CCL Reports Third Quarter 2009 Results and Declares Dividend TORONTO, ONTARIO--(Marketwire - 11/05/09) - CCL Industries Inc. (TSX:CCL.A - News)(TSX:CCL.B - News) -
Results Summary
-----------------------
For periods ended
September 30 Three months (Unaudited) Nine months (Unaudited)
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(In millions of Cdn
dollars, except per
share data) 2009 2008 % Change 2009 2008 % Change
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Sales $ 294.3 $ 289.8 1.6% $ 909.7 $ 897.7 1.3%
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EBITDA (Note 1) $ 50.7 $ 52.8 (4.0%) $ 158.9 $ 171.5 (7.3%)
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Operating Income
(Note 2) $ 28.9 $ 33.1 (12.7%) $ 97.2 $ 118.6 (18.0%)
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Restructuring and
other items - net
(loss) gain $ - $ 1.7 $ (2.1) $ 3.5
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Net earnings $ 16.6 $ 22.1 (24.9%) $ 42.3 $ 73.7 (42.6%)
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Per Class B share
Basic earnings per
share $ 0.51 $ 0.70 (27.1%) $ 1.31 $ 2.30 (43.0%)
Diluted earnings per
share $ 0.51 $ 0.68 (25.0%) $ 1.29 $ 2.23 (42.2%)
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Restructuring and
other items and
favourable
tax adjustments -
net (loss) gain $ - $ 0.05 $ (0.05) $ 0.11
Adjusted basic
earnings per
Class B share
(Note 3) $ 0.51 $ 0.65 (21.5%) $ 1.36 $ 2.19 (37.9%)
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Number of outstanding
shares (in 000's)
Weighted average for
the period 32,283 32,116
Actual at period
end 32,420 31,971
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 third quarter ended September 30, 2009, and declaration of its quarterly dividend. Sales for the third quarter of 2009 were $294.3 million, up 2% versus the $289.8 million recorded in the third quarter of 2008, while sales for the first nine months of 2009 were $909.7 million, up 1% over last year's $897.7 million. Sales increased for the quarter due to a 1% increase from acquisitions in the Label Division and 1% in organic growth, with a nominal impact from foreign exchange. The third quarter benefited from improved business conditions compared to the first half of 2009 and financial comparisons have eased significantly as Europe entered into the economic downturn in last year's third quarter. Financial comparisons to the prior year's third quarter results have been nominally affected by the appreciation of the U.S. dollar (5%) and to a lesser degree, the appreciation of the euro (1%) relative to the Canadian dollar, largely offset by the depreciation of the U.K. pound sterling (9%), Mexican peso (18%) and Brazilian real (6%). Year-to-date, sales increased by 1%, as a result of positive foreign currency translation of 5% mainly offset by an organic decline of 5%, with acquisitions accounting for the remaining 1%. EBITDA (a non-GAAP measure; see note 1 below) was $50.7 million in the third quarter of 2009, down by 4% from the $52.8 million reported in 2008. This decline reflects lower operating income (a non-GAAP measure; see note 2 below) and higher corporate expense partially offset by a nominal positive impact from the improvement in currency translation rates. Year-to-date EBITDA was $158.9 million in 2009, down 7% from $171.5 million in the comparable 2008 period for similar reasons as the quarter. Net earnings for the third quarter of 2009 were $16.6 million, down 25% from $22.1 million recorded in the third quarter of 2008 due to lower operating income, higher corporate expense and higher net interest expense partially offset by lower income tax rates due to an accounting tax benefit in the current quarter. Foreign currency translation had a nominal impact in the quarter. Operating income was down by $4.2 million or 13% primarily due to the unfavourable performance in the Container Division, partially offset by slightly improved results at Label Division and a strong improvement at the Tube Division compared to the prior year quarter. In the third quarter of 2009, no restructuring and other costs were incurred. In the third quarter of 2008, net earnings were favourably impacted by a gain from the repatriation of capital from Europe that arose from the disposal of the Company's investment in ColepCCL of $1.7 million with no tax effect. Year-to-date net earnings were $42.3 million, down 43% from $73.7 million in the comparable 2008 period. Net earnings for the first nine months of 2009 were negatively affected by a net loss of $1.7 million due to restructuring and other items. Net earnings for the comparable period in 2008 were affected by a net gain of $3.5 million due to restructuring and other items. Basic earnings per Class B share were $0.51 in the third quarter of 2009 compared to $0.70 earned in the same period last year, a decrease of 27%. Restructuring and other items in the third quarter of 2008 increased earnings per Class B share by $0.05. Foreign currency translation and transactions had no material impact on basic earnings per Class B share in the third quarter of 2009 versus the third quarter