Ccl Industries Inc. Class A · TSX:CCL.A
Ccl Industries Inc. Class A — Bank of America Merrill Lynch 2009 Global Industries Conference
52 slides from Ccl Industries Inc. Class A's conference presentation, Dec 10, 2009
Slide 1: CCL Industries Inc. – BofA Merrill Lynch 2009 Global Industries Conference
CCL Industries Inc. Geoffrey T. Martin President & CEO Bank of America Merrill Lynch 2009 Global Industries Conference New York Dec. 10th 2009
Slide 2: Disclaimer
Disclaimer Any forward-looking statements contained in this presentation, 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. For
Slide 3: CCL at a Glance
CCL at a Glance • Global Specialty Packaging Company – 3 segments: Label, Container and Tube: C$1.2bn in Sales – 57 locations in 18 countries in all 4 regions of world – 5,500 employees – headquartered in Toronto and Boston • Financial Structure – public company listed on the TSX: CCLB.TO – strong b
Slide 4: CCL Business Units
CCL Business Units CCL Label 2009 Revenue 83% CCL Container 2009 Revenue 12% CCL Tube 2009 Revenue 5% 4
Slide 5: CCL Label
CCL Industries Inc. CCL Label
Slide 6: Label Industry Structure
Label Industry Structure Converters (Entrepreneurs/Consolidators) Proximity to Point of Use Laminators & Film Extruders (Avery-Bemis-UPM-Mitsubishi) Primary Materials (Exxon-Dow-Shell-BASF) Degree of Scale 6
Slide 7: Three Label Markets
Three Label Markets • Variable Information Printing – Bar Codes – Information Processing Applications • Packaging and Presentation – Personal Care – Premium Food and Beverage CCL Focus – Healthcare and Chemicals • Product Identification – Automotive – Consumer Electronics: Computers, CCL Opportunity
Slide 8: Label Products – Global Leadership
Label Products – Global Leadership • Pressure sensitive labels (PSL) – global leader • Expanded content labels (ECL) – global leader • Sleeves – #2 globally • In-mould labels (IML) – niche player 8
Slide 9: Large Global Label Market
Large Global Label Market Market Volume Market Growth Rates (2008) (% p.a.) Film Pressure Sensitive Wraps/ 9% Labels Sleeves 39% In-mould 6% Wet Glue 50% Pressure Sensitive 5% In-mould 2% Labels Film Wraps / Sleeves 9% Wet Glue 3% Volume: 41 billion M2 Value: $25+billion Source: 2008 Global Awarenes
Slide 10: Global Pressure Sensitive Label Market
A CLOSER LOOK: Global Pressure Sensitive Label Market PS Label Market Volume PS Label Market Growth Rates (2008) (% p.a.) North America 33% Emerging Asia 14.7% Latin America Eastern Europe 8.0% 5% Latin America 8.0% Emerging Australia & NZ 3.0% Asia 12% N. Europe 17% Developed Asia 2.6% Northern Eur
Slide 11: CCL Label…Global No 1
CCL Label…Global No 1 To be the global supply chain leader of innovative label solutions for the world’s largest corporations in the consumer packaging, consumer durable and healthcare markets 11
Slide 12: Label Sales by Region
Label Sales by Region Sales By Region Emerging Markets CDN $1BN Pro-forma 17% of sales Aus-ZA 14% Europe 49% Asia 32% Emerging Markets 17% Latin America US & Canada 54% 34% 12
Slide 13: Label – Four Major Markets …
Label – Four Major Markets … Home and Sleeve Beverage Healthcare Personal Care Labels & Battery & Specialty 31% 18% 10% 36% 13
Slide 14: … and New Initiatives
… and New Initiatives Consumer Wine & Spirits Geographic Acquisitions Durables 2% Expansion 3% India & Gulf region 14
Slide 15: Label – Four Major Markets …
