Mr. Geoffrey Martin reports

CCL INDUSTRIES ANNOUNCES STRONG FOURTH QUARTER AND 2023 RESULTS

CCL Industries Inc. has released fourth quarter and annual financial results for 2023.

Sales for the fourth quarter of 2023 increased 4.7% to $1,662.5 million, compared to $1,587.2 million for the fourth quarter of 2022, due to acquisition-related growth of 3.0% and 2.2% positive impact from foreign currency translation partially offset by 0.5% organic decline.

Operating income (1) for the fourth quarter of 2023 increased by 20.6% to $254.8 million compared to $211.2 million for the comparable quarter of 2022. Excluding the impact of foreign currency translation, operating income (1) increased 18.2% compared to the 2022 fourth quarter.

Restructuring and other items were $37.2 million for the fourth quarter of 2023 principally for the previously announced reorganization and severance costs associated with closure of the Innovia Belgium facility. For the fourth quarter of 2022, restructuring and other items was $3.4 million primarily for severance at CCL Design and Checkpoint.

A non-cash goodwill impairment loss of $95.0 million, with no associated tax benefit, was recorded in the fourth quarter of 2023 at Innovia due to the closure of the Belgium manufacturing facility and the continuing demand challenges in the label materials industry.

Tax expense for the fourth quarter of 2023 was $45.4 million compared to $36.5 million in the prior year period. The effective tax rate for the 2023 fourth quarter was 57.0% resulting in an annual effective tax rate of 28.2% compared to 21.2% for the 2022 fourth quarter and 23.3% for the year 2022. The increase in the aforementioned 2023 fourth quarter and annual effective tax rates can be attributed to there being no associated tax benefit from the goodwill impairment loss and restructuring charges recorded at Innovia in the fourth quarter of 2023.

For the fourth quarter of 2023, net earnings were $38.8 million compared to $145.2 million for the 2022 fourth quarter, basic and adjusted basic earnings per Class B share (3) were $0.22 and $0.97, respectively, compared to basic and adjusted basic earnings per Class B share (3) of $0.82 and $0.83, respectively, in the prior year fourth quarter. Fourth quarter 2023 basic earnings included $0.75 per share impact from the aforementioned goodwill impairment loss and restructuring charges.

For the 2023 year, sales, operating income (1) and adjusted net earnings (6) improved 4.2%, 8.2% and 4.9% to $6,649.6 million, $1,010.6 million and $666.4 million, respectively, compared to December 31, 2022. The year ending December 31, 2023 included results from eleven acquisitions completed since January 1, 2022, delivering acquisition related sales growth for the year of 2.4%, coupled with organic sales decline of 2.5% and 4.3% positive impact from foreign currency translation. Foreign currency translation had a positive impact of $0.16 per share for the year ended December 31, 2023, basic and adjusted basic earnings per Class B share (3) were $2.99 and $3.76, respectively, compared to basic and adjusted basic earnings per Class B share (3) of $3.50 and $3.57, respectively, in the prior year.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "I'd like to start by thanking our people around the world for delivering another year of record adjusted annual results in 2023. This included better than expected fourth quarter performance with adjusted basic earnings per Class B share up 16.7% compared to the prior year period, momentum which has continued so far in 2024."

Mr. Martin continued, "The CCL Segment posted 1.8% fourth quarter organic growth with Food & Beverage recording the most compelling sales and profitability gains, particularly in sleeves and closure labels. Home & Personal posted strong results for aluminum aerosols and bottles plus labels in Latin America and Europe, offset by slower results for tubes and labels in North America and Asia. Healthcare & Specialty sales and profitability softened in many markets, partially offset by strong results for the newly acquired Faubel clinical trials business and recovering lawn and garden chemical markets in the United States. Results at CCL Design electronics showed signs of bottoming out after a challenging year as cost reduction initiatives improved profitability and order intake pointed to strengthening end demand in electronics; automotive markets remained solid. CCL Secure performance improved but compared to a poor prior year period. Avery posted strong fourth quarter gains in direct-to-consumer categories, while progress in the horticultural businesses offset declines in the smaller Canadian and Australian markets. Checkpoint MAS delivered solid sales and profitability gains compared to a strong prior year fourth quarter while ALS sales increased 20% organically on RFID growth, driving robust profit improvement. Despite a much improved fourth quarter result, lower volumes still impacted Innovia's annual profits requiring us to record a goodwill impairment loss of $95 million this period. In December, we also announced the closure of the Belgian plant, consolidating production into our U.K. and Australian operations, expecting to deliver $17 million to $20 million of incremental annualized operating income, once completed by mid-year. In the early weeks of 2024 order intake improved markedly in the label materials industry, which had seen a huge inventory build in the covid years subsequently corrected by five quarters of unparalleled destocking related demand decline, including the entirety of 2023."

