CCL Industries Inc.
TSX : CCL.A
TSX : CCL.B

CCL Industries Inc.

August 06, 2009 07:31 ET

CCL Reports Second Quarter 2009 Results and Declares Dividend

TORONTO, ONTARIO--(Marketwire - Aug. 6, 2009) - CCL Industries Inc. (TSX:CCL.A)(TSX:CCL.B) -



Results Summary
---------------

For periods ended
June 30 Three months (Unaudited) Six months (Unaudited)
------------------------- ------------------------
(In millions of Cdn
dollars, except per
share data) 2009 2008 % Change 2009 2008 % Change
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Sales $ 301.3 $ 312.8 (3.7%) $ 615.4 $ 607.9 1.2%
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EBITDA (Note 1) $ 48.7 $ 59.3 (17.9%) $ 108.2 $ 118.7 (8.8%)
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Operating Income
(Note 2) $ 29.0 $ 42.8 (32.2%) $ 68.4 $ 85.5 (20.0%)
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Restructuring and
other items - net
(loss) gain $ (0.4) $ (0.5) $ (2.1) $ 1.8
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Net earnings $ 8.9 $ 24.1 (63.1%) $ 25.7 $ 51.6 (50.2%)
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Per Class B share

Basic earnings
per share $ 0.28 $ 0.75 (62.7%) $ 0.80 $ 1.60 (50.0%)

Diluted earnings
per share $ 0.27 $ 0.73 (63.0%) $ 0.78 $ 1.55 (49.7%)
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Restructuring and
other items and
favourable tax
adjustments - net
(loss) gain $ (0.01) $ 0.01 $ (0.05) $ 0.06

Adjusted basic
earnings per
Class B share
(Note 3) $ 0.29 $ 0.74 (60.8%) $ 0.85 $ 1.54 (44.8%)

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Number of
outstanding shares
(in 000's)
Weighted average
for the period 32,227 32,219
Actual at period
end 32,367 31,851


CCL Industries Inc., a world leader in the development of labelling solutions and specialty packaging for the consumer products and healthcare industries, announced today its financial results for the second quarter ended June 30, 2009, and declaration of its quarterly dividend.

Sales for the second quarter of 2009 were $301.3 million, down 4% versus the $312.8 million recorded in the second quarter of 2008, while sales for the first six months of 2009 of $615.4 million were slightly up over last year's $607.9 million. Sales decreased for the quarter due to a 9% reduction in organic growth partially offset by a 4% increase from foreign exchange and a 1% increase from acquisitions in the Label Division. It should be noted that the second quarter of last year benefited from substantially stronger economic conditions and the timing of Easter holidays in Europe. Financial comparisons to the prior year's second quarter results have been materially positively affected by the appreciation of the U.S. dollar (16%) and to a lesser degree, the appreciation of the euro (1%) relative to the Canadian dollar, partially offset by the depreciation of the U.K. pound sterling (9%). Year-to-date, sales increased by 1% as a result of positive foreign currency translation of 8% and 1% from acquisitions, partially offset by a decline in organic growth of 8%.

EBITDA (a non-GAAP measure; see note 1 below) was $48.7 million in the second quarter of 2009, down by 18% from the $59.3 million reported in 2008. This decline reflects lower operating income and higher corporate expense partially offset by the positive impact from the improvement in currency translation rates. Year-to-date EBITDA was $108.2 million in 2009, down 9% from $118.7 million in the comparable 2008 period for similar reasons as the second quarter.

Net earnings for the second quarter of 2009 were $8.9 million, down 63% from $24.1 million recorded in the second quarter of 2008 due to lower operating income, higher net interest expense and higher income tax rates, partially offset by favourable currency translation. Operating income (a non-GAAP measure; see note 2 below) was down by $13.8 million or 32% from last year's strong second quarter level. Excluding favourable currency effects, operating income compared to 2008 for the Label and Container Divisions was significantly lower, while for Tube Division was marginally higher. In the second quarter of 2009, restructuring and other costs of $0.4 million were incurred from a foreign exchange loss with no tax affect from a repatriation of capital from foreign subsidiaries. In the second quarter of 2008, net earnings were favourably impacted by a net gain from the sale of the Container Division's ABS "Bag-on-Valve" product line of $3.1 million ($2.8 million after tax) partially offset by the shutdown cost of the Label operation in Rhyl, Wales of $3.6 million ($2.6 million after tax).

