CCL Industries Reports 4Q, Full Year Results

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 and personal care, healthcare, durable goods, and premium food and beverage sectors. CCL is also a specialty supplier of aluminum containers and plastic tubes for the same customers in North America.

Today, CCL announced its financial results for the fourth quarter and fiscal year ending December 31, 2011, and an increase of its annual dividend.

Full Year 2011 Results

Sales were $1,268.5 million in 2011, an increase of 6.4 percent compared to $1,192.3 million for 2010. Excluding the impact of foreign currency translation, sales increased 7.0 percent organically with an additional 0.8 percent from the acquisition of Sertech in April of 2011.

Operating income (a non-IFRS measure; see note 2 below) for 2011 was $163.7 million, an increase of 11.7 percent compared to $146.6 million for 2010; and an increase of 13.4 percent excluding the impact of foreign currency translation. This reflects significant improvement for the Container and Tube segments supported by a modest advance for the Label segment.

EBITDA (a non-IFRS measure; see note 1 below) was $239.1 million for 2011, an increase of 8.8 percent, compared to $219.8 million posted in 2010. Excluding the impact of foreign currency translation, EBITDA increased by 10.4 percent over the prior year.

Net earnings for 2011 increased 18.3 percent to $84.1 million, compared to $71.1 million for 2010, due to the aforementioned improvement in the business segments, and a reduction in net finance cost partially offset by an increase in corporate expense.

Basic earnings for 2011 were $2.54 per Class B non-voting share ("Class B share") compared to $2.17 in 2010. After the net impact of plant restructuring costs and other items in 2011, the Company posted adjusted basic earnings of $2.57 per Class B share (a non-IFRS measure; see note 3 below) compared to $2.18 per Class B share in 2010.

Fourth Quarter 2011 Results

Sales for the fourth quarter of 2011 increased 12.8 percent to $317.3 million compared to $281.3 million for 2010. Each business segment, for the 2011 fourth quarter recorded strong organic growth compared to the same period in 2010.

Operating income for the fourth quarter of 2011 was $35.4 million, an increase of 16.4 percent compared to $30.4 million for the comparable quarter in 2010. Strong organic growth, coupled with pricing programs and productivity initiatives, drove improvements in all three business segments.

EBITDA for the fourth quarter of 2011 was $54.7 million, an increase of 15.2 percent compared to $47.5 million in the comparable prior year three-month period.

In addition to the improvements recorded in the business segments, corporate expense and net finance cost for the current quarter decreased $1.4 million compared to the same period a year ago. The Company's equity accounted investments in Russia and the Middle East contributed fourth quarter earnings of $1.4 million compared to a loss of $0.1 million in the comparable prior year period. Consequently, net earnings for the fourth quarter of 2011 increased significantly to $18.4 million, compared to $13.3 million for the comparable quarter in 2010.

Basic earnings were $0.55 per Class B share in the fourth quarter of 2011 compared to $0.41 in the prior year quarter.

Restructuring and other items had an impact on earnings of $0.02 per Class B share in the fourth quarter of 2011 and $0.01 per Class B share in the prior year period. Therefore the Company posted adjusted basic earnings of $0.57 and $0.42 per Class B share in the fourth quarters of 2011 and 2010, respectively.

Geoffrey T. Martin, President and Chief Executive Officer commented, "After an excellent performance this past quarter, I am pleased to report a strong set of results for 2011 despite the unsettled macroeconomic backdrop that prevailed the entire year. Foreign currency effects were nominal for the fourth quarter but moderately negative for the year."

Mr. Martin continued, "Sales increases in all geographic regions, including Europe, underpinned an unusually strong 13 percent fourth quarter sales growth rate for CCL Label. Operating income gains were held to eight percent by higher input costs in certain product lines. Additionally, the floods in Thailand temporarily impaired many of our customers' operations in the country affecting label demand and trimming three cents a share from the Company's fourth quarter net earnings. No damage was done to any of our facilities in Bangkok. The robust performance was broad based across most global product lines and end-use markets but was particularly strong in both the Sleeve and Healthcare and Specialty sectors. CCL Label's annual revenues in 2011 passed the $1 billion milestone for the first time with solid organic growth and modest profitability improvement. Despite a challenging global economy and inflationary raw material costs, this segment delivered a 21.8 percent EBITDA margin for the year, which continues to be at the high end of our target range.

"Sales for CCL Container, excluding the impact of foreign currency translation, increased 12 percent for the fourth quarter as we continued to deliver on our turnaround plan. Improved pricing and product mix combined with many cost and productivity initiatives resulted in significant profitability gains highlighted by our Canadian operation contributing positive results for the second consecutive quarter. CCL Tube's performance exceeded all expectations delivering a record year and another outstanding quarter; sales in local currency were up 19 percent driving a steep change in profit margins. Shareholders will know that returns in these two segments have lagged the rest of the Company for some years so I am particularly pleased to see both businesses delivering meaningful contributions to our free cash flow and bottom line in 2011," stated Mr. Martin.

Mr. Martin added, "The fourth quarter also included a first time contribution from Pacman-CCL, the Company's new investment in the Middle East. Together with much improved profitability at our investment in Russia, consolidated fourth quarter net earnings from these joint ventures totaled four cents per share."

Mr. Martin then added, "Although global economic uncertainty remains, we are cautiously optimistic about the Company's prospects for profitable growth in 2012. Demand levels in Emerging Markets are expected to continue outpacing those in North America and Europe as our performance mirrors the experience of our large global customers. Order levels have been solid so far in 2012, including Europe, despite the ongoing sovereign debt crisis in the region. The Company's rate of performance improvement will narrow appreciably in the first quarter of 2012 as comparisons to a strong prior year period are more challenging than the fourth quarter of 2011, particularly for CCL Container. We do expect to see raw material inflation stabilize and potentially reverse in some commodity categories. Foreign currency impact would be nominal at today's exchange rates."

Mr. Martin concluded, "CCL has substantially strengthened its balance sheet in 2011 with $141 million of cash on hand, $91 million of unused credit facilities and net debt to total capital down 373 basis points to 20.7 percent at year end. Based on strong 2011 cash flows, our prospects for the coming year and the Company's commitment to increasing total shareholder return, your Board of Directors has declared an increase in the quarterly dividend of 11.4 percent or $0.02 per share. The new quarterly dividend of $0.195 per Class B non-voting share and $0.1825 per Class A voting share will be payable to shareholders of record at the close of business on March 16, 2012, to be paid on March 30, 2012. CCL has delivered dividends to shareholders without omission or reduction for over 30 years."

Donald G. Lang, Executive Chairman additionally announced, "After more than 17 years as a Director, with nine of them as Chairman of the Board and three as Lead Director, Jon Grant has announced his plans to retire in May of this year and therefore will not stand for re-election at the Company's Annual General Meeting on May 3, 2012. Jon was Chairman of the Board during a period of substantial change and growth and helped to navigate the Company's transition to the global leadership position it holds today. He has also contributed to the deliberations of the Environmental, Health and Safety, Nominating and Governance and Human Resources committees either as the chairman or as a member over the years. His knowledge of the Company, our industry and the environment in which we operate will be missed and we thank him for his guidance over his many years as a Director."

With headquarters in Toronto, Canada, CCL Industries now employs approximately 6,400 people and operates 69 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.