CCL Industries Q2 2026 Earnings Report

CCL Industries EPS Results

• Actual EPS: C$1.35
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

CCL Industries Revenue Results

• Actual Revenue: $2.11 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

CCL Industries Announcement Details

• Quarter: Q2 2026
• Date: 8/12/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 7:30AM ET

CCL Industries (TSE:CCL.A) Inc manufactures and sells packaging and packaging-related products. The company operates through various segments, which include The CCL segment, which generates the majority of revenue, sells pressure sensitive and extruded film materials used for labels on consumer packaging, healthcare, automotive, and consumer durable products. The Avery segment sells software, labels, tags, dividers, badges, and specialty card products under the Avery brand. The Checkpoint segment includes the manufacturing and selling of technology-driven, inventory management and labeling solutions. Innovia segment manufactures specialty films. Its geographical segments include Canada; USA and Puerto Rico; Mexico, Brazil, Chile & Argentina; Europe; and Asia, Australia, Africa & New Zealand.

CCL Industries Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter sales rose 9.1% to CAD 2.11 billion, supported by 5% organic growth, acquisitions, and favorable foreign exchange. Adjusted EPS increased 10.7% to CAD 1.35, while net earnings rose to CAD 223.8 million.
• Positive Sentiment: Innovia delivered exceptionally strong growth of 25%, including approximately 15% volume growth driven by U.S. share gains, EcoFloat shrink-film demand, and some customer inventory pre-buying. CCL also reported solid orders, particularly in home and personal care, food and beverage, and CCL Secure.
• Negative Sentiment: Checkpoint’s U.S. MAS business had a difficult quarter due to tariff-related customer behavior, migration from hard to soft tags, excess customer inventory, and tough comparisons with prior-year technology rollouts. Management expects sequential improvement in the second half but still anticipates challenging year-over-year comparisons.
• Negative Sentiment: Management expects some reversal of Innovia’s recent inventory build as resin prices decline and label converters consume accumulated stocks, potentially weighing on second-half demand. CCL Design also faces pressure from slowing automotive markets and tight memory-chip supply.
• Neutral Sentiment: Shareholder returns remained substantial, with CAD 455.1 million returned through buybacks and dividends in the first half and an authorized CAD 1.2 billion repurchase program. However, net debt increased to CAD 1.74 billion, and leverage rose to approximately 1.0 times following acquisitions, capital spending, and repurchases.

Presentation

[Operator]

Good morning, and welcome to CCL Industries 2026 Q2 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. Joining him is Mr. Sean Washchuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Thank you, Holly. Good morning, everyone. I'll draw everyone's attention to our second page of this presentation. I'll remind everyone that our business faces known and unknown risks and opportunities. For further details of these key risks, please take a look at our 2026 Q2 report and our 2025 annual report under the section Risks and Uncertainties. Our annual and quarterly reports can be found online at the company's website, cclind.com or on sedarplus.ca. Moving to slide three, our summary of financial results. For the Q2 of 2026, sales increased 9.1% with 5% organic growth, 1.8% acquisition-related growth, and 2.3% positive impact from foreign currency translation, resulting in sales of CAD 2.11 billion, compared to approximately CAD 1.93 billion in the Q2 of 2025.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Operating income was CAD 350.6 million for the 2026 Q2, compared to CAD 322.1 million for the Q2 of 2025, an improvement of approximately 7% excluding currency translation. This, however, did not include CAD 1.7 million of non-cash acquisition accounting-related adjustments to fair value in the inventory from the Sleever transaction. Excluding these non-cash adjustments, operating income, excluding foreign exchanges, increased more than 7%. Jeff will expand on the segmented operating results of our CCL, Avery, Checkpoint, and Innovia segments momentarily. Corporate expenses were up for the 2026 Q2 compared to the prior year's Q2 due to higher variable compensation expenses and other general costs. Consolidated EBITDA for the 2026 Q2, excluding the impact of foreign currency translation, increased 6% compared to the same period in 2025.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Net finance expense was CAD 18.7 million for the Q2 of 2026, higher than the CAD 17.3 million for the Q2 of 2025. The increase is due to higher finance costs on the company's drawn debt and a reduction of finance income on the company's cash and cash equivalents. The overall effective tax rate for the Q2 of 2026 was 26%, compared to an effective tax rate of 25.3% recorded for the Q2 of 2025. This is due to an increase in taxable income earned in higher tax jurisdictions. The effective tax rate may change in future periods depending on the proportion of taxable income earned in different tax jurisdictions with different rates. Net earnings for the 2026 Q2 was CAD 223.8 million, compared to CAD 213.1 million for the 2025 Q2.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