Label – Four Major Markets … Home and Sleeve Beverage Healthcare Personal Care Labels & Battery & Specialty 31% 18% 10% 36% 15
Slide 16: Label – Home & Personal Care
Label – Home & Personal Care • 14 plants – 4 in the U.S. – 4 in Europe – 2 in Latin America – 4 in Asia – Russian JV • 31% of CCL Label revenue – 3+ times larger than the nearest competitor Revenue Breakdown – 25%+ Global Market Share Asia • Competitors 11% U.S. – Largely regional Lat Am 33% – Entre
Slide 17: CCL Label Services
CCL Label Services • Brand “Icons” & creative development • Artwork and design management • Label supply chain & inventory management • Label application consulting • New development initiatives “problem solving” 17
Slide 18: Home & Personal Care Customers
Home & Personal Care Customers • Approximately two thirds of revenue • Balance is in regional players and specialty retailers 18
Slide 19: The “First Moment of Truth”…
The “First Moment of Truth”… 19
Slide 20: Global Home & Personal Care Market Shift
Global Home & Personal Care Market Shift W. Europe N. America Japan Emerging Markets 48% 34% 26% 27% 24% 17% 15% 9% 2007 2017 2007 2017 2007 2017 2007 2017 Industry estimates 20
Slide 21: Label – Four Major Markets …
Label – Four Major Markets … Home and Sleeve Beverage Healthcare Personal Care Labels & Battery & Specialty 31% 18% 10% 36% 21
Slide 22: Sleeve Labels
Sleeve Labels Shrink Stretch 22
Slide 23: Customers in Food and …
Customers in Food and … Arla Danone Unilever Campina Nestlé Müller 23
Slide 24: … Soft Drinks & Water
… Soft Drinks & Water Danone Perrier Pepsi Nestlé Coca Cola Gerolsteiner 24
Slide 25: Super Stretch Sleeve Labels
Super Stretch Sleeve Labels Shrink Sleeves Triple S 108 x 188 mm 68 x 207 mm 40,6 cm² 28,15 cm² Difference 31% 25
Slide 26: Sleeve Label Summary
Sleeve Label Summary Market Position: • 15-20% share of $1+ billion dollar market • Fastest growing category in product decoration • CCL: Strong in Europe, close to leadership • CCL: Growing rapidly from a small base in the Americas • No. 2 to market leader: Fuji Seal: Japanese Public Company 26
Slide 27: Label – Four Major Markets …
Label – Four Major Markets … Home and Sleeve Beverage Healthcare Personal Care Labels & Battery & Specialty 31% 18% 10% 36% 27
Slide 28: Battery & Beverage
Battery & Beverage • CCL decorates >50% of the world’s alkaline battery cells • Same technologies used to develop new premium packages for leading global beer brands • Competition: Chinese entrepreneurs, Spear (private equity controlled) 28
Slide 29: Paper vs Clear “WashOff” Labels
Paper vs Clear “WashOff” Labels Redd’s Redd’s With paper labels With Clear Film “WashOff” Labels 29
Slide 30: Global Beer Customers
Global Beer Customers Heineken Baltika Russia InBev Korea Femsa Mexico SABMiller South Africa Carlsberg China 30
Slide 31: Label – Four Major Markets …
Label – Four Major Markets … Home and Sleeve Beverage Healthcare Personal Care Labels & Battery & Specialty 31% 18% 10% 36% 31
Slide 32: Label – Healthcare & Specialty
Label – Healthcare & Specialty • 20 plants – 2 in Canada – 7 in the US – 2 in Puerto Rico – 6 in Europe – Brazil Emerging – Expansion: China, Thailand Europe Markets 37% 4% • Scale – 3-4 times larger than the nearest competitor Can – 15-20% global share 14% US 45% • Competitors – Regional – Private
Slide 33: Label – Healthcare …..