For the first six months of 2009, net earnings were $25.7 million, down 50% from $51.6 million in the comparable 2008 period. Net earnings for the first six months of 2009 were negatively affected by restructuring and other items for a net loss of $1.7 million. Net earnings for the first six months of 2008 increased by a net gain of $1.8 million due to restructuring and other items.

Basic earnings per Class B share were $0.28 in the second quarter of 2009 compared to $0.75 earned in the same period last year, a decrease of 63%. Restructuring and other items in the second quarter of 2009 reduced earnings per Class B share by $0.01. Restructuring and other items in the second quarter of 2008 increased earnings per Class B share by $0.01. The positive impact of currency translation and transactions on basic earnings per Class B share was $0.04 in the second quarter of 2009 versus the second quarter of 2008.

Adjusted basic earnings per Class B share (a non-GAAP measure; see note 3 below) were $0.29 in the second quarter of 2009, down 61% from the $0.74 in the second quarter of 2008.

For the first six months of 2009, basic earnings per Class B share were $0.80 compared to $1.60 in the prior year period, a 50% decrease. Restructuring and other items decreased earnings per Class B share by $0.05 for the first six months of 2009 versus a $0.06 increase in the same period last year. The positive impact of currency translation and transactions on basic earnings per Class B share from continuing operations was $0.10 in the first six months of 2009 versus the same period last year.

For the first six months of 2009, adjusted basic earnings per Class B share (a non-GAAP measure; see note 3 below) were $0.85 in 2009, down 45% from the $1.54 in 2008 comparable period.

Geoffrey T. Martin, President and Chief Executive Officer commented, "Like many of our customers and industry peers, our business has been negatively impacted by the continuing difficult global macroeconomic environment. Comparisons in Europe were particularly difficult this quarter with results in a deep recession viewed against a record period with robust demand in 2008 and compounded by the timing of Easter vacations falling in different quarters in respective years."

Mr. Martin continued, "Sales in the second quarter were down 8% excluding currency translation and the minimal impact from acquisitions. CCL's earnings per share were down 63% for the quarter and adjusted earnings per share were down 61%. Operating income fell 32%, driven by the lower results in Europe and the weak performance of the Container Division in the United States. Our earnings were also impacted significantly by higher net interest costs on increased debt levels compared to prior year, lower yields on our large cash balances and the income tax rate was significantly higher largely due to the inability to tax benefit certain losses."

Mr. Martin also noted, "Sales in the second quarter for the Label Division were down 6% excluding the positive impact of currency translation and we achieved a solid operating income margin of 11%. The sales decline in the second quarter was entirely driven by a weak comparative performance in our European business partially offset by solid growth in emerging markets and a welcome return to sales growth in North America. Operating income globally fell 29% entirely due to the performance in Europe with profits in North America and emerging market regions up slightly. Sales to beverage and alkaline battery customers, a business largely centered in Europe, were particularly weak and affected overall financial performance in the region. It's very clear that Europe is lagging in the economic cycle compared to North America but comparisons will ease significantly there in the second half of the year."

Mr. Martin added, "The Container Division had another difficult quarter. Aerosol sales to high-end personal care customers remained soft due to weak consumer demand in the United States. Beverage bottle business, however, was strong and Container Mexico continued to post significant revenue increases. The collapsing cost of aluminum and the knock on effect on our pricing and hedge positions drove most of the profit drop in the quarter. Despite hedging gains on the U.S. dollar and significant cost reduction actions helping to offset the volume decline, the Container Division still operated at a small loss for the quarter. The Tube Division continues to improve, generating another quarter of solid profits with much improved results at the new Los Angeles facility."

Mr. Martin stated, "We expect the difficult situation in Europe to continue for much of the balance of the year but we are beginning to be encouraged by the firmer order levels we have seen in June and July in the rest of the world in our Label business. Although the outlook for the Tube Division has improved in the United States, there are no signs of any volume improvements at the Container Division. Comparative issues, however, will ease in the second half."