For the six-month period, sales, operating income, and net income increased 5%, 3%, and 1%, excluding currency translation respectively, compared to the same six-month period in 2025. 2026 included results from four acquisitions completed since January 1st, 2025, delivering acquisition-related sales growth for the period of 1.1%, organic growth of 3.5%, and foreign currency translation was a tailwind of 1.4% to sales. Moving to our next slide, earnings per share. Basic and adjusted basic earnings per Class B share were CAD 1.31 and CAD 1.35 respectively for the 2026 Q2, compared to CAD 1.21 and CAD 1.22 basic and adjusted basic earnings per Class B share for the 2025 Q2. Adjusted earnings per Class B share increased 10.7% compared to the Q2 of 2025.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

This CAD 0.13 increase in adjusted basic earnings per share was primarily driven by improved operating income accounting for CAD 0.11, our share count reduction accounting for CAD 0.03, and another CAD 0.03 of positive foreign currency translation, partially offset by higher income tax rate, reduced joint venture earnings, increased net finance costs, and higher corporate expenses summing to CAD 0.04. Moving to our next slide, free cash flow from operations. For the Q2 of 2026, free cash flow from operations was an inflow of CAD 189.2 million, compared to an inflow of CAD 226 million posted for the Q2 of 2025. This decrease is principally due to an increase in net working capital, slightly higher net CapEx, partly offset by lower taxes paid for the Q2 of 2026 compared to the prior year's Q2.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

For the trailing 12 months, our free cash flow from operations remains near record levels. Moving to the next slide, returns to shareholders. During the first six months of 2026, the company moved from a discretionary share buyback plan to an automatic share repurchase plan that commenced on March 2nd of this year. Year-to-date, June 30th, 2026, the company repurchased 3.8 million shares for CAD 331.6 million. In addition, during the blackout period, July 1st to August 12th, the company also repurchased an additional 700,000 shares for CAD 66.3 million. Including the 12.5% increase in the 2026 annual dividend announced in February of this year, dividends paid year-to-date amounted to CAD 123.5 million, for a total of CAD 455.1 million returned to shareholders, including the buyback.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

It is the company's expectation that more will be returned to our shareholders in 2026, as the automatic share repurchase plan is active in the market daily, including blackout periods when the company was not permitted to make share purchases in 2025. Our board of directors has authorized management, commencing March 2nd of this year, to spend up to CAD 1.2 billion over the next 12 months on share repurchase. Next slide, our cash and debt summary. Net debt as at June 30th, 2026, was CAD 1.74 billion, an increase of CAD 479.6 million compared to December 31st, 2025. This increase is principally a result of higher total debt outstanding due to capital expenditures, business acquisitions, and our share buyback. Despite the increase, the company's net debt on the balance sheet closed the quarter in a strong position.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Our balance sheet leverage ratio was approximately 1.0x at June 30th, 2026, up from 0.78x reported at December 31st, 2025. Early in July, subsequent to the quarter end, the company signed a delayed draw syndicated term loan agreement for CAD 500 million. Therefore, the company's current liquidity position is robust. Including this new term loan and the legacy syndicated revolving facility, there is approximately CAD 1.25 billion undrawn debt capacity and cash on hand of CAD 975.6 million. The company's overall finance rate was approximately 2.6% at June 30th, 2026, up from 2.5% at December 31st, 2025, reflecting an increase in the company's variably drawn debt. The company's balance sheet continues to be well-positioned as we move through 2026. Jeff, over to you.

[Jeff Martin, President and CEO at CCL Industries]

Thank you, Sean. Good morning, everybody. I am on slide number eight, highlights of capital spending for the year. We spent CAD 200 million in the H1, so slightly behind the eight ball. Still planning to spend around CAD 470 million for the full-year of 2026. Slide nine, highlights for CCL. Another solid quarter of organic growth, 3.7%, up mid-single digits in North America and Asia. Up low single digit in Europe and Latin America. Good profitability gains at HPC and food and beverage. Solid results in healthcare and specialty, and CCL Secure. But CCL Design fell slightly, excluding foreign exchange on slowing automotive markets and the impact of tight memory chip supply for customers. Electronic device production rates, which I am sure you have all read about in the media. Moving to slide nine, highlights for Avery. Much better quarter than this time last year.

