Avery Dennison First Quarter 2025 Results

Highlights:

• 1Q25 Reported EPS of $2.09

  • Adjusted EPS of $2.30, up 0.4% and up ~4% ex. currency (non-GAAP)

• 1Q25 Net sales of $2.1 billion, down 0.1%

  • Organic sales change (non-GAAP), up 2.3%

• 2Q25 Reported EPS guidance of $2.25 to $2.45

  • 2Q25 Adjusted EPS guidance of $2.30 to $2.50

Avery Dennison has released preliminary, unaudited results for its first quarter ended March 29, 2025. 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 first quarter, in-line with expectations,” says Deon Stander, president and CEO. “Both our Materials and Solutions Groups achieved strong results in a dynamic environment.

“We have a proven track record of delivering strong results across cycles, due to the strength of our overall franchise,” added Stander. “While uncertainty is elevated, we are prepared for multiple scenarios as we progress through the year.

“Once again, I want to thank our agile, engaged and talented team for their focus on excellence and commitment to addressing challenges at hand.”

First Quarter 2025 Results by Segment

Materials Group

• Reported sales decreased 1.1% to $1.5 billion.

• Sales up 1.2% on an organic basis

  • High-value categories, including Intelligent Labels, up high single digits in total; base categories down low single digits

  • Label Materials up low single digits

  • Graphics and Reflectives up high single digits; Performance Tapes and Medical up mid-single digits

• Reported operating margin of 15.3%

  • Adjusted operating margin (non-GAAP) of 15.6%, down 50 basis point

  • Adjusted EBITDA margin (non-GAAP) of 17.7%, down 60 basis points, as benefits from productivity and higher volume were more than offset by the net impact of pricing and raw material input costs.

    • Strong margin, in-line with expectations and up 70 basis points sequentially

Solutions Group

• Reported sales increased 2.0% to $668 million.

• Sales up 4.9% on an organic basis

  • Sales in high-value categories, including Intelligent Labels, up low single digits

    • Intelligent Labels up in apparel and food, partially offset by decline in logistics, as expected

    • Vestcom sales up high single digits

    • Embelex down mid-single digits

  • Sales in base categories up high single digits

  • Overall apparel categories up mid-single digits

• Reported operating margin of 8.7%

  • Adjusted operating margin of 10.2%, up 90 basis points

  • Adjusted EBITDA margin of 17.2%, up 110 basis points compared to prior year as benefits from productivity and higher volume were partially offset by growth investments.

Other

Balance Sheet and Capital Deployment

During the first quarter of 2025, the company returned $331 million in cash to shareholders through a combination of share repurchases and dividends. The company repurchased 1.4 million shares at an aggregate cost of $262 million in the quarter. Net of dilution from long-term incentive awards, the company’s share count was down 2.3 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. Net debt to adjusted EBITDA (non-GAAP) was 2.3x at the end of the first quarter.

Income Taxes

The company’s reported effective tax rate was 26.7% in the first quarter. The adjusted tax rate (non-GAAP) for the quarter was 26.0%.

Cost Reduction Actions

In the first quarter, the company realised approximately $14 million in pre-tax savings from restructuring, net of transition costs, and incurred approximately $5 million in pre-tax restructuring charges.