11.07.14
CCL Industries Inc. reported its third quarter 2014 results.
Sales for the third quarter of 2014 increased 13.7% to $689.7 million, compared to $606.6 million for the third quarter of 2013, with 2.5% organic growth, 5.9% positive currency translation and the balance primarily from the Sancoa, Dekopak and Bandfix acquisitions.
For the nine months ended Sept. 30, 2014, sales increased 37.5%, excluding foreign currency translation, driven by above noted acquisitions as well as the Avery and DES acquisitions on July 1, 2013 compared to the prior year nine-month period.
Operating income for the third quarter of 2014 was $107.2 million, an increase of 58.1% compared to $67.8 million for the comparable quarter of 2013. The Label, Avery and Container Segments posted 22.0%, 176.5% and 3.4% increases in their respective operating income for the comparable third quarters. Again, all three segments contributed to the strong results for the nine-month period ending September 30, 2014, resulting in a 58.4% improvement in operating income for the comparable nine-month period.
EBITDA was $133.1 million for the third quarter of 2014, an increase of 23.5% compared to $107.8 million for the third quarter of 2013, driven by the notable improvements at the Label and Avery Segments. EBITDA improved 16.1%, excluding the impact of currency translation. For the nine-month period ended September 30, 2014, EBITDA was $369.9 million, an increase of 42.5% compared to $259.5 million in the comparable 2013 nine-month period.
Net earnings for the 2014 third quarter were $63.1 million, an increase of 167.4% compared to $23.6 million for the third quarter of 2013. Net earnings for the nine-month period of 2014 were $171.0 million, an increase of 103.3% compared to $84.1 million for the same period a year ago.
“Third quarter earnings per share reached an all-time record for CCL, with our core Label business contributing strong improvement and Avery delivering solid sales and outstanding profitability performance far ahead of our expectations,” said Geoffrey T. Martin, president and CEO. “CCL Label sales increased 21%, fueled by strong 7% organic growth plus the impact of acquisitions and positive currency translation. In North America consumer staples markets remained subdued but a strong performance at Sancoa boosted modest organic sales growth from Home & Personal Care customers. A substantial recovery in our Healthcare & Specialty business, robust automotive demand at CCL Design and new initiatives in Food & Beverage combined to drive mid-single digit organic growth overall. Profits improved on the back of the sales performance plus a meaningful contribution from Sancoa.
“European sales were up mid-single digits in local currencies with all business lines and geographies posting solid and in some cases, significantly improved results in a challenging economic environment,” Martin added. “Profit margins increased compared to the prior year period on better mix. Sales in Emerging Markets continued to grow double digits despite many Home & Personal Care customers commenting on marked deceleration in growth rates almost everywhere in the developing world. Profitability was down modestly on softer mix and start-up costs in the Philippines. Globally, operating results improvement for the Food & Beverage sector outpaced all other business lines. Our joint ventures also posted solid results despite the turmoil in the Middle East and the impact in Russia of events in Ukraine. The Label Segment’s absolute profitability continued to improve with margins slightly ahead of the prior year third quarter with some room to expand as recent acquisitions improve their performance.
“Results at Avery exceeded all expectations,” Martin said. “As we previously indicated, early retailer orders in June for the binder product line shifted sales from the third to second quarter comparatively resulting in a 5% local currency decline for Avery in the period, reversing the gains we saw in the second quarter as a result of this shift. Underlying sales performance was roughly flat with growth initiatives making up for secular declines in some product lines. Printable media sales advanced so this mix effect combined with the cost savings initiatives executed over the last year drove a significant rise in profitability on a like for like adjusted basis. With the back-to-school season completed, the next two quarters are seasonal lows for Avery.”
Martin then added, “CCL Container posted 4% organic sales growth driven by higher volumes in North America and Mexico. Profitability was only in line with the 2013 third quarter as aluminum cost increased double digits compared to the prior year. Work continues on the eventual closure of the Canadian plant and year to date we have expensed $0.5 million of our planned $4 million cost to redistribute capacity to our U.S. and Mexican operations. We remain committed to delivering $10 million in annualized cost savings after the transition is completed towards the end of 2015.
“Recent geopolitical and macroeconomic news brings the return of uncertainty to our outlook,” Martin added. “We therefore decided to prepare for the future by closing unprofitable operations and combining some sub scale locations into larger facilities. A small number of CCL Label operations will be impacted involving approximately 100 people in the coming two quarters. Together with the final actions around Avery, largely in Europe, we plan to incur a restructuring charge of approximately $6 million in the fourth quarter. We expect a pre-tax pay back of approximately one year on these changes.”
