CCL Industries : Announces Record 2021 Results

News Release

For Immediate Release, Thursday, February 24, 2022

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

CCL Industries Announces Record 2021 Results

Fourth Quarter Highlights

• Per Class B share(3): $0.81 adjusted basic earnings down 3.6%; $0.80 basic earnings down 1.2%; currency translation negative $0.04
• Sales increased 10.2% on 12.8% organic growth, 1.8% acquisition growth partially offset by 4.4% negative currency translation
• 14.0% operating margin(1) down 180 bps on inflation challenges

2021 Highlights

• Per Class B share(3): $3.37 adjusted basic earnings, up 9.4%; $3.33 basic earnings up 12.5%; currency translation negative $0.15
• Sales increased 9.4% on 11.8% organic growth, 2% acquisition growth partially offset by 4.4% negative currency translation
• Operating income(1) increased 8.2%, with a 15.5% operating margin(1) down 20 bps
• Consolidated leverage ratio improved to 1.06 for 2021; annual dividend increased 14.3% effective March 17, 2022

Toronto, February 24, 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 fourth quarter and annual financial results for 2021.

Sales for the fourth quarter of 2021 increased 10.2% to $1,488.8 million, compared to $1,350.6 million for the fourth quarter of 2020, with organic growth of 12.8% and acquisition-related growth of 1.8% partially offset by 4.4% negative impact from foreign currency translation.

Operating income(1) for the fourth quarter of 2021 decreased by 2.1% to $208.8 million compared to $213.3 million for the comparable quarter of 2020. Excluding the impact of foreign currency translation operating income(1) increased 2.5% compared to the 2020 fourth quarter.

Restructuring and other items were $1.1 million for the 2021 fourth quarter primarily for reorganization and severance costs at the CCL and Checkpoint Segments. For the fourth quarter of 2020, restructuring and other items was $5.8 million primarily for severance costs at the Checkpoint Segment.

Tax expense for the fourth quarter of 2021 was $35.3 million compared to $33.4 million in the prior year period. The effective tax rate for the 2021 fourth quarter was 20.1% resulting in an annual effective tax rate of 23.6% compared to 19.0% for the 2020 fourth quarter and the 2020 annual rate of 23.9%. The decline in the aforementioned 2021 effective tax rates can be attributed to the utilization of previously unrecognized deferred tax assets at certain subsidiaries of the Company.

For the fourth quarter of 2021, net earnings were $145.1 million compared to $145.9 million for the 2020 fourth quarter, basic and adjusted basic earnings per Class B share(3) were $0.80 and $0.81 respectively, compared to basic and adjusted basic earnings per Class B share(3) of $0.81 and $0.84, respectively, in the prior year fourth quarter.

For the 2021 year, sales, operating income(1) and net earnings improved 9.4%, 8.2% and 13.1% to $5.7 billion, $891.3 million and $599.1 million, respectively, compared to December 31, 2020. The year ending December 31, 2021 included results from eighteen acquisitions completed since January 1, 2020, delivering acquisition related sales growth for the period of 2.0%, coupled with organic sales growth of 11.8% partially offset by 4.4% negative impact from foreign currency translation. Foreign currency translation had a negative impact of $0.15 per share. For the year ended December 31, 2021, basic and adjusted basic earnings per Class B share(3) were $3.33 and $3.37, respectively, compared to basic and adjusted basic earnings per Class B share(3) of $2.96 and $3.08, respectively, in the prior year.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "2021 marked our second consecutive year of delivering record results in the midst of a global pandemic as strong growth in sales and adjusted basic earnings per share generated solid free cash flow. This speaks to the resiliency and diversity of our end markets plus the focus and dedication of our amazing people. These results come as the Company faces supply chain disruptions and inflationary issues the likes of which we have rarely seen in our long history."

Mr. Martin continued, "The CCL Segment 6.0% fourth quarter organic growth rate was broad based across all end markets. Home & Personal Care results benefitted from strong aerosol and aluminum bottle demand in North America, primarily offsetting soft label results in Asia where consumer markets remain dampened by the pandemic. Solid Healthcare & Specialty sales growth augmented significant operational gains in Europe, increasing profits. Food & Beverage recorded good organic sales growth but profitability declined on inflationary raw material costs not yet fully recovered from customers, especially in North America and Europe. CCL Design made extensive sales gains in electronics markets; higher operating costs and softer mix held profitability while the ongoing semiconductor crisis continued to severely restrain production output across the automotive industry. Results at CCL Secure improved on sales gains. Our label joint ventures in Russia and the Middle East delivered record earnings in 2021. Avery results improved in all geographies and in all categories leading to an excellent fourth quarter, with a 21.3% operating margin(1) which could have been even better but for supply constraints. Substantial organic growth in MAS, and especially ALS product lines fueled by RFID and coupled with a better-than-expected contribution from the recently acquired Uniter, resulted in very strong results at Checkpoint despite higher freight and component inflation from internal supply plants in China. Innovia film volume increased but the vast majority of the sales gain derived from higher resin costs largely passed through to customers. Substantial energy and freight inflation significantly reduced profitability, particularly in Europe. The important new EcoFloat film operation in Poland should commence commercial operations during the second quarter of 2022."

