CCL Industries Inc.

Good morning, and welcome to CCL Industries' fourth quarter investor update. Please note that there will be a question and answer session after the call. The moderator for today is Mr. Jeff Martin, President and Chief Executive Officer, and joining him is Mr. Sean Waschuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.

Thank you, Holly. Welcome, everyone, to our fourth quarter call. I'll draw everyone's attention to slide number two, our disclaimer regarding forward-looking information. I'll remind everyone that our business faces known and unknown risks and opportunity. For further details on these key risks, please take a look at our 2022 and 2021 annual MD&A, particularly under the section risks and uncertainties. Our annual and quarterly reports can be found online on our company's website, CCLIND.com or on CDAR.com. Moving to slide three, financial summary for the fourth quarter in the year. For the fourth quarter of 2022, sales increased 6.6% with 4.9% acquisition growth and 2.3% positive impact from currency translation. part offset by an organic decline of 0.6% resulting in sales of $1.59 billion compared to $1.49 billion in the fourth quarter of 2021. Operating income was $211.2 million for the 2022 fourth quarter compared to $208.8 million for the fourth quarter of 2021, a 2% decline excluding the impact of foreign currency translation. Jeff will expand on our segmented operating results for the CCL Avery Checkpoint and Inovia segments momentarily. Corporate expenses were down slightly for the fourth quarter, with an insurance accrual reversal offsetting higher expense for long-term variable compensation compared to the prior year fourth quarter. Consolidated EBITDA for the 2022 fourth quarter, excluding the impact of foreign currency translation, increased 2% compared to the same period in 2021. Net finance expense was $17.6 million for the fourth quarter of 2022, compared to $13.9 million in the 2021 fourth quarter, due to an increase in total debt outstanding and an increase in interest rates on our variable-rated debt. The overall effective tax rate was 21.2%, for the 2022 fourth quarter compared to an effective tax rate of 20.1% recorded in the fourth quarter of 2021. This reflects the utilization of previously unrecognized deferred tax assets at certain subsidiaries of the company in the prior year quarter that did not reoccur in the 2022 fourth quarter. The effective tax rate may change in future periods depending on the proportion of our taxable income earned in different tax jurisdictions with different rates. Net earnings for the 2022 fourth quarter were $145.2 million, down 3% excluding foreign currency translation compared to the 2021 fourth quarter. For the 2022 year, sales increased 12%, operating income increased 5%, including a $3.5 million non-cash acquisition accounting adjustment to fair value the inventory at Adelbra, and net earnings increased 5% compared to 2021. 2022 included results for 12 acquisitions completed since January 1st, 2021, delivering acquisition-related sales growth for the period of 4.8%, organic sales growth of 7.3%, and a foreign currency translation headwind of 0.8% to sales. Moving to the next slide. Earnings per share. Basic earnings per Class B share were 82 cents for the fourth quarter of 2022 compared to 80 cents for the fourth quarter of 2021. Adjusted basic earnings per Class B share were 83 cents for the 2022 fourth quarter compared to adjusted basic earnings per Class B share of 81 cents for the fourth quarter of 2021. The change in adjusted basic EPS to $0.83 is primarily attributable to an increase of $0.02 from our joint ventures contribution and $0.03 from currency translation partially offset with $0.01 from higher tax rate and $0.02 from increased finance costs.

Moving to the next slide. Free cash flow from operations.