CCL Industries : Announces 2022 Second Quarter Results

News Release

For Immediate Release, Wednesday, August 10, 2022

Stock Symbols: TSX - CCL.A and CCL.B

CCL Industries Announces 2022 Second Quarter Results

Second Quarter Highlights

• Per Class B share(3): $0.94 adjusted basic earnings up 5.6%; $0.91 basic earnings up 5.8%; currency translation negative $0.02 per share
• Sales increased 14.9% on 10.9% organic and 4.8% acquisition growth partially offset by 0.8% negative currency translation
• CCL, Avery and Innovia posted organic sales growth of 10.9%, 13.8% and 19.5%, respectively
• Operating income(1) improved 5.2%, with a 15.3% operating margin(1) down 140 bps

Six-Month Highlights

• Per Class B share(3): $1.79 adjusted basic earnings up 4.7%; $1.75 basic earnings up 4.2%; currency translation negative $0.04 per share
• Sales increased 13.8% on 10.8% organic and 4.7% acquisition growth partially offset by 1.7% negative currency translation
• CCL, Avery, Checkpoint and Innovia posted organic sales growth of 9.1%, 13.7%, 7.0% and 20.8%, respectively
• Operating income(1) improved 3.9%, with a 15.2% operating margin(1) down 140 bps

Toronto, August 10, 2022 - CCL Industries Inc. ("the Company"), a world leader in specialty label, security and packaging solutions for global corporations, government institutions, small businesses and consumers, today reported 2022 second quarter results.

Sales for the second quarter of 2022 increased 14.9% to $1,615.2 million, compared to $1,406.3 million for the second quarter of 2021, with organic growth of 10.9% and acquisition- related growth of 4.8% partially offset by 0.8% negative impact from foreign currency translation.

Operating income(1) for the second quarter of 2022 was $247.8 million compared to $235.5 million for the comparable quarter of 2021. Results included a $3.5 million non-cash acquisition accounting adjustment related to the acquired inventory from the Adelbras acquisition that was expensed in the Company's cost of sales for the quarter. Excluding this non-cash adjustment, operating income improved 6.7% to $251.3 million. Foreign currency translation had a 0.4% negative impact on operating income for the comparable quarters.

The Company recorded an expense for restructuring and other items of $3.2 million, primarily attributable to reorganization charges at CCL Design and transaction costs associated with acquisitions completed in the current year compared to $2.6 million for reorganization costs in the 2021 second quarter.

Tax expense for the second quarters of 2022 and 2021 was $51.7 million resulting in effective tax rates for the 2022 second quarter of 24.4% compared to 25.5% for the prior year period. The lower tax rate in the current period is due to higher portion of taxable income earned in lower taxed jurisdictions as well as the impact of additional UK tax legislation accrued for in 2021, partially offset by a valuation allowance reduction.

Net earnings increased 6.8% to $163.4 million for the 2022 second quarter compared to $153.0 million for the 2021 second quarter. Basic and adjusted basic earnings per Class B share(3) for the 2022 second quarter were $0.91 and $0.94, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $0.86 and $0.89, respectively, in the prior year second quarter.

For the six-month period ended June 30, 2022, sales, operating income(1) and net earnings improved 13.8%, 3.9% and 4.3% to $3.1 billion, $476.4 million and $313.6 million, respectively, compared to the same six-month period in 2021. Results for the 2022 six-month period included a $3.5 million non-cash acquisition accounting adjustment to the acquired finished goods inventory from the Adelbras acquisition expensed through cost of sales in the period. The 2022 six-month period included results from twelve acquisitions completed since January 1, 2021, delivering acquisition-related sales growth of 4.7%. Organic sales growth was 10.8%; negative impact from foreign currency translation partially offset by 1.7%. For the six-month period ended June 30, 2022, basic and adjusted basic earnings per Class B share(3) were $1.75 and $1.79, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $1.68 and $1.71, respectively, in the prior year six-month period. Foreign currency translation had a negative $0.04 per share impact on earnings.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "I am pleased to report record quarterly results despite an unsettled geopolitical backdrop, China-centric Covid lockdowns, persistent inflation and supply chain challenges. The Company posted strong 10.9% organic sales growth, although significantly selling price driven to offset inflation, while adjusted basic earnings per Class B share(3) improved 5.6% to $0.94, including $0.02 of negative impact from foreign currency translation."

