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Press release from Marketwire

CCL Industries Reports Strong Organic Sales Growth And a 13.4% Increase in First Quarter 2012 Net Earnings

Thursday, May 03, 2012

CCL Industries Reports Strong Organic Sales Growth And a 13.4% Increase in First Quarter 2012 Net Earnings08:23 EDT Thursday, May 03, 2012TORONTO, ONTARIO--(Marketwire - May 3, 2012) - CCL Industries Inc. (TSX:CCL.A)(TSX:CCL.B) - Results Summary For periods ended March 31Three months unaudited(in millions of Cdn dollars,20122011%% Changeexcept per share data)ChangeExcl. FX (*)Sales$341.4$315.68.2%8.8%EBITDA 1$71.2$66.47.2%7.8%Operating income 2$52.6$48.78.0%8.6%Earnings (losses) in equity accounted investments$0.8$-n.m.Restructuring and other items - net loss$-$0.5n.m.Net earnings$30.4$26.813.4%14.8%Per Class B non-voting shareBasic earnings per share$0.91$0.8112.3%Diluted earnings per share$0.89$0.8011.3%Restructuring and other items - net loss$-$0.01n.m.Adjusted basic earnings per Class B share 3$0.91$0.8211.0%Number of outstanding shares (in 000's)Weighted average for the period - basic33,42733,030Actual at period end33,75133,324(*) - Change over prior year's comparative period excludes estimated impact of foreign currency translation. CCL Industries Inc. ("CCL" or "the Company") is a world leader in the development of label solutions for global producers of consumer brands in the home & personal care, healthcare, durable goods, and premium food & beverage sectors; and a specialty supplier of aluminum containers and plastic tubes for the same customers in North America. First Quarter 2012 Results Sales for the first quarter of 2012 were $341.4 million, an increase of 8.2% compared to $315.6 million for the first quarter of 2011. Excluding the impact of foreign currency translation, sales increased 8.0% organically with an additional 0.8% increase from the acquisition of Sertech in April of 2011.Operating income (a non-IFRS measure; see note 2 below) for the first quarter of 2012 was $52.6 million, an improvement of 8.0% compared to $48.7 million for the first quarter of 2011. Operating income improved 8.6%, excluding the negative impact of foreign currency translation for the comparative quarters. The Label and Tube segments increased operating income, partially offset by a decline at the Container segment, for the first quarter of 2012 compared to the first quarter of 2011. EBITDA (a non-IFRS measure; see note 1 below) was $71.2 for the first quarter of 2012 compared to $66.4 million for the first quarter of 2011, a 7.8% improvement excluding the impact of foreign currency translation.Net earnings for the 2012 first quarter increased 13.4% to $30.4 million, compared to $26.8 million posted for the first quarter of 2011. The increase in net earnings is attributable to the above-mentioned improvement in operating income, and a reduction in net finance cost partially offset by an increase in the effective tax rate.Basic earnings were $0.91 per Class B share in the first quarter of 2012 compared to $0.81 per Class B share in the prior year quarter.Geoffrey T. Martin, President and Chief Executive Officer commented, "I am pleased to report another solid quarter and excellent start to the 2012 year for CCL. Our Label and Tube segments capitalized on robust organic growth particularly in North America, to post strong results for the quarter. Foreign currency translation effects were nominally negative for the first quarter of the year."Mr. Martin continued, "CCL Label enjoyed another quarter of strong double digit growth driven by a very good performance in North America where we saw evidence of a solid consumer recovery. Growth rates were compounded by the Healthcare sector with certain customers operating at normal levels in 2012 compared to a regulatory driven hiatus in the prior year period. Asia Pacific continued to deliver strong growth as demand levels in Thailand recovered from the fourth quarter floods. Overall operating income reached record levels and increased 11% in line with sales gains, excluding foreign currency translation. Results were held in check by a small, but not entirely unexpected decline in European profitability given macroeconomic events in the region, although sales were up low single digits. We also faced difficult comparisons in Latin America where currency depreciation and cost inflation affected results compared to the reverse effect in the prior year despite solid sales increases. Overall, CCL Label delivered a return on sales of approximately 17% for the first quarter of 2012, beyond the high end of our target range but not untypical for this period which has favourable seasonality factors."Mr. Martin commented, "Our two joint ventures, CCL-Kontur in Russia and Pacman-CCL, the Company's third quarter 2011 investment in the Middle East, both contributed positively to first quarter results. Consolidated first quarter net earnings from the joint ventures totalled two cents per share. Acrus-CCL, our new wine label joint venture in Santiago, Chile, will