Avery Dennison Sales increase in Third Quarter 2024 Results

Highlights:

• 3Q24 Reported EPS of $2.25, up 32%
  • 3Q24 Adjusted EPS (non-GAAP) of $2.33, up 9%
• 3Q24 Net sales of $2.2 billion, up 4%
  • Sales change ex. currency (non-GAAP) up 5%
  • Organic sales change (non-GAAP) up 4%
• FY24 Reported EPS guidance of $8.75 to $8.90 (previously $8.75 to $8.95)
  • Raising Adjusted EPS guidance of $9.35 to $9.50 (previously $9.30 to $9.50)

Avery Dennison has announced preliminary, unaudited results for its third quarter ended September 28, 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 third quarter with strong earnings growth, above expectations, driven by higher volume and productivity gains,” said Deon Stander, president and CEO. “Both our Materials and Solutions Groups delivered strong bottom-line growth.

“In Intelligent Labels, we are delivering another year of strong growth and continue to see significant opportunity ahead. Adoption of our solutions in new categories is increasing, particularly in Food, as the value of our technology in helping address key industry challenges continues to resonate with customers.

“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 challenges at hand.”

Third Quarter 2024 Results by Segment

Materials Group

• Reported sales increased 3% to $1.5 billion. Sales were up 4% ex. currency and on an organic basis.
  • Label Materials sales were up low-to-mid single digits on an organic basis.
    • Volume/mix was up mid-single digits, which was partially offset by deflation-related price reductions.
  • Graphics and Reflectives were up mid-single digits organically.
  • Performance Tapes and Medical were up low single digits organically.
• Reported operating margin was 14.5%. Adjusted EBITDA margin (non-GAAP) of 17.0% comparable to prior year, as the benefits from higher volume/mix and productivity were partially offset by higher employee-related costs and the net impact of pricing and raw material input costs.

Solutions Group

• Reported sales increased 7% to $686 million. Sales were up 7% ex. currency and 6% on an organic basis.
  • Sales in high-value categories were up low single digits ex. currency.
    • Strong growth in apparel and general retail in Intelligent labels, partially offset by logistics in Intelligent Labels and other high-value solutions.
  • Sales were up mid teens ex. currency in base solutions.
• Reported operating margin was 9.7%. Adjusted EBITDA margin was 17.9%, up 150 basis points, driven by benefits from productivity and higher volume, partially offset by higher employee-related costs and investments.
  • Adj. EBITDA margin was up 110 basis points sequentially.

Other

Balance Sheet and Capital Deployment

During the first three quarters of 2024, the company returned $315 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.5 million shares at an aggregate cost of $108 million in the first three quarters of the year. Net of dilution from long-term incentive awards, the company’s share count was down 0.3 million compared to the same time last year.

The company continues to deploy capital in a disciplined manner, executing its long-term capital allocation strategy. The company’s balance sheet remains strong, with net debt to adjusted EBITDA (non-GAAP) of 2.1x at the end of the third quarter.

Income Taxes

The company’s reported effective tax rate was 24.1% in the third quarter. The adjusted tax rate (non-GAAP) for the quarter was 26.0%.

Cost Reduction Actions

Through the first three quarters of the year, the company realized approximately $50 million in pre-tax savings from restructuring, net of transition costs, and incurred approximately $26 million in pre-tax restructuring charges.