CCL Industries Announces 2Q 2017 Results

CCL Industries Inc. reported 2017 second quarter results. Sales for the second quarter of 2017 increased 30.5% to $1,252.9 million, compared to $960.2 million for the second quarter of 2016, with 1.9% organic growth, 2.5% positive currency translation impact and 26.1% acquisition-related growth, primarily driven by the acquisitions of Checkpoint Systems, Inc. on May 13, 2016, and Innovia Group of Companies on Feb. 28, 2017.
 
Operating income for the second quarter of 2017 was $188.3 million, an increase of 31.6% compared to $143.1 million for the comparable quarter of 2016. Net earnings were $109.9 million for the 2017 second quarter compared to $72.2 million for the 2016 second quarter.
 
For the six-month period ended June 30, 2017, sales, operating income and net earnings improved 26.7%, 18.5% and 22.2% to $2.3 billion, $347.2 million and $197.8 million, respectively, compared to the same six-month period in 2016. The 2017 six-month period included results from eleven acquisitions completed since Jan. 1, 2016, delivering acquisition related growth for the period of 25.6%.
 
“Second quarter results were underpinned by the newly configured CCL delivering healthy 5.7% organic sales growth considering the timing of Easter and a challenging double digit comparative for the prior year period,” Geoffrey T. Martin, president and CEO, said. “CCL Secure had an excellent first full quarter with results above expectations from the Innovia Security acquisition while CCL Design outperformed on stronger demand from electronics customers.
 
“Consumer packaging and healthcare end markets also posted growth, as did CCL overall in all major geographies,” Martin continued. “Checkpoint delivered another good quarter, eclipsing the partial post acquisition second quarter of 2016. Avery performance lagged 2016’s second quarter on superstore closures and soft wholesaler demand in the changing U.S. distribution landscape; Canadian and international operations plus direct to consumer businesses grew low single digits with improved profitability. With considerable regret, I can confirm that in early June, after many years, CCL Container finally ceased operations in Canada. An unfortunate event driven by currency volatility and the move of customers’ North American aerosol filling operations to the United States and Mexico. Innovia’s film business profitability was significantly lower than expected due to an intra-quarter spike in polypropylene resin prices that, so far partially reversed in the third quarter.
 
“Through the first six months of 2017, debt repayments totaled $136 million and coupled with improved profitability measures including the trailing results of the acquired business, the Company reduced its net leverage ratio, to 2.2 times EBITDA, at the end of the second quarter,” Martin concluded.
 
CCL, formerly CCL Label, sales increased 20.7% to $728.8 million, with 5.7% organic growth, 12.2% acquisition contribution and 2.8% positive currency translation. Strong 16.1% operating margin excluded 50 bps for a non-cash acquisition accounting adjustment to Innovia Security (now CCL Secure) finished goods inventory.
 
Avery sales wwere up 0.8% to $209.1 million with a 3.9% organic sales decline, 2.0% acquisition contribution and 2.7% positive currency translation. Office superstore closures and wholesale channel weakness more than offset e-tail and direct-to-consumer growth in the US; Canada and international profitability improved. Operating income declined 10.3% to $45.4 million, with a solid 21.7% operating margin
 
Checkpoint sales were $171.0 million, with operating income of $19.5 million and better than expected 11.4% operating margins. Innovia sales of $91.7 million represent the first full quarter of activity postInnovia acquisition, with operating income of $6.7 million. Operating margin of 7.3% was negatively impacted by intra-quarter spike in resin prices.
 
Container sales were down 6.9% to $52.3 million with 9.8% organic sales decline partially offset by 2.9% positive currency translation. Operating income was $5.6 million with a 10.7% operating margin.