Label – Healthcare …. Vial and Expanded Identification Inverted Syringe Labels Content Labels Labels Hanging Labels 33
Slide 34: …..and Specialty
…..and Specialty • Consumer Instruction/Function • Consumer Game Pieces & Promotions • Agricultural , Lawn and Garden Chemicals 34
Slide 35: Healthcare: Regulation Driven
Healthcare: Regulation Driven Braille • Braille for healthcare products is a new European Union requirement • CCL’s new innovative solution applies transparent dots to existing label designs digitally • Allows for seamless integration of the Braille legislation by healthcare companies 35
Slide 36: … with Demanding “GMP” Requirements
… with Demanding “GMP” Requirements World Class “White Room” facilities…. … with 100% digital inspection 36
Slide 37: Large Global Customers …
Large Global Customers … … but the market remains fragmented 37
Slide 38: Healthcare & Specialty
Healthcare & Specialty • Largest and most profitable business in the label segment • Defensive…steady demand, even during recessions • Ageing populations in the developed world, many new opportunities in emerging markets • Number 1 business area priority for acquisitions that enhance CCL’s global/re
Slide 39: Label Nine Months Ended September 30th
Label Nine Months Ended September 30th (Millions of Cdn$) Excluding Currency 2009 2008 Change Translation Sales $ 751.2 $ 733.4 +2.4% (2%) Operating income $ 98.2 $ 107.0 (8.2%) – Return on sales 13.1% 14.6% – – EBITDA $ 153.9 $ 155.1 (0.8%) – % of sales 20.5% 21.1% – – • Profitability drop entirely
Slide 40: CCL Label Business Strategy
CCL Label Business Strategy • Focus primarily on large global customers – organize around their needs • Invest globally in world-class facilities and technologies • Acquire to expand geographic footprint and product range – bolt-on businesses $10-$100 million – many opportunities in fragmented space
Slide 41: CCL Container
CCL Industries Inc. CCL Container
Slide 42: CCL Container
CCL Container Aerosols Aluminum Bottles Market Position: • 1 of 2 producers for the US market • 1 of 2 producers in Mexico • Indirect competitors and some imports 42
Slide 43: Aluminum Cost Challenges
Aluminum Cost Challenges (US$/ton) $1,725 $1,900 $2,600 $2,640 $2,851 $1,585 Hedge Impact $4,000 12,000 Hedge Impact $3,000 6,000 $2,000 LME spot price -6,000 $1,000 -12,000 2004 2005 2006 2007 2008 43
Slide 44: Container Nine Months Ended September 30th
Container Nine Months Ended September 30th (Millions of Cdn$) Excluding Currency Translation 2009 2008 Change & Divestiture Sales $ 105.0 $ 117.6 (10.7%) (19%) Operating income $ (3.2) $ 11.0 n.m. – Return on sales (3.0%) 9.4% – – EBITDA $ 8.0 $ 18.6 (57.0%) – % of sales 7.6% 15.8% – – • Sales outlo
Slide 45: CCL Tube
building on OUr Strengths CCL Tube
Slide 46: CCL Share
CCL Tube North American Tube Market US$400M CCL Share 15% Competitors: • Berry Plastics • Alcan • Silgan • Private entrepreneurs • Imports 46
Slide 47: Tube Nine Months Ended September 30th
Tube Nine Months Ended September 30th (Millions of Cdn$) Excluding Currency 2009 2008 Change Translation Sales $ 53.5 $ 46.7 +14.6% +1% Operating income $ 2.2 $ 0.6 – – Return on sales 4.1% 1.3% – – EBITDA $ 9.1 $ 5.8 +56.9% – % of sales 17.0% 12.4% – – • Focus remains on building share in premium a
Slide 48: Balance Sheet
Balance Sheet As at September 30th, 2009 (Millions of Cdn$, except Book Value per Share) 2009 2008 Change Net working capital (receivables, inventory, prepaids, taxes receivable, payables, accruals and taxes payable) $ 56.0 $ 45.5 +23.1% Property, plant & equipment (net) $ 783.0 $ 757.5 +3.4% Intang
Slide 49: Current Valuation
INVESTOR PERSPECTIVE Current Valuation • $27.50 price represents a trailing 6.4 times EBITDA • Stock trades at a discount to many US sector peers Peer Analysis – EV/EBITDA Multiple 10.6 9.9 Median = 7.8 7.8 7.9 6.1 6.4 Multi-Color CCL AptarGroup Bemis Brady Avery Dennison Source: Capital IQ, as of D
Slide 50: Strong Cash Flow
INVESTOR PERSPECTIVE Strong Cash Flow • 2009 capex C$100million, C$90million in 2010 • World class track record managing working capital • Strong dividend track record: $0.60 a share in 2009 Dividend History – Per Share $0.60 up 88% $0.56 last 8 years $0.48 $0.43 $0.39 $0.40 $0.34 $0.36 $0.32 2001 2
Slide 51: Future Development
INVESTOR PERSPECTIVE Future Development • Potential to further realign portfolio • Strong track record of disciplined acquisitions in the Label space • Further contacts: – Gaston Tano, Senior Vice President and CFO (416)-756-8526 51
Slide 52: Questions
~< Le Ey Questions
CCL Industries — Bank of America Merrill Lynch 2009 Global Industries Conference on 6ix