commence trading during the 2012 second quarter."Mr. Martin then added, "First quarter sales for CCL Container declined 3% and operating income fell compared to the prior year period but improved sequentially over each of the previous three quarters of 2011. The year-over-year decline was driven by significantly lower volumes of beverage bottles at our U.S. operation coupled with an unusual seasonal shift in aerosol demand from the early months of the year to the spring and early summer. The plant is now booked solid for the second quarter. The Canadian operation continues to improve and the Mexican business posted solid performance as volume grows at our new facility. We were also pleased to see Container deliver strong free cash flow for the quarter. CCL Tube continued its outstanding performance, with solid sales growth and strong profitability gains driven by improved mix. Operating income was a record $4 million for the 2012 first quarter."Mr. Martin continued, "The recent strong performance of our business in North America gives us cause for cautious optimism for the coming quarter and 2012 as a whole. The caution stems from macroeconomic uncertainty in Europe, the recent currency depreciation in Latin America and concerns being raised by some commentators on the near term sustainability of growth rates in Asia. The early part of the 2012 second quarter is influenced by holiday periods but order intake for all three of our business segments has been solid, with North American growth so far offsetting slow markets in Europe. Despite this, the Company will likely see the rate of performance improvement moderate appreciably in the coming quarter as comparisons to a strong prior year period are more challenging. Foreign currency exchange rates to the Canadian dollar could also impact translated earnings while strengthening in the U.S. dollar would affect raw material costs in Latin America."Mr. Martin concluded, "CCL's balance sheet remains strong at the end of the 2012 first quarter with $142 million of cash on hand, $91 million of unused credit facilities and net debt to total capital down 140 basis points to 19.3% compared to December 31, 2011. Based on our strong cash flow and our prospects for the coming year, your Board of Directors has declared a dividend of $0.1950 per Class B non-voting share and $0.1825 per Class A voting share payable to shareholders of record at the close of business on June 15, 2012, to be paid on June 29, 2012."Donald G. Lang, CCL's Executive Chairman, added "At our AGM today, we bid farewell to Jon Grant, who has retired from the Board after 17 years of service as a Director. We wish him well. He will be replaced as Lead Director by Alan D. Horn who has been with us since 2008 and is uniquely qualified to serve in this capacity. I also want to welcome Philip M. Gresh who joins the Board effective today. Phil had a lengthy career as a senior executive with Illinois Tool Works and brings specific industry knowledge of global markets to our deliberations. Shareholder interests continue to be represented by a majority of strong independent Directors on the Board who also provide wise counsel to management."With headquarters in Toronto, Canada, CCL Industries now employs approximately 6,400 people and operates 70 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.1 EBITDA is a critical non-IFRS 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-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. See section entitled "Supplementary Information" below for a reconciliation of operating income to EBITDA. The Company believes that it 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, it is 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 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 CCL's senior notes and bank lines of credit. 2 Operating Income is a key non-IFRS financial measure used to assist in understanding the profitability of the Company's business units. This non-IFRS financial measure is defined as income before corporate expenses, net finance cost, earnings in equity accounted investments, restructuring and other items and taxes. 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 restructuring and other items and tax adjustments. Supplementary InformationFor periods ended March 31stReconciliation of Operating Income to EBITDAUnaudited(In millions of Canadian dollars)Three months ended March 31stOperating Income20122011Label$46.2$41.9Container2.43.7Tube4.03.1Total operating income52.648.7Less: Corporate expenses(6.5)(6.3)Add: Depreciation & amortization25.124.0EBITDA$71.2$66.4The financial information presented herein has been prepared on the basis of IFRS for financial statements and is expressed in Canadian dollars unless otherwise stated.