[Jeff Martin, President and CEO at CCL Industries]

Didn't have any of the chaos relating to the back-to-school load in, which was very good to see, and we benefited from some promotions we did for the World Cup in our RFID wristband and card business. Stable quarter in the horticultural business. Checkpoint. We had a pretty difficult quarter in the MAS business in the U.S., and I will give some more color on that in the Q&A. It was steady in the rest of the world, but it was below the very strong prior year period, where we had a number of very large technology roll-outs. Apparel labeling results improved as retail supply chain costs, which we have had for several quarters now, eased, and RFID growth continues with new business wins. Innovia, very strong growth, 25%, about 15% of that coming from volume. The other 10% coming from price.

[Jeff Martin, President and CEO at CCL Industries]

And we had very good results in Poland on EcoFloat shrink films growth. Continuing robust performance in the Americas, really driven by volume and internal productivity initiatives. The downside, our other plants in Europe and the one in Australia were held by very significant, and at times rampant around effects resin and energy inflation, but aided somewhat by price increases, label industry stock building, and much reduced losses, I should say, at the new German plant. Outlook comments on slide 13 for the coming quarter. CCL segment orders remain solid. We are watching the situation with memory chips' effect on CCL Design closely. We do expect Avery's direct-to-consumer growth and the stronger back-to-school season to continue to play out in this quarter.

[Jeff Martin, President and CEO at CCL Industries]

We do think Checkpoint will have sequentially better H2 than it does in the H1, but our comps remain difficult because that technology rollout I referred to earlier continued for much of the H2 of last year and will not repeat this year. Innovia could see some inflation reversal and unwinding of the recent label industry inventory build, especially in Europe, and we expect foreign exchange to be a modest plus. With that, operator, we would like to open up the call for questions.

[Operator]

Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Your first question for today is from Ahmed Abdullah with National Bank of Canada.

[Ahmed Abdullah, Analyst at National Bank of Canada]

Yes. Hi, good morning, and thank you for taking my question. On the Checkpoint MAS, acknowledging the large tech rollouts that made comps difficult, but looking more specifically at your consumable business there, would you note any change in volume trends there or replenishment cycles that you used to see in prior quarters?

[Jeff Martin, President and CEO at CCL Industries]

It was really a phenomenon driven by our hard tag business. Hard tags are the things you see being pulled off when you buy an item of merchandise, for example, in a clothing store. Those hard tags are all manufactured in China and were all subject to tariffs last year. We saw quite a bit of change of behavior with retailers, and we went out with price increases. Some retailers elected to stop using them. Some have since reversed that decision because of the amount of shrinkage loss they had, but at the time, they decided not to swallow the price increases and just stop using the tags.

[Jeff Martin, President and CEO at CCL Industries]

There's been some migration from hard tags to soft tags, and we had our largest soft tag customer for EAS labels found a whole bunch of inventory and stopped ordering from us really for the whole of the H1 of this year. They were the main drivers. It's somewhat situational around tariffs, some situations with key customers, migration of hard tags to soft tags, and one very large customer, just excess inventory.

[Ahmed Abdullah, Analyst at National Bank of Canada]

Thanks. That's helpful. When you talk about these migrations to a soft tag, is it still with the same hardware installations that you have done, or does this require another-

[Jeff Martin, President and CEO at CCL Industries]

No. No hardware change.

[Ahmed Abdullah, Analyst at National Bank of Canada]

No hardware change. Okay, thanks. Just looking down the pipeline past the H2 of 2026, are there any rollouts or MAS deployments that you have kind of in the pipeline that could improve 2027 comparisons versus 2026?

[Jeff Martin, President and CEO at CCL Industries]

Well, when we get to 2027, we'll have 2016 the comparator, so that's going to ease things considerably. It's definitely a situation driven by the tariff chaos. That was the biggest driver. I'd say the second biggest driver is the move from hard tags to soft tags, but we will eventually benefit from that as also a producer of soft tags. I think it's somewhat situational around a few customers, and it'll eventually wash itself out.

