11.10.16
CCL Industries Inc. reported 2016 third quarter and nine month results.
Sales for the third quarter of 2016 increased 34.0% to $1,089.3 million, compared to $812.9 million for the third quarter of 2015, with 0.4% organic growth, 1.1% negative currency translation impact and 34.7% acquisition-related growth, primarily driven by the May 13, 2016 acquisition of Checkpoint Systems, Inc. and Nov 6, 2015 acquisition of Worldmark Ltd.
Operating income for the third quarter of 2016 was $149.7 million, an increase of 11.5% compared to $134.3 million for the comparable quarter of 2015. Included in the 2016 third quarter was a final $17.3 million non-cash acquisition accounting adjustment related to the acquired finished goods inventory from the Checkpoint acquisition that was expensed in the company’s cost of goods sold for the quarter. Excluding this non-cash adjustment, operating income was $167.0 million for the three-month period ended September 30, 2016. Excluding the impact of currency translation and the non-cash accounting adjustment operating income improved 26.0%.
Net earnings was $86.1 million for the 2016 third quarter compared to $81.8 million for the 2015 third quarter.
For the nine-month period ended September 30, 2016, sales, operating income and net earnings improved 30.2%, 18.4% and 11.1% to $2,916.3 million, $442.7 million and $248.0 million, respectively, compared to the same nine-month period in 2015. Included in the 2016 nine-month period was a $33.9 million non-cash acquisition accounting adjustment to the acquired finished goods inventory from the Checkpoint and Worldmark businesses that was expensed in the company’s cost of goods sold for the period. Excluding this non-cash adjustment, operating income was $476.6 million and improved 27.4% for the comparable nine-month periods.
The 2016 results included results from fourteen acquisitions completed since Jan. 1, 2015, delivering acquisition-related sales growth for the period of 23.7%, with 4% organic sales growth providingthe foundation for solid profit improvement and foreign currency translation added $0.13 per share.
“Third quarter results were driven by good performance in the base business, considering the very strong prior year period, augmented by Checkpoint,” said Geoffrey T. Martin, president and CEO. “CCL Label posted solid 4.3% organic growth with profit gains on improving performance from recent acquisitions. Avery delivered modest operating margin improvement despite the predicted share loss in economy ‘back-to-school’ binders and slow sales in general to the superstore channel. Results for CCL Container were below an unusually strong third quarter in 2015, impacted by start-up costs for new capacity in the US and challenges with the significant Mexican peso devaluation. Our acquisition pipeline remains robust and we closed two more bolt on Healthcare acquisitions for CCL Label, one in Germany and the other in Northern Ireland, during the quarter.
“We are pleased with the performance of Checkpoint as the underlying operating margin for their first full quarter exceeded expectations,” Martin added.
2016 Third Quarter Highlights
CCL Label sales increased 22.5% to $639.5 million, with 4.3% organic growth, 19.6% acquisitions and 1.4% negative currency translation, and a solid 14.7% operating margin(1) diluted by the impact of acquisitions.
Avery sales decreased 5.5% to $220.2 million, 7.8% organic sales decline, partially offset by a 2.1% increase from acquisitions and 0.2% positive currency translation, while operating income declined 2.6%, operating margin improved 70 bps to 20.6%.
Checkpoint’s $175.5 million sales met expectations as the retail high season commenced, with operating income of $22.9 million excluding $17.3 million non-cash acquisition accounting adjustment related to finished goods inventory. It had better than expected 13.0% operating margin.
CCL Container sales decreased 6.1% to $54.1 million with 2.1% organic revenue decline on lower aluminum cost pass through pricing and 4.0% negative currency translation. Operating income was down $1.5 million on an unusually strong prior year period.
Sales for the third quarter of 2016 increased 34.0% to $1,089.3 million, compared to $812.9 million for the third quarter of 2015, with 0.4% organic growth, 1.1% negative currency translation impact and 34.7% acquisition-related growth, primarily driven by the May 13, 2016 acquisition of Checkpoint Systems, Inc. and Nov 6, 2015 acquisition of Worldmark Ltd.
Operating income for the third quarter of 2016 was $149.7 million, an increase of 11.5% compared to $134.3 million for the comparable quarter of 2015. Included in the 2016 third quarter was a final $17.3 million non-cash acquisition accounting adjustment related to the acquired finished goods inventory from the Checkpoint acquisition that was expensed in the company’s cost of goods sold for the quarter. Excluding this non-cash adjustment, operating income was $167.0 million for the three-month period ended September 30, 2016. Excluding the impact of currency translation and the non-cash accounting adjustment operating income improved 26.0%.
Net earnings was $86.1 million for the 2016 third quarter compared to $81.8 million for the 2015 third quarter.
For the nine-month period ended September 30, 2016, sales, operating income and net earnings improved 30.2%, 18.4% and 11.1% to $2,916.3 million, $442.7 million and $248.0 million, respectively, compared to the same nine-month period in 2015. Included in the 2016 nine-month period was a $33.9 million non-cash acquisition accounting adjustment to the acquired finished goods inventory from the Checkpoint and Worldmark businesses that was expensed in the company’s cost of goods sold for the period. Excluding this non-cash adjustment, operating income was $476.6 million and improved 27.4% for the comparable nine-month periods.
The 2016 results included results from fourteen acquisitions completed since Jan. 1, 2015, delivering acquisition-related sales growth for the period of 23.7%, with 4% organic sales growth providingthe foundation for solid profit improvement and foreign currency translation added $0.13 per share.
“Third quarter results were driven by good performance in the base business, considering the very strong prior year period, augmented by Checkpoint,” said Geoffrey T. Martin, president and CEO. “CCL Label posted solid 4.3% organic growth with profit gains on improving performance from recent acquisitions. Avery delivered modest operating margin improvement despite the predicted share loss in economy ‘back-to-school’ binders and slow sales in general to the superstore channel. Results for CCL Container were below an unusually strong third quarter in 2015, impacted by start-up costs for new capacity in the US and challenges with the significant Mexican peso devaluation. Our acquisition pipeline remains robust and we closed two more bolt on Healthcare acquisitions for CCL Label, one in Germany and the other in Northern Ireland, during the quarter.
“We are pleased with the performance of Checkpoint as the underlying operating margin for their first full quarter exceeded expectations,” Martin added.
2016 Third Quarter Highlights
CCL Label sales increased 22.5% to $639.5 million, with 4.3% organic growth, 19.6% acquisitions and 1.4% negative currency translation, and a solid 14.7% operating margin(1) diluted by the impact of acquisitions.
Avery sales decreased 5.5% to $220.2 million, 7.8% organic sales decline, partially offset by a 2.1% increase from acquisitions and 0.2% positive currency translation, while operating income declined 2.6%, operating margin improved 70 bps to 20.6%.
Checkpoint’s $175.5 million sales met expectations as the retail high season commenced, with operating income of $22.9 million excluding $17.3 million non-cash acquisition accounting adjustment related to finished goods inventory. It had better than expected 13.0% operating margin.
CCL Container sales decreased 6.1% to $54.1 million with 2.1% organic revenue decline on lower aluminum cost pass through pricing and 4.0% negative currency translation. Operating income was down $1.5 million on an unusually strong prior year period.