Mr. Martin concluded, "Despite the operating issues, cash flow during the second quarter continued to be healthy and actually improved, and we are comfortably within our debt covenants. Our strong financial position therefore continues to support our dividend policy. As a result, your Board of Directors has declared a dividend at the same level as the higher dividend declared earlier this year. The quarterly dividend is $0.15 on Class B non-voting shares and $0.1375 on Class A voting shares to shareholders of record at the close of business on September 16, 2009, payable on September 30, 2009. CCL continues its record of paying quarterly dividends without reduction or omission for over 25 years."

With headquarters in Toronto, Canada, CCL Industries now employs approximately 5,400 people and operates 56 production facilities globally located to meet the sourcing needs of large international customers. CCL Label is the world's largest converter of pressure sensitive and film materials for label applications and sells to leading global customers in the consumer packaging, healthcare, automotive and consumer durable markets. CCL Container and CCL Tube are leading producers of aluminum aerosol cans, bottles and extruded plastic tubes for consumer packaged goods customers in the United States, Canada and Mexico.

Note 1 - EBITDA - A critical financial measure used extensively in the packaging industry and other industries to assist in understanding and measuring operating results and is also considered as a proxy for cash flow and a facilitator for business valuations. This non-GAAP measure is defined as earnings before interest, taxes, depreciation and amortization, excluding restructuring and other items. See section entitled "Supplementary Information" below for a reconciliation of operating income to EBITDA. We believe that it is an important measure as it allows us to assess our ongoing business without the impact of interest, depreciation and amortization and income tax expenses, as well as non-operating factors and one-time items. As a proxy for cash flow, it is intended to indicate our ability to incur or service debt and to invest in property, plant and equipment, and it allows us to compare our business to those of our peers and competitors who may have different capital or organizational structures. EBITDA is a measure tracked by financial analysts and investors to evaluate financial performance and is a key metric in business valuations. EBITDA is considered an important measure by lenders to the Company and is included in the financial covenants of our senior notes and bank lines of credit.

Note 2 - Operating Income is a key non-GAAP measure to assist in understanding the profitability of the Company's business units. This non-GAAP measure is defined as operating income before corporate expenses, interest, restructuring and other items and taxes.

Note 3 - Adjusted Basic Earnings Per Class B Share is an important non-GAAP measure to assist in understanding the ongoing earnings performance of the Company excluding items of a one-time or nonrecurring nature. It is not considered a substitute for Basic Net Earnings per Class B share but it does provide additional insight into the ongoing financial results of the Company. This non-GAAP measure is defined as basic net earnings per Class B share excluding restructuring and other items and favourable tax adjustments.



Supplementary Information

Six months ended June 30th
Reconciliation of Operating Income to EBITDA

Unaudited

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(In million of Cdn dollars)

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Three months ended June 30th Six months ended June 30th
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Operating Income Operating Income
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2009 2008 2009 2008
------- ------- ------- -------

Label $ 28.4 $ 39.7 $ 67.6 $ 76.9

Container (0.1) 2.8 (0.4) 8.2

Tube 0.7 0.3 1.2 0.4
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Total operations 29.0 42.8 68.4 85.5

Less: Corporate
expenses (5.4) (4.2) (9.9) (6.6)

Add: Depreciation
& Amortization 25.1 20.7 49.7 39.8
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EBITDA $ 48.7 $ 59.3 $ 108.2 $ 118.7
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Any forward-looking statements contained in this press release, including 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. Forward-looking statements include all statements that are predictive in nature or depend on future events or conditions. They involve known and unknown risks and uncertainties, and assumptions relating to future events and conditions, including, but not limited to, the evolving global financial crisis and its impact on the world economy and capital markets; the impact of competition; consumer confidence and spending preferences; general economic and geopolitical conditions; currency exchange rates; interest rates and credit availability; income tax rates and the ability to tax-benefit losses by jurisdiction; technological change; changes in government regulations; risks associated with operating and product hazards; and CCL'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.

Unless noted otherwise, all amounts are expressed in Canadian dollars.



Note: CCL will hold a conference call at 4:00 p.m. EDT on Thursday,
August 6, 2009 to discuss these results. Quarterly Financial
Statements and Management's Discussion and Analysis will be posted
on the Company's website.