Mr. Martin continued, "Our CCL Segment's 10.9% organic sales growth drove corresponding profitability improvement. Home & Personal Care results improved significantly, with exceptional demand in the Americas for labels and aerosols offsetting slower markets in Europe and Asia. Healthcare results improved dramatically worldwide offsetting much slower lawn & garden chemical markets benefitting from pandemic tailwinds in the prior year period. Food & Beverage recorded solid organic sales growth driving improved profitability despite some unrecovered inflation. The impact of chip shortages and Covid lockdowns in China during April and May impacted customer demand at CCL Design electronics, although gains in automotive included solid results for the recently acquired McGavigan operation in China. CCL Secure delivered good sales growth but faced particularly difficult mix-driven profit comparatives to a very strong prior year period while our label joint ventures delivered excellent earnings growth. Checkpoint's exceptional sales growth and profitability gains in ALS, driven by RFID, organic share wins and recent acquisitions could not offset MAS profitability declines as price increases lagged inflation and supply chain issues at our plants in China impacted product availability on top of softer markets globally. Avery posted outstanding results fueled by an early start to the North American back-to-school season while Direct-to-Consumer sales accelerated significantly with the badge category continuing to close the gap to pre-pandemic demand levels; early results from the Adelbras acquisition in Brazil met expectations. Surging energy and transportation cost challenges in Europe plus start-up costs for the new "Ecofloat" line in Poland impacted Innovia profitability more than offsetting solid gains in the Americas."

Mr. Martin added, "Looking ahead, end market demand appears to remain solid and there are early signs supply chain challenges could ease going forward; input costs also look to have peaked with resins and aluminum both declining as we go into the third quarter. At today's Canadian dollar exchange rates, currency translation would be a modest headwind, if sustained, for the third quarter of 2022; with weaker European and Australian currencies more than offsetting the stronger U.S. dollar."

Mr. Martin concluded, "The Company finished the quarter with a strong balance sheet and robust liquidity. While the Company's consolidated leverage ratio(5) increased to 1.47 times Adjusted EBITDA(2) the $634.3 million of cash-on-hand and US$0.8 billion undrawn capacity on its syndicated revolving credit facility, leave us well placed to fund global expansion initiatives. During the quarter, the Company returned $142.5 million to shareholders in dividends and share repurchases under its Normal Course Issuer Bid. The Board of Directors declared the quarterly dividend at $0.24 per Class B non-voting share and $0.2375 per Class A voting share, payable to shareholders of record at the close of business on September 15, 2022, to be paid on September 29, 2022."

Board of Directors Update

Dr. Susana Suarez-Gonzalez, who joined the Company's Board in January of 2021, has decided to resign as a Director to focus on her new role of Executive Vice President and Chief Human Resources Officer of Amcor PLC, a global packaging company. Executive Chairman, Mr. Donald G. Lang stated, "We have been very fortunate to have Dr. Suarez- Gonzalez serve on our Board and thank her for her contributions. We wish her all the best in the future."

2022 Second Quarter Highlights

CCL

• Sales increased 12.7% to $965.2 million on 10.9% organic growth, 2.3% acquisition contribution partially offset by 0.5% negative impact from foreign currency translation
• Regional organic sales growth: double digit in Europe, high-single digit in North America, mid-single digit in Asia Pacific and Latin America up over 30%
• Operating income(1) $154.9 million, up 11.0%, 16.0% operating margin(1) down 30 bps
• Label joint ventures added $0.02 earnings per Class B share

Avery

• Sales increased 32.2% to $236.5 million on 13.8% organic growth, 17.9% acquisition contribution and 0.5% positive impact from foreign currency translation
• Operating income(1) $46.9 million, up 22.8%, 19.8% operating margin(1), down 160 bps largely due to finished goods inventory acquisition accounting at Adelbras

Checkpoint

• Sales increased 5.0% to $197.1 million on acquisition growth of 8.4% partially offset by organic decline of 0.5% and 2.9% negative impact from foreign currency translation
• Operating income(1) $22.6 million, down 22.3%, 11.5% operating margin(1), down 400 bps on declines in MAS profitability

Innovia

• Sales increased 18.0% to $216.4 million with 19.5% organic growth partially offset by 1.5% negative impact from foreign currency translation
• Operating income(1) $23.4 million, down 18.5%, 10.8% operating margin(1), down 480 bps on resin pass through

The Company will hold a live webcast call at 7:30 a.m. ET on August 11, 2022, to discuss these results.

The quarterly results review presentation, including outlook commentary, is posted on the

Company's website athttps://www.cclind.com/investors/investor-presentations/

To access the webcast or webcast replay, please use the following webcast link:

https://www.webcaster4.com/Webcast/Page/2807/46179

Replay for the webcast will be available Thursday, August 11, 2022, at 11:30 a.m. ET until Sunday, September 11, 2022.