[Ahmed Abdullah, Analyst at National Bank of Canada]

Okay, that's fair. Just one last one for me. The RFID new business wins that you've mentioned, are those in apparel or non-apparel?

[Jeff Martin, President and CEO at CCL Industries]

In apparel.

[Ahmed Abdullah, Analyst at National Bank of Canada]

Okay. That's it. I'll pass the line. Thank you.

[Operator]

Your next question is from Sean Steuart with TD Cowen.

[Sean Steuart, Analyst at TD Cowen]

Thanks. Good morning.

[Jeff Martin, President and CEO at CCL Industries]

Good morning, Sean.

[Sean Steuart, Analyst at TD Cowen]

Jeff, on Innovia, can you give us perspective on how much of the top-line growth there was pull forward of orders, I guess, in advance of price hikes? The margins there held up really well despite inflationary pressure. I appreciate German starter costs are falling, but can you reconcile that, and is there room for margin expansion through the back half of the year as price hikes roll through?

[Jeff Martin, President and CEO at CCL Industries]

I don't think there's much room for margin expansion from today's level. There are a lot of levers being pulled in the Q2. So in Europe, at some periods after the Ukraine war started, inflation in our resin grades hit 80% at its peak. It was a pretty big swallow. We passed it on immediately to some customers. Other customers, we had a lag. We've got those price increases coming through now in the H2. But of course, our inventory position in resin reflects those price increases, so we're not really gaining a whole lot. So that's why I don't think there'll be much margin expansion. It was about 15% volume. We know we gained share in the Americas. I don't think we gained share in Europe, but in the Americas, we most certainly did. So there's some share gain there.

[Jeff Martin, President and CEO at CCL Industries]

There's also the gains in EcoFloat, which isn't share gain, it's really a new application. EcoFloat grew pretty strongly, so that was also a factor. I think there will be some rollback once this inventory starts to be consumed by the label converter channel. That will soften demand in the label materials channel, and that will subsequently soften demand to Innovia. But the flip side of that, we'll have the upscale in Germany, ongoing growth of EcoFloat, and the benefit of price increases coming through, which we weren't able to get through in Q2. Lots of moving levers all happening at one time. But I think the team did an outstanding job this past quarter, managing their way through it.

[Sean Steuart, Analyst at TD Cowen]

Yeah, it was an impressive result. You've qualified the CCL segment, Q3 order activity is solid. Can you give us perspective on which sub-segments or regions are driving that trend? It sounds like CCL Design isn't necessarily, but across the rest of it, where are you seeing particularly strong order activity?

[Jeff Martin, President and CEO at CCL Industries]

Well, the two strongest businesses in the H1, particularly the Q2, were food and beverage, and home and personal care. That's continuing in the H2. We think we'll see also strong volume gains in the H2 in CCL Secure. The healthcare's just steady eddy. The business, we've got some concerns about the CCL Design relative to that memory shortage, but that's also moving at fairly rapid speed. There's two problems we face there. There's the availability of chips affecting demand, and also it's pushed the customers we have in that space into very heavy cost-saving mode because they're looking to mitigate whatever they can from the rising cost of chips.

[Sean Steuart, Analyst at TD Cowen]

Okay. Thanks for that detail. I'll get back in the queue.

[Jeff Martin, President and CEO at CCL Industries]

No problem.

[Operator]

Your next question for today is from Hamir Patel with CIBC Capital Markets.

[Hamir Patel, Analyst at CIBC Capital Markets]

Hi, good morning. Jeff, the 3.7% organic growth that you delivered in the core CCL segment, how much of that was price versus volume? How meaningful would you expect pricing gains to drive the comps in the H2?

[Jeff Martin, President and CEO at CCL Industries]

Well, that's really impossible for us to measure because we have millions of different transactions over so many designs. It's just not possible to break that out. All we can really do in that space is report the organic revenue growth. For sure, there's some inflation in there, not a whole lot. I think it's really more volume than it is price. That's about all I could really tell you.

[Hamir Patel, Analyst at CIBC Capital Markets]

Okay. Fair enough. If you did see the label inventory build in Europe unwind somewhat in the H2, do you think you can still sustain the sort of consolidated mid-single-digit organic growth you delivered in Q2, in Q3?