of 2008. Adjusted basic earnings per Class B share (a non-GAAP measure; see note 3 below) were $0.51 in the third quarter of 2009, down 22% from the $0.65 in the third quarter of 2008. For the first nine months of 2009, basic earnings per Class B share were $1.31 compared to $2.30 in the prior year period, a 43% decrease. Restructuring and other items decreased earnings per Class B share by $0.05 for the first nine months of 2009 versus an $0.11 increase in the same period last year. The positive impact of currency translation and transactions on basic earnings per Class B share was $0.10 in the first nine months of 2009 compared to the same period last year. For the first nine months of 2009, adjusted basic earnings per Class B share (a non- GAAP measure; see note 3 below) were $1.36 in 2009, down 38% from the $2.19 in the 2008 comparable period. Geoffrey T. Martin, President and Chief Executive Officer commented, "Along with many of our customers and suppliers we saw some signs of improvement in global business conditions, particularly in North America during the third quarter. Market demand also continued at robust levels in both Latin America and Asia. Although we saw both comparative and sequential improvements in our European operations, business there remains below the levels of one year ago." Mr. Martin continued, "Sales in the third quarter were slightly higher, excluding currency translation and the small impact from acquisitions. CCL's earnings per share were down 27% for the quarter and adjusted earnings per share were down 22%. Operating income declined by 13%, largely due to a poor performance in our Container Division. Our earnings were also negatively impacted by lower yields on our large cash balances, partly offset by a lower income tax rate due to an accounting benefit of certain tax losses." Mr. Martin also noted, "Sales in the third quarter for the Label Division were up 2%, excluding acquisitions and currency translation, while operating income margin improved to almost 13%. The North American business delivered strong sales gains in the quarter, with all major market segments up but by widely varying degrees. New business gains and particularly strong results in our Healthcare & Specialty segment were important factors in significantly improved profitability. Sales in Europe however declined and although comparisons eased, the region's profits were still below last year. Asia and Latin America both continue to deliver strong growth rates particularly in the Home and Personal Care markets, and above average profitability." Mr. Martin added, "Financial performance in the Container Division was unacceptable, but at levels anticipated when the quarter began. Market conditions in the United States remain challenging with continued lower demand for high-end aerosol cans aggravated by a slow summer for aluminum beverage bottles. The quarter's operating income was also negatively impacted by previously reported issues with aluminum hedges and scrap aluminum, partly offset by hedging gains on the U.S. dollar. Many cost saving actions are underway to deliver improved performance. We have also seen a notable pick up in demand so far in the fourth quarter." Mr. Martin continued, "We are very pleased with the Tube Division which continued to deliver significantly improved financial results in the quarter, with new business gains, much improved operational performance and strong cash flows." Mr. Martin stated, "Like many commentators we are trying to read whether the third quarter improvement was driven by real demand or customers rebuilding inventories. The improvement that we have seen over the summer has so far continued in the fourth quarter making us cautiously optimistic for immediate earnings prospects at both our Label and Tube Divisions. Although we believe volume will also improve at Container we don't see this business returning to profitability before 2010." Mr. Martin concluded, "Until we are convinced that the apparent recovery we have seen in recent months can be sustained in 2010, we will maintain a vigilant focus on cost and net cash flow, particularly in underperforming businesses. However, CCL continues to have a strong financial position with positive cash flow from operations and liquidity. We remain comfortably within our debt covenants and maintain full availability on our existing lines of credit. As a result, your Board of Directors has declared a dividend at the same level as the higher dividend declared earlier this year. The quarterly dividend is $0.15 on Class B non-voting shares and $0.1375 on Class A voting shares to shareholders of record at the close of business on December 14, 2009, payable on January 4, 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 5,500 people and operates 57 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 - A critical financial measure used extensively in the packaging industry and other industries to assist in understanding and measuring operating results and 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 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 favourable tax adjustments.
