CCL Industries Announces Record 2022 Results

CCL Industries Inc. reported fourth quarter and annual financial results for 2022.

Sales for the fourth quarter of 2022 increased 6.6% to $1,587.2 million, compared to $1,488.8 million for the fourth quarter of 2021, with an organic decline of 0.6% offset by acquisition- related growth of 4.9% and 2.3% positive impact from foreign currency translation.

Operating income for the fourth quarter of 2022 increased by 1.1% to $211.2 million compared to $208.8 million for the comparable quarter of 2021. Excluding the impact of foreign currency translation operating income decreased 1.6% compared to the 2021 fourth quarter.

For the 2022 year, sales, operating income and net earnings improved 11.3%, 4.8% and 3.9% to $6.4 billion, $934.4 million and $622.7 million, respectively, compared to Dec. 31, 2021. The year ending Dec. 31, 2022 included results from 12 acquisitions completed since January 1, 2021, delivering acquisition related sales growth for the year of 4.8%, coupled with organic sales growth of 7.3% partially offset by 0.8% negative impact from foreign currency translation.

“2022 was our third consecutive year of delivering record results despite difficult economic conditions including historic inflationary pressures, global supply chain disruptions, pandemic-related restrictions and geopolitical events disrupting commodity and energy markets,” said Geoffrey T. Martin, president and CEO. “Our teams worked with resolve, dedication and passion delivering for customers and shareholders. 2022 was another year of strong free cash flow, largely reinvested in our businesses, positioning the company for continued long term success.

“The CCL Segment posted a 1.8% fourth quarter organic growth rate. Strong Home & Personal Care results derived from labels improved globally with especially robust gains in aluminum aerosols, partly offset by a profitability decline in tubes. Healthcare delivered another very strong quarter, particularly in North America but Specialty markets were mixed, remaining notably weak in consumer garden chemicals. Food & Beverage recorded strong organic sales growth and significant profitability improvement as price increases recovered inflationary raw material costs; Latin America profitability notably excelled.

“Avery results were solid as strong profitability gains in North America, notably in direct-to- consumer categories, more than offset modest underlying declines internationally. Good results for the newly acquired Adelbras tapes unit in Brazil outpaced softer performance at the recent acquisitions in the horticultural space, adding to profitability.

“Checkpoint MAS results improved in all regions, other than Asia, compared to a strong prior year fourth quarter. ALS performance moderated compared to a very robust period in 2021 as the apparel retail supply chain deals with excess inventories. RFID results remained strong. Sharply lower volume to the label materials industry, persistent energy inflation in Europe, higher freight charges, startup costs for the new ‘Ecofloat’ line in Poland and the impact of reduced sales prices from falling resin indices squeezing margins short term on higher cost inventories all combined to significantly reduce Innovia profitability.”

Martin concluded, “The company finished the year with a strong balance sheet and excellent liquidity, despite spending $287 million on three acquisitions, repurchasing $200 million of capital stock in buyback programs and investing $419 million in capital expenditure, net of disposals. The company’s consolidated leverage ratio ended 2022 at 1.24 times Adjusted EBITDA with $840 million cash-on-hand and approximately US$910 million undrawn capacity on our syndicated revolving credit facility, leaving us well placed to fund global ambitions.”

2022 Fourth Quarter Highlights:
CCL Segment
• Sales increased 7.2% to $947.1 million on 1.8% organic growth, 2.2% acquisition contribution and 3.2% positive impact from currency translation.
• Regional organic sales growth: high single digit gains in Europe and Latin America, mid- single digit in North America and double digit decline in Asia Pacific.
• Operating income $131.9 million, up 8.6%, 13.9% operating margin up 10 bps.

Avery
• Sales increased 33.3% to $239.8 million on 2.6% organic growth, 27.1% acquisition contribution and 3.6% positive impact from currency translation.
• Operating income $42.1 million, up 9.6%, 17.6% operating margin, down 370 bps.

Checkpoint
• Sales declined 1.9% to $222.6 million on 2.2% organic decline, and 1.5% negative impact from foreign currency translation, partially offset by 1.8% acquisition contribution.
• Operating income $34.6 million, down 4.9%, 15.5% operating margin, down 50 bps.

Innovia
• Sales decreased 10.7% to $177.7 million with 12.2% organic decline partially offset by 1.5% positive impact from foreign currency translation.
• Operating income $2.6 million, down 79.2%, 1.5% operating margin, down 480 bps.