To access this call, please dial:
416-340-8018 - Local
866-223-7781 - Toll Free

Post-View service will be available from Thursday, August 6, 2009,
at 6:00 p.m. EDT until Thursday, August 20, 2009, at 11:59 p.m. EDT

To access Conference Replay, please dial:
416-695-5800 - Local
800-408-3053 - Toll Free
Access Code: 8524175


For more details on CCL, visit our website - www.cclind.com.



CCL INDUSTRIES INC.
2009 Second Quarter
Consolidated Balance Sheets

Unaudited June 30th December 31st June 30th
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(in millions of Canadian dollars) 2009 2008 2008
---------- -------------- ----------

Assets
Current assets
Cash and cash equivalents $ 120.4 $ 136.3 $ 104.4
Accounts receivable - trade 177.1 156.0 174.3
Other receivables and prepaid
expenses 33.5 26.4 26.2
Income and other taxes recoverable - 2.2 -
Inventories 80.5 87.1 83.4
----------------------------------------
411.5 408.0 388.3
Property, plant and equipment 833.1 830.8 735.0
Other assets 51.3 57.6 42.4
Future income tax assets 42.8 43.5 34.5
Intangible assets 43.9 47.5 42.5
Goodwill 375.3 379.3 390.1
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Total assets $ 1,757.9 $ 1,766.7 $ 1,632.8
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Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 242.3 $ 250.8 $ 234.8
Income and other taxes payable 8.7 - 7.6
Current portion of long-term debt 23.6 25.9 21.6
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274.6 276.7 264.0
Long-term debt 538.5 566.6 439.2
Other long-term items 59.6 66.5 55.2
Future income tax liabilities 108.8 106.4 99.3
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Total liabilities 981.5 1,016.2 857.7
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Shareholders' equity
Share capital 195.0 191.3 186.4
Contributed surplus 5.6 4.8 6.0
Retained earnings 636.6 621.9 634.4
Accumulated other comprehensive
loss (60.8) (67.5) (51.7)
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Total shareholders' equity 776.4 750.5 775.1
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Total liabilities and
shareholders' equity $ 1,757.9 $ 1,766.7 $ 1,632.8
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CCL INDUSTRIES INC.
2009 Second Quarter
Consolidated Statements of Earnings

Three months Six months
Unaudited ended June 30th ended June 30th
----------------------------------------------------------------------------
(in millions of
Canadian dollars,
except per share
data) 2009 2008 % Change 2009 2008 % Change
-------- -------- --------- -------- -------- ---------

Sales $ 301.3 $ 312.8 (3.7) $ 615.4 $ 607.9 1.2
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Costs and expenses
Cost of goods sold 236.9 236.2 482.8 459.2
Selling, general
and administrative 39.2 36.2 70.8 66.4
Depreciation and
amortization 1.6 1.8 3.3 3.4
Interest expense,
net 7.6 5.9 15.8 10.1
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16.0 32.7 (51.1) 42.7 68.8 (37.9)
Restructuring and
other items - net
(loss) gain (0.4) (0.5) (2.1) 1.8
-------------------------------------------------------
Earnings before
income taxes 15.6 32.2 (51.6) 40.6 70.6 (42.5)
Income taxes 6.7 8.1 14.9 19.0

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Net earnings $ 8.9 $ 24.1 (63.1) $ 25.7 $ 51.6 (50.2)
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Basic earnings per
Class B share $ 0.28 $ 0.75 (62.7) $ 0.80 $ 1.60 (50.0)
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Diluted earnings per
Class B share $ 0.27 $ 0.73 (63.0) $ 0.78 $ 1.55 (49.7)
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CCL INDUSTRIES INC.
2009 Second Quarter
Consolidated Statements of Cash Flows

Three months Six months
Unaudited ended June 30th ended June 30th
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(in millions of
Canadian dollars) 2009 2008 2009 2008
-------- -------- -------- --------

Cash provided by (used for)