Supplementary Information
Nine months ended September 30th
Reconciliation of Operating Income to EBITDA
Unaudited
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(In million of Cdn dollars)
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Three months ended Nine months ended
September 30th September 30th
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Operating Income
----------------
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2009 2008 2009 2008
---- ---- ---- ----
Label $ 30.7 $ 30.1 $ 98.2 $ 107.0
Container (2.8) 2.8 (3.2) 11.0
Tube 1.0 0.2 2.2 0.6
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Total operations 28.9 33.1 97.2 118.6
Less: Corporate expenses (2.6) (1.8) (12.4) (8.4)
Add: Depreciation &
Amortization 24.4 21.5 74.1 61.3
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EBITDA $ 50.7 $ 52.8 $ 158.9 $ 171.5
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Any forward-looking statements contained in this press release, including 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. Forward-looking statements include all statements that are predictive in nature or depend on future events or conditions. They involve known and unknown risks and uncertainties, and assumptions 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; income tax rates and the ability to tax-benefit losses by jurisdiction; 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. Unless noted otherwise, all amounts are expressed in Canadian dollars.
Note: CCL will hold a conference call at 2:30 p.m. EST on Thursday,
----- November 5, 2009, to discuss these results. Quarterly Financial
Statements and Management's Discussion and Analysis will be
posted on the Company's website.
To access this call, please dial:
416-340-8018 - Local
866-223-7781 - Toll Free
Post-View service will be available from Thursday, November 5, 2009,
at 6:00 p.m. EST until Thursday, November 19, 2009,
at 11:59 p.m. EST
To access Conference Replay, please dial:
416-695-5800 - Local
800-408-3053 - Toll Free
Access Code: 7830114
For more details on CCL, visit our website - www.cclind.com
CCL INDUSTRIES INC.
2009 Third Quarter
Consolidated Statements of Earnings
Three months ended Nine months ended
Unaudited September 30th September 30th
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(in millions of Canadian
dollars, except per share
data) 2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
Sales $294.3 $289.8 1.6 $909.7 $897.7 1.3
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Costs and expenses
Cost of goods sold 231.3 225.2 714.1 684.4
Selling, general and
administrative 35.0 31.3 105.8 97.8
Depreciation and
amortization 1.7 2.0 5.0 5.3
Interest expense, net 7.0 6.1 22.8 16.2
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19.3 25.2 (23.4) 62.0 94.0 (34.0)
Restructuring and other
items - net (loss) gain - 1.7 (2.1) 3.5
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Earnings before income taxes 19.3 26.9 (28.3) 59.9 97.5 (38.6)
Income taxes 2.7 4.8 17.6 23.8
Net earnings $ 16.6 $ 22.1 (24.9) $ 42.3 $ 73.7 (42.6)
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Basic earnings per Class B
share $ 0.51 $ 0.70 (27.1) $ 1.31 $ 2.30 (43.0)
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Diluted earnings per
Class B share $ 0.51 $ 0.68 (25.0) $ 1.29 $ 2.23 (42.2)
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CCL INDUSTRIES INC.
2009 Third Quarter
Consolidated Balance Sheets
September December September
Unaudited 30th 31st 30th
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(in millions of Canadian dollars) 2009 2008 2008
---- ---- ----
Assets
Current assets
Cash and cash equivalents $ 108.4 $ 136.3 $ 206.1
Accounts receivable - trade 168.8 156.0 156.7
Other receivables and prepaid
expenses 26.8 26.4 18.3
Income and other taxes
recoverable - 2.2 -
Inventories 82.1 87.1 83.9
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386.1 408.0 465.0
Property, plant and equipment 783.0 830.8 757.5
Other assets 46.6 57.6 39.5
Future income tax assets 45.5 43.5 35.1
Intangible assets 43.4 47.5 44.5
Goodwill 362.5 379.3 389.9
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Total assets $ 1,667.1 $ 1,766.7 $ 1,731.5
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Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 215.5 $ 250.8 $ 211.2
Income and other taxes payable 6.2 - 2.2
Current portion of long-term
debt 59.5 25.9 22.1
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281.2 276.7 235.5
Long-term debt 452.9 566.6 566.1
Other long-term items 56.9 66.5 56.7
Future income tax liabilities 113.8 106.4 101.8
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Total liabilities 904.8 1,016.2 960.1
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Shareholders' equity
Share capital 195.9 191.3 189.0
Contributed surplus 6.1 4.8 6.2
Retained earnings 648.4 621.9 652.1
Accumulated other comprehensive
loss (88.1) (67.5) (75.9)
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Total shareholders' equity 762.3 750.5 771.4
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Total liabilities and
shareholders' equity $ 1,667.1 $ 1,766.7 $ 1,731.5
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CCL INDUSTRIES INC.