Mr. Martin noted, "Foreign currency translation continued to be a tailwind for the fourth quarter with a $0.01 positive impact on basic earnings per Class B share and $0.16 for 2023. However, if today's Canadian dollar exchange rates are sustained, currency translation would become a modest headwind for the first quarter 2024."

Mr. Martin concluded, "The Company finished the year with a strong balance sheet and excellent liquidity, despite investing $345.8 million on eight acquisitions, returning $188.2 million in annualized dividends and $5.1 million of capital stock buybacks to shareholders, while investing $443.7 million in capital expenditures, net of disposals. The Company's consolidated leverage ratio (5) ended 2023 at 1.13 times Adjusted EBITDA (2) down 0.11 turns, with $774.2 million cash-on-hand and approximately US$966.1 million undrawn capacity on our syndicated revolving credit facility; with strong free cash flows expected in 2024, this leaves the Company well placed to fund its global ambitions. Total capital expenditures for 2024 are expected to be approximately $455.0 million, including greenfield projects in Germany for the new thin-gauge sustainable film plant; in Raleigh, NC, for a new Healthcare operation heavily focused on GLP-1 customers; and in Mexico for the Company's new RFID inlay facility and significantly expanded capacity for aluminum containers. Given the stronger outlook, the Board of Directors declared a 9.4% increase in the quarterly dividend to $0.29 per Class B non-voting share and $0.2875 per Class A voting share, payable to shareholders of record at the close of business on March 15, 2024, to be paid on March 28, 2024."

2023 Fourth Quarter Highlights

CCL Segment

• Sales increased 8.9% to $1,031.5 million on 1.8% organic growth, 4.6% acquisition contribution and 2.5% positive impact from currency translation
• Regional organic sales growth: high teens gains in Latin America, flat in Asia Pacific and low single digit declines in North America and Europe
• Operating income (1) $154.4 million, up 17.1%, 15.0% operating margin (1) up 110 bps
• Label joint ventures added $0.03 earnings per Class B share

Avery

• Sales increased 1.0% to $242.1 million on 1.9% acquisition contribution and 1.9% positive impact from currency translation partially offset by an organic decline of 2.8%
• Operating income (1) $47.9 million, up 13.8%, 19.8% operating margin (1) , up 220 bps

Checkpoint

• Sales increased 9.7% to $244.2 million on 8.9% organic growth, and 0.8% positive impact from foreign currency translation
• Operating income (1) $44.3 million, up 28.0%, 18.1% operating margin (1) , up 260 bps

Innovia

• Sales decreased 18.6% to $144.7 million with 21.1% organic decline partially offset by 2.5% positive impact from foreign currency translation
• Operating income (1) $8.2 million, up 215.4%, 5.7% operating margin (1) , up 420 bps

CCL will host a webcast at 7:30 a.m. ET on February 22, 2024, to discuss these results.

The quarterly results review presentation, including outlook commentary, are posted on the Company's website.

To access the audio/listen only live webcast, please use the following numbers:

• Toll Free: 1-877-545-0320
• International: 1-973-528-0002
• Conference Entry Code (CEC): 832360

Replay of the webcast will be available Thursday, February 22, 2024 until Sunday, March 24, 2024.

Business Description

CCL Industries Inc. employs approximately 25,700 people operating 213 production facilities in 43 countries with corporate offices in Toronto, Canada, and Framingham, Massachusetts. CCL is the world's largest converter of pressure sensitive and specialty extruded film materials for a wide range of decorative, instructional, functional and security applications for government institutions and large global customers in the consumer packaging, healthcare & chemicals, consumer electronic device and automotive markets. Extruded & laminated plastic tubes, aluminum aerosols & specialty bottles, folded instructional leaflets, precision decorated & die cut components, electronic displays, polymer banknote substrate and other complementary products and services are sold in parallel to specific end-use markets. Avery is the world's largest supplier of labels, specialty converted media and software solutions for short-run digital printing applications for businesses and consumers available alongside complementary products sold through distributors, mass market stores and e-commerce retailers. Checkpoint is a leading developer of RF and RFID based technology systems for loss prevention and inventory management applications, including labeling and tagging solutions, for the retail and apparel industries worldwide. Innovia is a leading global producer of specialty, high performance, multi-layer, surface engineered films for label, packaging and security applications. The Company is partly backward integrated into materials science with capabilities in polymer extrusion, adhesive development, coating & lamination, surface engineering and metallurgy; deployed as needed across the four business segments.

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