[Jeff Martin, President and CEO at CCL Industries]

The European inventory thing really only affects Innovia, so it has no effect on the CCL segment because that's where they're dealing with the CPGs and all the rest of it. I think we're more dependent there on CPG volume trends. They are a bit mixed. Some companies doing quite well, some companies struggling. I'd describe the volume environment in that space as mixed, but we don't see it being any worse in the H2 than it was in the H1.

[Hamir Patel, Analyst at CIBC Capital Markets]

Okay. Fair enough. Just the last question I had, one of your competitors recently pointed to RFID growth in the U.S. grocery category as a major rollout begins in the back half. I believe you've been supporting that retailer with general merchandising. But are you seeing any opportunities on the grocery side?

[Jeff Martin, President and CEO at CCL Industries]

We are also working with the same customers.

[Hamir Patel, Analyst at CIBC Capital Markets]

Okay. Fair enough. Thanks. That is all I had. I will turn it over.

[Operator]

Your next question is from Stephen MacLeod with BMO.

[Stephen MacLeod, Analyst at BMO]

Thank you. Good morning. Morning, Jeff. Morning, Sean.

[Jeff Martin, President and CEO at CCL Industries]

Steve.

[Stephen MacLeod, Analyst at BMO]

Just wanted to ask about the CCL segment. Margins very strong, almost 17%. I am just curious if you can talk about some of the drivers there. Is it mostly mix? Then I guess separately from that, how do you expect that to evolve in the back half of the year with the inflationary backdrop?

[Jeff Martin, President and CEO at CCL Industries]

I am not too concerned about the inflationary backdrop because we are starting to see it ease pretty significantly. I am not concerned about that. I do not see a lot of difference in the H2 to what happened in the H1. We did have the events around the aluminum can business, aerosol can and bottle business in the H1. We had the issue with a piece of equipment in one of our plants that went down. We had rampant inflation in aluminum, which has since eased off. We will certainly have a better H2 in that business than we had H1. I do not see a lot to comment on that is different except for the issue I have raised about CCL Design and memory chips.

[Stephen MacLeod, Analyst at BMO]

Okay. That is great. Thanks, Jeff. Then in one of your previous questions, you suggested or talked about demand beginning to soften in the Innovia business in the back half of the year. I was just wondering if you could give a little bit more color on that commentary.

[Jeff Martin, President and CEO at CCL Industries]

Well, that is to do with what happened in the inflation period. The big producers of label materials all announced due to the resin inflation, there were going to be very dramatic price increases. So that prompted all of the label converters in their channel to start ordering like crazy. That prompts companies like Avery Dennison and UPM, the public companies in that channel, and all the private companies, to start ordering materials from Innovia. So at some point that will go back to normal. We had some circumstances in our quarter that were separate from that. The new plant in Germany, EcoFloat film gains, share gain in the U.S. So that was a pretty significant offset to that. So I do not think we will suffer that much, but there will definitely be some reversal in the H2. Very difficult to quantify.

[Stephen MacLeod, Analyst at BMO]

Right. Okay. Yeah, fair. I just wanted to make sure it wasn't anything on the consumer side. It was more just-

[Jeff Martin, President and CEO at CCL Industries]

No.

[Stephen MacLeod, Analyst at BMO]

A reversal of the pre-buying.

[Jeff Martin, President and CEO at CCL Industries]

Yeah.

[Stephen MacLeod, Analyst at BMO]

Okay. And then just with the new facility that you entered into, the delayed draw term loan. I'm just curious if you can give a little bit color, maybe this one's for Sean, just about how you're thinking about capital allocation and the backdrop behind the new loan facilities, and then how you're thinking about M&A in the back half of the year.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Well, we put the facility in place as a backup plan or a cushion to our upcoming bonds that fall due in the 1st of October. Given kind of the choppy environment and CCL being a small issuer in the bond market, we thought it would be prudent to have this facility available if we didn't like where the market was when our bonds come due. We have secured this undrawn facility at a very attractive spread, less than 100 basis points, and that gives us an attractive all-in interest rate should we not access the bond market. That's the plan.

[Stephen MacLeod, Analyst at BMO]

Right. Okay. Thanks, Sean. Then maybe just on the M&A backdrop.

[Jeff Martin, President and CEO at CCL Industries]

No change, Stephen. I think our focus is still very much on bolt-ons.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

Yeah.

[Jeff Martin, President and CEO at CCL Industries]

We have a number of things we're working on in that space, but no change.