2009 Third Quarter
Consolidated Statements of Cash Flows
Three months ended Nine months ended
Unaudited September 30th September 30th
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(in millions of Canadian
dollars) 2009 2008 2009 2008
---- ---- ---- ----
Cash provided by (used
for)
Operating activities
Net earnings $ 16.6 $ 22.1 $ 42.3 $ 73.7
Items not involving
cash:
Depreciation and
amortization 24.4 21.5 74.1 61.3
Executive compensation 0.6 0.7 1.6 2.7
Future income taxes (1.5) 2.4 1.6 6.4
Restructuring and other
items, net of tax - (1.7) 1.7 (3.5)
Gain on sale of
property, plant and 0.1 (0.1) (1.0) (1.0)
equipment
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40.2 44.9 120.3 139.6
Net change in non-cash
working capital (12.0) 6.4 (31.0) 44.8
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Cash provided by
operating activities 28.2 51.3 89.3 184.4
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Financing activities
Proceeds on issuance of
long-term debt 2.1 141.8 6.2 182.2
Retirement of long-term
debt (10.8) (20.8) (12.9) (28.4)
Issue of shares 0.8 2.1 4.1 2.2
Repurchase of shares - - - (18.1)
Purchase of shares held
in trust - - - (4.4)
Repayment of executive
share purchase plan loans - - 0.4 -
Dividends (4.9) (4.4) (14.6) (13.5)
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Cash provided by (used
for) financing
activities (12.8) 118.7 (16.8) 120.0
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Investing activities
Additions to property,
plant and equipment (19.9) (54.6) (88.4) (157.7)
Proceeds on disposal of
property, plant and
equipment 0.2 0.5 4.0 3.8
Proceeds on product line
dispositions - 1.0 - 9.4
Business acquisitions 0.2 - (5.3) (35.2)
Long-term investment - - - (6.3)
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Cash used for investing
activities (19.5) (53.1) (89.7) (186.0)
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Effect of exchange rate
changes on cash (7.9) (15.2) (10.7) (8.9)
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Increase (decrease) in
cash and cash equivalents (12.0) 101.7 (27.9) 109.5
Cash and cash equivalents
at beginning of period 120.4 104.4 136.3 96.6
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Cash and cash equivalents
at end of period $ 108.4 $ 206.1 $ 108.4 $ 206.1
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CCL INDUSTRIES INC.
2009 Third Quarter
Segmented Information
Unaudited
----------------------------------------------------------------------------
(in millions of Canadian dollars)
Three months Nine months
ended September 30th ended September 30th
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Operating Operating
Sales income Sales income
------------------------------------------------------------
------------------------------------------------------------
2009 2008 2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ---- ---- ----
Label $244.8 $237.1 $ 30.7 $ 30.1 $751.2 $733.4 $ 98.2 $107.0
Container 31.5 36.9 (2.8) 2.8 105.0 117.6 (3.2) 11.0
Tube 18.0 15.8 1.0 0.2 53.5 46.7 2.2 0.6
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Total
operations $294.3 $289.8 28.9 33.1 $909.7 $897.7 97.2 118.6
--------------- --------------
Corporate
expense (2.6) (1.8) (12.4) (8.4)
----------------- ---------------
26.3 31.3 84.8 110.2
Interest expense,
net 7.0 6.1 22.8 16.2
----------------- ---------------
19.3 25.2 62.0 94.0
Restructuring and other
items - net (loss) gain - 1.7 (2.1) 3.5
----------------- ---------------
Earnings before income
taxes 19.3 26.9 59.9 97.5
Income taxes 2.7 4.8 17.6 23.8
----------------- ---------------
Net earnings $ 16.6 $ 22.1 $ 42.3 $ 73.7
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Depreciation & Capital
Identifiable Assets Goodwill Amortization Expenditures
------------------- -------- -------------- ------------
Sept- Dec- Sept- Dec- Nine months Nine months
ember ember ember ember ended ended
30th 31st 30th 31st September 30th September 30th
----- ----- ----- ----- -------------- --------------
2009 2008 2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ---- ---- ----
Label $ 1,218.5 $ 1,250.3 $ 349.8 $ 366.5 $ 55.7 $ 48.1 $ 81.5 $ 117.4
Container 177.3 190.4 12.7 12.8 11.2 7.6 2.4 30.1
Tube 63.0 77.1 - - 6.9 5.2 4.5 9.7
Corporate 208.3 248.9 - - 0.3 0.4 - 0.5
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Total $ 1,667.1 $ 1,766.7 $ 362.5 $ 379.3 $ 74.1 $ 61.3 $ 88.4 $ 157.7
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Contact:
Source: CCL Industries Inc.
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