Mr. Martin noted, "The Canadian dollar was one of the strongest currencies in the world during 2021 and continued to be so in the fourth quarter. With 98% of sales outside Canada, foreign currency translation reduced earnings $0.04 and $0.15 per Class B share for the fourth quarter and 2021 respectively. At today's Canadian dollar exchange rates, currency translation would remain a headwind for 2022, if sustained."

Mr. Martin concluded, "The Company finished the year with a strong balance sheet and excellent liquidity, despite investing $234.4 million in nine acquisitions and $306.9 million in capital expenditure, net of disposals. The Company's consolidated leverage ratio(5) declined to 1.06 times Adjusted EBITDA(2) with $602.1 million cash-on-hand and US$1.19 billion undrawn capacity on its syndicated revolving credit facility, leaving us well placed to fund global ambitions. Therefore, the Board of Directors declared a 14.3% increase in the quarterly dividend to $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 March 17, 2022, to be paid on March 31, 2022."

2021 Fourth Quarter Highlights

CCL Segment

• Sales increased 2.7% to $883.2 million on 6.0% organic growth, 1.2% acquisition contribution partially offset by 4.5% negative impact from currency translation
• Regional organic sales growth: double digit gains in Latin America and Asia, mid-single digit in Europe and low single digit in North America
• Operating income(1) $121.5 million, down 10.9%, 13.8% operating margin(1) down 210 bps
• Label joint ventures added $0.03 earnings per Class B share

Avery

• Sales increased 19.3% to $179.9 million on 20.8% organic growth, 1.9% acquisition contribution partially offset by 3.4% negative impact from currency translation
• Operating income(1) $38.4 million, up 42.2%, 21.3% operating margin(1), up 340 bps

Checkpoint

• Sales increased 19.8% to $226.8 million on 18.8% organic growth, 6.2% acquisition contribution partially offset by 5.2% negative impact from foreign currency translation
• Operating income(1) $36.4 million, up 13.0%, 16.0% operating margin(1), down 100 bps

Innovia

• Sales increased 32.3% to $198.9 million with 36.0% organic growth partially offset by 3.7% negative impact from foreign currency translation
• Operating income(1) $12.5 million, down 29.4%, 6.3% operating margin(1), down 550 bps

CCL will host a webcast at 7:30 a.m. ET on February 25, 2022, to discuss these results.

The quarterly results review presentation, including outlook commentary, are posted on the Company's website at https://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/2807/44465

Replay for the webcast will be available Friday, February 25, 2022, at 11:30 a.m. ET until Sunday, March 22, 2022, at 11:30 p.m. ET.

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 anticipated growth in sales; the impact of foreign currency exchange rates on the 2022 ; the income and profitability of the Company's segments; the commencement of the Polish EcoFloat film commercial operations during the second quarter of 2022; and the Company's expectations regarding 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 statements of financial position

Unaudited

In millions of Canadian dollars
		As at December 31, 2021		As at December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	602.1	$	703.7
Trade and other receivables		1,083.8		922.8
Inventories		677.3		533.5
Prepaid expenses		46.5		35.3
Income taxes recoverable		37.9		29.0
Derivative instruments		-		0.4
Total current assets		2,447.6		2,224.7
Non-current assets
Property, plant and equipment		1,910.3		1,882.7
Right-of-use assets		145.5		158.4
Goodwill		1,975.1		1,918.5
Intangible assets		991.1		1,007.6
Deferred tax assets		47.7		42.7
Equity-accounted investments		68.4		66.1
Other assets		25.8		26.8
Derivative instruments		16.3		9.2
Total non-current assets		5,180.2		5,112.0

Total assets	$	7,627.8	$	7,336.7
Liabilities
Current liabilities
Trade and other payables	$	1,321.5	$	1,135.7
Current portion of long-term debt		15.3		51.8
Lease liabilities		32.7		34.2
Income taxes payable		48.5		40.3
Total current liabilities		1,418.0		1,262.0
Non-current liabilities
Long-term debt		1,691.4		1,889.4
Lease liabilities		111.9		119.2
Deferred tax liabilities		286.6		270.8
Employee benefits		315.5		385.1
Provisions and other long-term liabilities		15.2		10.9
Derivative instruments		42.2		117.1
Total non-current liabilities		2,462.8		2,792.5
Total liabilities		3,880.8		4,054.5
Equity
Share capital		462.1		396.8
Contributed surplus		103.6		90.1
Retained earnings		3,422.7		2,937.5
Accumulated other comprehensive loss		(241.4)		(142.2)
Total equity attributable to shareholders of the
Company		3,747.0		3,282.2
Total liabilities and equity	$	7,627.8	$	7,336.7