[Stephen MacLeod, Analyst at BMO]

Great. Thanks, Jeff. Thanks, Sean. Appreciate it.

[Operator]

Your next question for today is from Michael Glen with Raymond James.

[Michael Glen, Analyst at Raymond James]

Hey, good morning. Jeff, maybe just to start, can you just discuss what you're seeing across your CPG customer base generally? Are we seeing an improved volume picture emerging or it remains kind of low single digit growth overall?

[Jeff Martin, President and CEO at CCL Industries]

Yeah. I characterize it as mixed. We've seen some sectors doing better than others and I think the World Cup certainly helped in the food and beverage space this year. So there won't be a World Cup in the H2, so we'll see what happens in the mass beer category, particularly spirits, particularly, which have been soft for much of 2025 and the first part of 2026. And in HPC, some of our customers are doing quite well in that space. Some have got more struggles. So I wouldn't say it's good or bad. I think mixed is the right word to use on the volume side.

[Michael Glen, Analyst at Raymond James]

You didn't call out World Cup for the label segment, but was there a bit of a World Cup bump embedded in that organic number?

[Jeff Martin, President and CEO at CCL Industries]

Only in food and beverage and only in a couple of their product lines. It's really promotional activity, special promotions, soccer player stickers and things like that. But we definitely saw some impact from that.

[Michael Glen, Analyst at Raymond James]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

It wasn't as big as the impact we saw at Avery.

[Michael Glen, Analyst at Raymond James]

Okay. On working capital, there has been a bit of an AR build in the front half of the year. I'm just wondering if that's expected to come back to CCL in the back half of the year.

[Jeff Martin, President and CEO at CCL Industries]

Yeah. It's not AR, it's more in inventory than AR.

[Michael Glen, Analyst at Raymond James]

Okay. And I think you explained some of that, but would you expect that to reverse in the back half then?

[Jeff Martin, President and CEO at CCL Industries]

It's inflation-driven. If you have 80% inflation in resin, it can drive some working capital issues.

[Michael Glen, Analyst at Raymond James]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

I would expect that to eventually wash out in the back end of the H2.

[Michael Glen, Analyst at Raymond James]

Okay. Just the outlook for corporate expense line.

[Sean Washchuk, Senior Vice President and CFO at CCL Industries]

I think it's going to be in the neighborhood of what it's been running this year. Probably take the H1 and double it for the H2.

[Michael Glen, Analyst at Raymond James]

Okay. Thank you.

[Operator]

Your next question for today is from David McFadgen with ATB Cormark.

[David McFadgen, Analyst at ATB Cormark]

Oh, yeah. Hi, guys. A couple of questions. Just on Innovia, it seems like the primary growth driver from the result in Q2 was just this pre-build of inventory ahead of price increases, right? What do you think the organic growth is?

[Jeff Martin, President and CEO at CCL Industries]

Not really, David.

[David McFadgen, Analyst at ATB Cormark]

Oh, okay.

[Jeff Martin, President and CEO at CCL Industries]

There was 15% volume growth, and there were three components in the volume growth. Share gain in the Americas, EcoFloat sales growth out of Poland, and the pre-build. So there were three buckets. Don't ask me what the ratios of the three, because I'm not sure we fully understand that, but we know for sure they were the three drivers. It wasn't all pre-buy.

[David McFadgen, Analyst at ATB Cormark]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

Pre-buy was definitely one of the main factors.

[David McFadgen, Analyst at ATB Cormark]

Okay, that's excellent. Then we should see at least two of those factors continuing into Q3 and beyond, right?

[Jeff Martin, President and CEO at CCL Industries]

I think we'll definitely see that continue in EcoFloat. Whether we'll have the same degree of share gain continuing remains to be seen.

[David McFadgen, Analyst at ATB Cormark]

Okay. All right. As far as the pre-build goes, do you expect some of that to continue in Q3 as well probably, right?

[Jeff Martin, President and CEO at CCL Industries]

I think the pre-build will reverse because the reasons for it have largely evaporated.

[David McFadgen, Analyst at ATB Cormark]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

It could, of course, all change on geopolitical events. If there is more trouble in the Gulf that generates more resin price increase activity, then obviously that could happen again. But at the moment, it is going in the opposite direction. Resins are dropping, even despite the news not being that great, the resins are dropping.

