exchange rates remain at current levels, however, foreign currency will continue to be challenging both for translation and the impact of U.S. dollar transactions at our Canadian Container plant. In addition, inflationary trends have returned for some of our key raw materials. For the second half of 2010, recessionary conditions will be largely removed from our prior year comparisons. This will likely see sales growth rates moderate appreciably from first quarter levels in developed markets."Mr. Martin concluded, "The Company's financial position remains very solid with cash balances of $126.6 million at quarter end and net debt to total capital falling to 32% from 40% one year ago. Based on our cash flow and available credit lines to finance our business, your Board of Directors has declared a dividend at the same level as the higher dividend declared last quarter. The quarterly dividend of $0.16 on the Class B non-voting shares and $0.1475 on the Class A voting shares will be payable to shareholders of record at the close of business on June 16, 2010, to be paid on June 30, 2010. CCL continues its record of paying quarterly dividends without reduction or omission for over 25 years."With headquarters in Toronto, Canada, CCL Industries now employs approximately 5,600 people and operates 60 production facilities globally located to meet the sourcing needs of large international customers. CCL Label is the world's largest converter of pressure sensitive and film materials for label applications and sells to leading global customers in the consumer packaging, healthcare, automotive and consumer durable markets. CCL Container and CCL Tube are leading producers of aluminum aerosol cans, bottles and extruded plastic tubes for consumer packaged goods customers in the United States, Canada and Mexico.Note 1 - EBITDA is a critical financial measure used extensively in the packaging industry and other industries to assist in understanding and measuring operating results. It is also considered as a proxy for cash flow and a facilitator for business valuations. This non-GAAP measure is defined as earnings before interest, taxes, depreciation and amortization, goodwill impairment loss and restructuring and other items. See section entitled "Supplementary Information" below for a reconciliation of operating income to EBITDA. We believe that it is an important measure as it allows us to assess our ongoing business without the impact of interest, depreciation and amortization and income tax expenses, as well as non-operating factors and one-time items. As a proxy for cash flow, it is intended to indicate our ability to incur or service debt and to invest in property, plant and equipment, and it allows us to compare our business to those of our peers and competitors who may have different capital or organizational structures. EBITDA is a measure 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 our senior notes and bank lines of credit.Note 2 - Operating Income is a key non-GAAP measure to assist in understanding the profitability of the Company's business units. This non-GAAP measure is defined as income before corporate expenses, interest, restructuring and other items and taxes.Note 3 - Adjusted Basic Earnings Per Class B Share is an important non-GAAP measure 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-GAAP measure is defined as basic net earnings per Class B share excluding restructuring and other items and tax adjustments.Supplementary InformationThree months ended March 31st Reconciliation of Operating Income to EBITDAUnaudited -------------------------------------------------------------------------- (In million of Cdn dollars) -------------------------------------------------------------------------- Three months ended March 31st ------------------------------ Operating Income ---------------- 2010 2009 ------- ------- Label $ 43.2 $ 39.1 Container (1.7) (0.3) Tube 2.1 0.5 ------------------------------ Total operations 43.6 39.3 Less: Corporate expenses (4.8) (4.4) Add: Depreciation & Amortization 23.7 24.6 ------------------------------ EBITDA $ 62.5 $ 59.5 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Unless noted otherwise, all amounts are expressed in Canadian dollars.This press release contains forward-looking information and forward-looking statements, as defined under applicable securities laws, (hereinafter collectively referred to as "forward-looking statements") 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 divisions; the future profitability of the Container Division; 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 evolving 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 segments and entering into new segments; 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; and 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 MD&A section of our 2009 Annual Report, particularly under Section 4: "Risks and Uncertainties". Our 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 our business. Such statements do not, unless otherwise specified by us, 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. Note: CCL will hold a conference call at 3:30 p.m. EDT on Thursday, May 6, ------ 2010, to discuss these results. The analyst presentation will be posted on the Company's website. To access this call, please dial: 416-695-7848 - Local 800-769-8320 - Toll Free Post-View service will be available from Thursday, May 6, 2010, at 6:00 p.m. EDT until Thursday, May 20, 2010, at 11:59 p.m. EDT To access Conference Replay, please dial: 416-695-5800 - Local 800-408-3053 - Toll Free Access Code: 5672154 For more details on CCL, visit our website - www.cclind.com.CCL INDUSTRIES INC.2010 First QuarterConsolidated Statements of Earnings Unaudited Three months ended March 31st ---------------------------------------------------------------------------- (in thousands of Canadian dollars, except per share data) 2010 2009 % Change ---------- ---------- ---------- Sales $ 307,131 $ 314,071 (2.2) Costs and expenses Cost of goods sold 233,980 245,875 Selling, general and administrative 32,881 31,618 Depreciation and amortization 1,511 1,668 ---------------------------------- 38,759 34,910 Interest expense, net 6,477 8,246 ---------------------------------- 32,282 26,664 21.1 Restructuring and other items - net loss - 1,687 ---------------------------------- Earnings before income taxes 32,282 24,977 29.2 Income taxes Current 9,817 7,688 Future (842) 549 ---------------------------------- Net earnings $ 23,307 $ 16,740 39.