Operating activities
Net earnings $ 8.9 $ 24.1 $ 25.7 $ 51.6
Items not involving cash:
Depreciation and
amortization 25.1 20.7 49.7 39.8
Executive compensation 0.5 1.1 1.0 2.0
Future income taxes 2.2 0.9 3.1 4.0
Restructuring and other
items, net of tax 0.4 (0.2) 1.7 (1.8)
Gain on sale of property,
plant and equipment (0.2) (0.6) (1.1) (0.9)
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36.9 46.0 80.1 94.7
Net change in non-cash
working capital 18.0 (8.7) (19.0) 38.4
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Cash provided by operating
activities 54.9 37.3 61.1 133.1
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Financing activities
Proceeds on issuance of
long-term debt 1.3 (1.7) 4.1 40.4
Retirement of long-term debt (0.8) (6.5) (2.1) (7.6)
Issue of shares 1.3 0.1 3.3 0.1
Repurchase of shares - (6.3) - (18.1)
Purchase of shares held in
trust - - - (4.4)
Repayment of executive share
purchase plan loans 0.4 - 0.4 -
Dividends (4.8) (4.5) (9.7) (9.1)
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Cash provided by (used for)
financing activities (2.6) (18.9) (4.0) 1.3
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Investing activities
Additions to property, plant
and equipment (32.0) (50.9) (68.5) (103.1)
Proceeds on disposal of
property, plant and equipment 0.6 2.5 3.8 3.3
Proceeds on product line
dispositions - 8.4 - 8.4
Business acquisitions (2.8) (26.9) (5.5) (35.2)
Long-term investment - (6.3) - (6.3)
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Cash (used for) investing
activities (34.2) (73.2) (70.2) (132.9)
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Effect of exchange rate
changes on cash (4.6) 3.0 (2.8) 6.3
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Increase (decrease) in cash
and cash equivalents 13.5 (51.8) (15.9) 7.8
Cash and cash equivalents
at beginning of year 106.9 156.2 136.3 96.6
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Cash and cash equivalents
at end of period $ 120.4 $ 104.4 $ 120.4 $ 104.4

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CCL INDUSTRIES INC.
2009 Second quarter
Segmented Information

Unaudited
----------------------------------------------------------------------------
(in millions of Canadian dollars)

Three months Six months
ended June 30th ended June 30th
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales Operating income Sales Operating income
---------------------------------------------------------------------
---------------------------------------------------------------------
2009 2008 2009 2008 2009 2008 2009 2008
---- ---- ---- ---- ---- ---- ---- ----

Label $ 248.9 $ 258.4 $ 28.4 $ 39.7 $ 506.4 $ 496.3 $ 67.6 $ 76.9

Container 35.4 39.2 (0.1) 2.8 73.5 80.7 (0.4) 8.2

Tube 17.0 15.2 0.7 0.3 35.5 30.9 1.2 0.4

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Total
operati-
ons $ 301.3 $ 312.8 29.0 42.8 $ 615.4 $ 607.9 68.4 85.5
----------------- -----------------

Corporate
expense (5.4) (4.2) (9.9) (6.6)
---------------- -----------------

23.6 38.6 58.5 78.9

Interest
expense,
net 7.6 5.9 15.8 10.1
---------------- -----------------

16.0 32.7 42.7 68.8

Restructuring
and other
items - net
(loss) gain (0.4) (0.5) (2.1) 1.8
---------------- -----------------

Earnings before
income taxes 15.6 32.2 40.6 70.6

Income taxes 6.7 8.1 14.9 19.0
---------------- -----------------
Net earnings $ 8.9 $ 24.1 $ 25.7 $ 51.6
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Identifiable Depreciation & Capital
Assets Goodwill Amortization Expenditures
------------ -------- -------------- ------------

June December June December Six months Six months
30th 31st 30th 31st ended June ended June
30th 30th
-------- --------- ------ -------- ------------- ---------------
2009 2008 2009 2008 2009 2008 2009 2008
-------- --------- ------ -------- ------ ------ ------ --------

Label $ 1,268.0 $ 1,250.3 $ 362.5 $ 366.5 $ 36.9 $ 31.2 $ 62.4 $ 88.5
Container 187.6 190.4 12.8 12.8 7.6 4.9 1.9 11.4
Tube 70.4 77.1 - - 4.7 3.4 4.2 2.8
Corporate 231.9 248.9 - - 0.5 0.3 - 0.4
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Total $ 1,757.9 $ 1,766.7 $ 375.3 $ 379.3 $ 49.7 $ 39.8 $ 68.5 $ 103.1
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Contact Information

  • CCL Industries Inc.
    Gaston Tano
    Senior Vice President and Chief Financial Officer
    416-756-8526
    www.cclind.com