[David McFadgen, Analyst at ATB Cormark]

Okay. When I look at the revenue growth of the business, obviously, it is a very good quarter, and the revenue growth was strong. Then I look at the EBITDA margin, it is kind of the same. Just wondering, does this business lend itself to operating leverage or not really?

[Jeff Martin, President and CEO at CCL Industries]

It has operating leverage, but we had a lot of levers being pulled. German plant startup costs reversing, 80% inflation in some months during the quarter. So eight, zero, not eight. Eight, zero. A lot of things going on.

[David McFadgen, Analyst at ATB Cormark]

Okay. All right. Just maybe to check, you talked about RFID, there was growth in the quarter. Can you quantify that? Was it in the single-digit range or was it-

[Jeff Martin, President and CEO at CCL Industries]

No.

[David McFadgen, Analyst at ATB Cormark]

No?

[Jeff Martin, President and CEO at CCL Industries]

RFID inlay business, that's the technology science behind those labels. Last year, we were running at a sub-3 billion unit clip. This year, we're running at about a 3.5 billion clip, just to give you a frame of reference. That's the one thing we can accurately measure.

[David McFadgen, Analyst at ATB Cormark]

Okay. And the pricing's probably consistent year-over-year?

[Jeff Martin, President and CEO at CCL Industries]

Well, that pricing comes down as volume builds, but it-

[David McFadgen, Analyst at ATB Cormark]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

Wasn't a huge factor.

[David McFadgen, Analyst at ATB Cormark]

Okay. All right. Just on MAS, we saw it was a bit weak in the U.S. Is that to be expected in Q3?

[Jeff Martin, President and CEO at CCL Industries]

I think we'll improve sequentially in Q3 and Q4. We'll probably still struggle comparatively because the H2 of last year, we had these very large technology rollouts, which are definitely not there this year. We have some, but they're not at the scale of the ones we had in the H2 of last year.

[David McFadgen, Analyst at ATB Cormark]

Okay. All right. Okay. Thank you.

[Operator]

Your next question is from Jonathan Goldman with Scotiabank.

[Jonathan Goldman, Analyst at Scotiabank]

Hey, good morning, team. Thanks for taking my questions. Most of them have been asked already, but Jeff, could you talk about the trends that you're seeing in your GLP-1 business, maybe what you've seen in recent quarters past and what you expect going forward?

[Jeff Martin, President and CEO at CCL Industries]

Well, it's growing rapidly, but in terms of labels, it's lost in the roundings. It's an important customer for us. We do very well with them. But if we had all the business for every label they use, it would be low tens of millions. It wouldn't be a huge number.

[Jonathan Goldman, Analyst at Scotiabank]

But end market demand is still strong?

[Jeff Martin, President and CEO at CCL Industries]

Sorry?

[Jonathan Goldman, Analyst at Scotiabank]

End market demand, customer demand is still strong?

[Jeff Martin, President and CEO at CCL Industries]

Oh, yeah. Absolutely.

[Jonathan Goldman, Analyst at Scotiabank]

On RFID, is that business still growing at double digits?

[Jeff Martin, President and CEO at CCL Industries]

Well, I've just gave some color on that. Last year, our RFID inlay business was sub 3 billion. This year, it's running at a 3.5 billion unit clip.

[Jonathan Goldman, Analyst at Scotiabank]

Okay.

[Jeff Martin, President and CEO at CCL Industries]

That is unit volume picture.

[Jonathan Goldman, Analyst at Scotiabank]

Okay. Thanks for that.

[Operator]

Once again, if there are any questions, please press star one. We have reached the end of the question and answer session, and I will now turn the call over to Jeff for closing remarks.

[Jeff Martin, President and CEO at CCL Industries]

Okay. Thanks very much for joining us, everybody, and we will look forward to seeing you next quarter.

[Operator]

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Sean Washchuk, Senior Vice President and CFO
• Jeff Martin, President and CEO

Analysts

• Ahmed Abdullah, Analyst at National Bank of Canada
• Sean Steuart, Analyst at TD Cowen
• Hamir Patel, Analyst at CIBC Capital Markets
• Stephen MacLeod, Analyst at BMO
• Michael Glen, Analyst at Raymond James
• David McFadgen, Analyst at ATB Cormark
• Jonathan Goldman, Analyst at Scotiabank