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per Class B share $ 0.71 $ 0.52 36.5 ---------------------------------------------------------------------------- Diluted earnings per Class B share $ 0.70 $ 0.51 37.3 ---------------------------------------------------------------------------- CCL INDUSTRIES INC. 2010 First QuarterConsolidated Balance Sheets March 31st December March 31st Unaudited 31st ---------------------------------------------------------------------------- (in thousands of Canadian dollars) 2010 2009 2009 ---------- ---------- ---------- Assets Current assets Cash and cash equivalents $ 126,616 $ 150,594 $ 106,899 Accounts receivable - trade 176,251 148,688 179,587 Other receivables and prepaid expenses 27,773 24,342 24,253 Income and other taxes recoverable - - 42 Inventories 72,583 75,530 84,612 ------------------------------------ 403,223 399,154 395,393 Property, plant and equipment 724,881 751,592 848,933 Other assets 45,677 46,182 62,681 Future income tax assets 47,364 47,440 46,011 Intangible assets 40,405 42,335 45,486 Goodwill 352,647 358,794 384,407 ---------------------------------------------------------------------------- Total assets $ 1,614,197 $ 1,645,497 $ 1,782,911 ---------------------------------------------------------------------------- Liabilities Current liabilities Bank advances 533 - - Accounts payable and accrued liabilities 197,270 206,510 234,993 Income and other taxes payable 4,854 10,943 - Current portion of long-term debt 119,238 49,290 25,685 ------------------------------------ 321,895 266,743 260,678 Long-term debt 365,751 448,849 585,391 Other long-term items 56,017 58,384 63,945 Future income tax liabilities 118,598 118,764 110,878 ---------------------------------------------------------------------------- Total liabilities 862,261 892,740 $ 1,020,892 ---------------------------------------------------------------------------- Shareholders' equity Share capital 203,140 201,339 193,224 Contributed surplus 4,510 3,805 5,273 Retained earnings 661,392 643,303 632,432 Accumulated other comprehensive loss (117,106) (95,690) (68,910) ---------------------------------------------------------------------------- Total shareholders' equity 751,936 752,757 762,019 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 1,614,197 $ 1,645,497 $ 1,782,911 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CCL INDUSTRIES INC.2010 First QuarterConsolidated Statements of Cash Flows Unaudited Three months ended March 31st ---------------------------------------------------------------------------- (in thousands of Canadian dollars) 2010 2009 ---------- --------- Cash provided by (used for) Operating activities Net earnings $ 23,307 $ 16,740 Items not involving cash: Depreciation and amortization 23,691 24,604 Executive compensation 880 510 Future income taxes (842) 549 Restructuring and other items - 1,687 Gain on sale of property, plant and equipment (38) (903) ---------------------------------------------------------------------------- 46,998 43,187 Net change in non-cash working capital (39,702) (36,974) ---------------------------------------------------------------------------- Cash provided by operating activities 7,296 6,213 ---------------------------------------------------------------------------- Financing activities Proceeds on issuance of long-term debt 1,592 2,821 Retirement of long-term debt (615) (1,260) Increase in bank advances 533 - Issue of shares 984 1,936 Repayment of executive share purchase plan loans 683 - Dividends (5,260) (4,862) ---------------------------------------------------------------------------- Cash used for financing activities (2,083) (1,365) ---------------------------------------------------------------------------- Investing activities Additions to property, plant and equipment (21,222) (36,547) Proceeds on disposal of property, plant and equipment 68 3,221 Business acquisitions (1,239) (2,717) -------------------------------------------------------------------------- Cash used for investing activities (22,393) (36,043) ---------------------------------------------------------------------------- Effect of exchange rate changes on cash (6,798) 1,825 ---------------------------------------------------------------------------- Decrease in cash and cash equivalents (23,978) (29,370) Cash and cash equivalents at beginning of period 150,594 136,269 ---------------------------------------------------------------------------- Cash and cash equivalents at end of period $126,616 $106,899 Consists of: Cash $ 81,736 $ 38,919 Short-term investments 44,880 67,980 ---------------------------------- Cash and cash equivalents at end of period $126,616 $106,899 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CCL INDUSTRIES INC.2010 First Quarter Segmented Information Unaudited ---------------------------------------------------------------------------- (in thousands of Canadian dollars) Three months ended March 31st ---------------------------------------------------------------------------- Sales Operating income ------------------------------------------ 2010 2009 2010 2009 --------- --------- --------- --------- Label $ 248,904 $ 257,528 $ 43,210 $ 39,123 Container 40,315 38,099 (1,670) (280) Tube 17,912 18,444 2,053 514 ------------------------------------------ Total operations $ 307,131 $ 314,071 43,593 39,357 -------------------- Corporate expense (4,834) (4,447) --------------------- 38,759 34,910 Interest expense, net 6,477 8,246 --------------------- 32,282 26,664 Restructuring and other items - net loss - (1,687) --------------------- Earnings before income taxes 32,282 24,977 Income taxes 8,975 8,237 --------------------- Net earnings $ 23,307 $ 16,740 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Identifiable Assets Goodwill ------------------- -------- March 31st December 31st March 31st December 31st ---------- ------------- ---------- ------------- 2010 2009 2010 2009 ---- ---- ---- ---- Label $ 1,151,940 $ 1,095,832 $ 339,909 $ 346,051 Container 175,851 171,500 12,738 12,743 Tube 57,353 59,472 - - Corporate 229,053 318,693 - - -------------------------------------------------------------- Total $ 1,614,197 $ 1,645,497 $ 352,647 $ 358,794 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Depreciation & Amortization Capital Expenditures --------------------------- -------------------- Three months ended Three months ended March 31st March 31st ------------------ ------------------ 2010 2009 2010 2009 ---- ---- ---- ---- Label $ 18,161 $ 18,311 $ 20,893 $ 32,657 Container 3,538 3,643 226 747 Tube 1,917 2,387 94 3,143 Corporate 75 263 9 - --------------------------------------------------------- Total $ 23,691 $ 24,604 $ 21,222 $ 36,547 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- FOR FURTHER INFORMATION PLEASE CONTACT: CCL Industries Inc. Gaston Tano Senior Vice President and Chief Financial Officer 416-756-8526 www.cclind.com