Sales for the third quarter of 2014 increased 13.7% to $689.7 million, compared to $606.6 million for the third quarter of 2013, with 2.5% organic growth, 5.9% positive currency translation and the balance primarily from the Sancoa, Dekopak and Bandfix acquisitions.
For the nine months ended Sept. 30, 2014, sales increased 37.5%, excluding foreign currency translation, driven by above noted acquisitions as well as the Avery and DES acquisitions on July 1, 2013 compared to the prior year nine-month period.
Operating income for the third quarter of 2014 was $107.2 million, an increase of 58.1% compared to $67.8 million for the comparable quarter of 2013. The Label, Avery and Container Segments posted 22.0%, 176.5% and 3.4% increases in their respective operating income for the comparable third quarters. Again, all three segments contributed to the strong results for the nine-month period ending September 30, 2014, resulting in a 58.4% improvement in operating income for the comparable nine-month period.
EBITDA was $133.1 million for the third quarter of 2014, an increase of 23.5% compared to $107.8 million for the third quarter of 2013, driven by the notable improvements at the Label and Avery Segments. EBITDA improved 16.1%, excluding the impact of currency translation. For the nine-month period ended September 30, 2014, EBITDA was $369.9 million, an increase of 42.5% compared to $259.5 million in the comparable 2013 nine-month period.
Net earnings for the 2014 third quarter were $63.1 million, an increase of 167.4% compared to $23.6 million for the third quarter of 2013. Net earnings for the nine-month period of 2014 were $171.0 million, an increase of 103.3% compared to $84.1 million for the same period a year ago.
“Third quarter earnings per share reached an all-time record for CCL, with our core Label business contributing strong improvement and Avery delivering solid sales and outstanding profitability performance far ahead of our expectations,” said Geoffrey T. Martin, president and CEO. “CCL Label sales increased 21%, fueled by strong 7% organic growth plus the impact of acquisitions and positive currency translation. In North America consumer staples markets remained subdued but a strong performance at Sancoa boosted modest organic sales growth from Home & Personal Care customers. A substantial recovery in our Healthcare & Specialty business, robust automotive demand at CCL Design and new initiatives in Food & Beverage combined to drive mid-single digit organic growth overall. Profits improved on the back of the sales performance plus a meaningful contribution from Sancoa.
“European sales were up mid-single digits in local currencies with all business lines and geographies posting solid and in some cases, significantly improved results in a challenging economic environment,” Martin added. “Profit margins increased compared to the prior year period on better mix. Sales in Emerging Markets continued to grow double digits despite many Home & Personal Care customers commenting on marked deceleration in growth rates almost everywhere in the developing world. Profitability was down modestly on softer mix and start-up costs in the Philippines. Globally, operating results improvement for the Food & Beverage sector outpaced all other business lines. Our joint ventures also posted solid results despite the turmoil in the Middle East and the impact in Russia of events in Ukraine. The Label Segment’s absolute profitability continued to improve with margins slightly ahead of the prior year third quarter with some room to expand as recent acquisitions improve their performance.
“Results at Avery exceeded all expectations,” Martin said. “As we previously indicated, early retailer orders in June for the binder product line shifted sales from the third to second quarter comparatively resulting in a 5% local currency decline for Avery in the period, reversing the gains we saw in the second quarter as a result of this shift. Underlying sales performance was roughly flat with growth initiatives making up for secular declines in some product lines. Printable media sales advanced so this mix effect combined with the cost savings initiatives executed over the last year drove a significant rise in profitability on a like for like adjusted basis. With the back-to-school season completed, the next two quarters are seasonal lows for Avery.”
Martin then added, “CCL Container posted 4% organic sales growth driven by higher volumes in North America and Mexico. Profitability was only in line with the 2013 third quarter as aluminum cost increased double digits compared to the prior year. Work continues on the eventual closure of the Canadian plant and year to date we have expensed $0.5 million of our planned $4 million cost to redistribute capacity to our U.S. and Mexican operations. We remain committed to delivering $10 million in annualized cost savings after the transition is completed towards the end of 2015.
“Recent geopolitical and macroeconomic news brings the return of uncertainty to our outlook,” Martin added. “We therefore decided to prepare for the future by closing unprofitable operations and combining some sub scale locations into larger facilities. A small number of CCL Label operations will be impacted involving approximately 100 people in the coming two quarters. Together with the final actions around Avery, largely in Europe, we plan to incur a restructuring charge of approximately $6 million in the fourth quarter. We expect a pre-tax pay back of approximately one year on these changes.”