Avery Dennison Net sales up 7% in Q2 results

Highlights:

• 2Q24 Reported EPS of $2.18, up 76%
  • 2Q24 Adjusted EPS (non-GAAP) of $2.42, up 26%
• 2Q24 Net sales of $2.2 billion, up 7%
  • Sales change ex. currency (non-GAAP) up 8%
  • Organic sales change (non-GAAP) up 7%
• FY24 EPS guidance
  • Revising Reported EPS guidance of $8.75 to $8.95 (previously $8.60 to $9.10)
  • Raising Adjusted EPS guidance of $9.30 to $9.50 (previously $9.00 to $9.50)

Avery Dennison announced preliminary, unaudited results for its second quarter ended June 29, 2024. Non-GAAP financial measures referenced in this release are reconciled from GAAP in the attached financial schedules. Unless otherwise indicated, comparisons are to the same period in the prior year.

“We delivered a strong second quarter, with significant earnings growth, driven by higher volume and productivity gains,” said Deon Stander, president and CEO. “Both our Materials and Solutions Groups delivered strong top- and bottom-line growth.

“In Intelligent Labels, we are targeting to deliver another year of significant growth, as apparel volumes normalize and new categories adopt our solutions that help address key industry challenges.

“We have raised our full-year outlook for adjusted earnings per share. We continue to remain confident that the consistent execution of our strategies will enable us to meet our long-term goals for superior value creation for all our stakeholders,” added Stander.

“Once again, I want to thank our entire team for their continued resilience, focus on excellence and commitment to addressing the unique challenges at hand.”

Second Quarter 2024 Results by Segment

Materials Group

• Reported sales increased 5% to $1.5 billion. Sales were up 6% ex. currency and on an organic basis.
  • Label Materials sales were up mid-to-high single-digits on an organic basis.
    • Volume/mix was up low double-digits, which was partially offset by deflation-related price reductions.
  • Graphics and Reflectives were up low single-digits organically.
  • Performance Tapes and Medical were down low single-digits organically.
• Reported operating margin was 14.4%. Adjusted EBITDA margin (non-GAAP) was 17.9%, up 220 basis points driven by higher volume/mix and benefits from productivity, partially offset by higher employee-related costs.

Solutions Group

• Reported sales increased 12% to $689 million. Sales were up 14% ex. currency and 11% on an organic basis.
  • Sales in high-value categories were up low double-digits ex. currency.
  • Sales were up mid-to-high teens ex. currency in base solutions.
• Reported operating margin was 9.3%. Adjusted EBITDA margin was 16.8%, up 100 basis points, driven by higher volume and benefits from productivity, partially offset by higher employee-related costs and investments.
  • Margin was up 70 basis points sequentially; the company expects margin to continue to improve in the second half of 2024.

Other

Balance Sheet and Capital Deployment

During the first half of 2024, the company returned $177 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.2 million shares at an aggregate cost of $41 million in the first half of the year. Net of dilution from

long-term incentive awards, the company’s share count was unchanged compared to the same time last year. On April 25, 2024, the company increased its quarterly dividend to $0.88 per share, representing an increase of approximately 9% over the previous dividend rate.