For more information on CCL, visit our website - www.cclind.com or contact:

Sean Washchuk	Senior Vice President	416-756-8526
	and Chief Financial Officer

Forward-looking Statements

This press release contains forward-looking information and forward-looking statements (hereinafter collectively referred to as "forward-looking statements"), as defined under applicable securities laws, that involve a number of risks and uncertainties. Forward-looking statements include all statements that are predictive in nature or depend on future events or conditions. Forward-looking statements are typically identified by the words "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. 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. Specifically, this press release contains forward-looking statements regarding the impact of foreign currency exchange rates on the 2022 third quarter; income and profitability of the Company's segments; and the Company's expectations regarding inflation, supply chain challenges, general business and economic conditions.

Forward-looking statements are not guarantees of future performance. They involve known and unknown risks and uncertainties relating to future events and conditions including, but not limited to, the impact of competition; consumer confidence and spending preferences; general economic and geopolitical conditions; currency exchange rates; interest rates and credit availability; technological change; changes in government regulations; risks associated with operating and product hazards; and the Company'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. Forward-looking statements are also based on a number of assumptions, which may prove to be incorrect, including, but not limited to, assumptions about the following: global economic environment and higher consumer spending; improved customer demand for the Company's products; continued historical growth trends, market growth in specific sectors and entering into new sectors; the Company's ability to provide a wide range of products to multinational customers on a global basis; the benefits of the Company's focused strategies and operational approach; the achievement of the Company's plans for improved efficiency and lower costs, including stable aluminum costs; the availability of cash and credit; fluctuations of currency exchange rates; fluctuations in resin prices; the Company's continued relations with its customers; and economic conditions. Should one or more risks materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking statements. Further details on key risks can be found in the 2021 Annual Report, Management's Discussion and Analysis, particularly under Section 4: "Risks and Uncertainties." CCL Industries Inc.'s annual and quarterly reports can be found online at www.cclind.comand www.sedar.comor are available upon request.

Except as otherwise indicated, forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made may have on the Company's business. Such statements do not, unless otherwise specified by the Company, reflect the impact of dispositions, sales of assets, monetizations, mergers, acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them and therefore cannot be described in a meaningful way in advance of knowing specific facts. The forward-looking statements are provided as of the date of this press release and the Company does not assume any obligation to update or revise the forward-looking statements to reflect new events or circumstances, except as required by law.

The financial information presented herein has been prepared on the basis of IFRS for financial statements and is expressed in Canadian dollars unless otherwise stated.

Financial Information

CCL Industries Inc.

Consolidated condensed interim statements of financial position

Unaudited

In millions of Canadian dollars
	As at June 30, 2022	As at December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	634.3	$	602.1
Trade and other receivables		1,169.5		1,083.8
Inventories		808.9		677.3
Prepaid expenses		50.9		46.5
Income taxes recoverable		12.9		37.9
Total current assets		2,676.5		2,447.6
Non-current assets
Property, plant and equipment		1,971.2		1,910.3
Right-of-use assets		163.7		145.5
Goodwill		2,106.9		1,975.1
Intangible assets		994.6		991.1
Deferred tax assets		52.6		47.7
Equity-accounted investments		78.8		68.4
Other assets		26.5		25.8
Derivative instruments		68.3		16.3
Total non-current assets		5,462.6		5,180.2

Total assets	$	8,139.1	$	7,627.8
Liabilities
Current liabilities
Trade and other payables	$	1,325.0	$	1,321.5
Current portion of long-term debt		19.8		15.3
Lease liabilities		35.2		32.7
Income taxes payable		60.3		48.5
Derivative instruments		0.4		-
Total current liabilities		1,440.7		1,418.0
Non-current liabilities
Long-term debt		2,218.7		1,691.4
Lease liabilities		124.9		111.9
Deferred tax liabilities		315.1		286.6
Employee benefits		202.5		315.5
Provisions and other long-term liabilities		14.7		15.2
Derivative instruments		-		42.2
Total non-current liabilities		2,875.9		2,462.8
Total liabilities		4,316.6		3,880.8
Equity
Share capital		461.9		462.1
Contributed surplus		117.2		103.6
Retained earnings		3,539.2		3,422.7
Accumulated other comprehensive loss		(295.8)		(241.4)
Total equity attributable to shareholders of the Company		3,822.5		3,747.0
Total liabilities and equity	$	8,139.1	$	7,627.8