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; 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 Management's Discussion and Analysis section of CCL's 2011 Annual Report, particularly under Section 4: "Risks and Uncertainties." CCL'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 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. Note: CCL will hold a conference call at 3:00 p.m. EDT on Thursday, May 3, 2012, to discuss these results. The analyst presentation will be posted on the Company's website.To access this call, please dial: 416-340-2219 - Local1-866-226-1793 - Toll Free Audio replay service will be available from Thursday, May 3, 2012, at 6:00 p.m. EDT until Thursday, May 17, 2012, at 11:59 p.m. EDT. To access Conference Replay, please dial: 905-694-9451- Local 1-800-408-3053 - Toll Free Access Code: 5270712 For more details on CCL, visit our website - www.cclind.comCCL Industries Inc.Consolidated condensed interim statements of financial positionUnauditedIn thousands of Canadian dollarsAs at March 31As at December 3120122011AssetsCurrent assetsCash and cash equivalents$141,924$140,698Trade and other receivables218,711192,003Inventories90,70886,932Prepaid expenses4,3435,304Income tax recoverable-802Derivative instruments767820Total current assets456,453426,559Property, plant and equipment691,482688,099Goodwill355,045355,788Deferred tax assets54,00854,152Equity accounted investments39,04838,464Intangible assets32,29534,853Other assets15,11215,566Total non-current assets1,186,9901,186,922Total assets$1,643,443$1,613,481LiabilitiesCurrent liabilitiesTrade and other payables$226,500$233,963Current portion of long-term debt19,29619,750Income taxes payable10,169-Derivative instruments1,6422,530Total current liabilities257,607256,243Long-term debt327,051334,218Deferred tax liabilities114,160118,827Employee benefits80,39277,806Provisions and other long-term liabilities10,0879,507Total non-current liabilities531,690540,358Total liabilities789,297796,601EquityShare capital220,642218,663Contributed surplus10,3739,421Retained earnings653,387629,469Accumulated other comprehensive loss(30,256)(40,673)Total equity attributable to shareholders of the Company854,146816,880Total liabilities and equity$1,643,443$1,613,481CCL Industries Inc.Consolidated condensed interim income statementsUnauditedIn thousands of Canadian dollars, except per share dataThree months ended March 31%20122011ChangeRevenue$341,396$315,6258.2Cost of sales257,620238,037Gross profit83,77677,588Selling, general and administrative37,72035,053Restructuring and other items-542(Earnings) loss in equity accounted investments(830)89Results from operating activities46,88641,904Finance cost5,5115,989Finance income(308)(324)Net finance cost5,2035,665Earnings before income taxes41,68336,23915.0Income tax expense11,2619,419Net earnings$30,422$26,82013.4Attributable to:Shareholders of the Company$30,422$26,820Net earnings for the period$30,422$26,820Basic earnings per Class B share$0.91$0.8112.3Diluted earnings per Class B share$0.89$0.8011.3CCL Industries Inc.Consolidated condensed interim statements of cash flowsUnauditedIn thousands of Canadian dollarsThree months endedMarch 3120122011Cash provided by (used for)Operating activitiesNet earnings$30,422$26,820Adjustments for:Depreciation and amortization25,10923,950Restructuring and other items-542Net finance cost5,2035,665Current income tax expense14,3869,408Equity-settled share-based payment transactions1,0811,090Deferred taxes(3,125)11Loss on sale of property, plant and equipment(114)(453)72,96267,033Change in inventories(3,776)(4,448)Change in trade and other receivables(26,708)(29,607)Change in prepaid expenses9611,174Change in trade and other payables(2,332)(5,781)Change in income taxes1,565(49)Change in employee benefits2,5862,816Change in other assets and liabilities1691,50045,42732,638Interest paid(10,332)(11,557)Income taxes paid(4,980)(3,216)Cash provided by operating activities30,11517,865Financing activitiesProceeds on issuance of long-term debt-1,040Repayment of long-term debt(1,246)(68,472)Increase in bank advance-172Proceeds from issuance of shares1,5521,073Repayment of executive share purchase plan loans233-Dividends(6,550)(5,802)Cash used for financing activities(6,011)(71,989)Investing activitiesAdditions to property, plant and equipment(23,300)(25,841)Proceeds on disposal of property, plant and equipment572664Business acquisitions-(1,955)Cash used for investing activities(22,728)(27,132)Net increase (decrease) in cash and cash equivalents1,376(81,256)Cash and cash equivalents at beginning of period140,698173,197Translation adjustment on cash and cash equivalents(150)193Cash and cash equivalents at end of period$141,924$92,134CCL Industries Inc.Segment informationUnauditedIn thousands of Canadian dollarsThree months ended March 31SalesOperating income2012201120122011Label$273,876$247,756$46,193$41,935Container46,14647,6512,4163,740Tube21,37420,2183,9953,098Total operations$341,396$315,62552,60448,773Corporate expense(6,548)(6,238)Restructuring and other items-(542)Earnings (loss) in equity accounted investments830(89)Finance cost(5,511)(5,989)Finance income308324Income taxes(11,261)(9,419)Net earnings$30,422$26,820FOR FURTHER INFORMATION PLEASE CONTACT: Sean WashchukCCL Industries Inc.Senior Vice President and Chief Financial