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 Corporation (NYSE:AVY) today 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.
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 2.2x at the end of the second quarter.
Income Taxes
The company’s reported effective tax rate was 25.8% in the
second quarter. The adjusted tax rate (non-GAAP) for the quarter
was 26.0%.
Cost Reduction Actions
In the first half of the year, the company realized
approximately $36 million in pre-tax savings from restructuring,
net of transition costs, and incurred approximately $13 million in
pre-tax restructuring charges.
Guidance
In its supplemental presentation materials, “Second Quarter 2024
Financial Review and Analysis,” the company provides a list of
factors that it believes will contribute to its 2024 financial
results. Based on the factors listed and other assumptions, the
company has revised its guidance range for 2024 reported earnings
per share from $8.60 to $9.10 to $8.75 to $8.95.
Excluding an estimated $0.55 per share impact of restructuring
charges and other items, the company raised its guidance range for
2024 for adjusted earnings per share from $9.00 to $9.50 to $9.30
to $9.50.
For more details on the company’s results, see the summary
tables accompanying this news release, as well as the supplemental
presentation materials, “Second Quarter 2024 Financial Review and
Analysis,” posted on the company’s website at
www.investors.averydennison.com, and furnished to the SEC on Form
8-K.
Throughout this release and the supplemental presentation
materials, amounts on a per share basis reflect fully diluted
shares outstanding.
About Avery Dennison
Avery Dennison Corporation (NYSE: AVY) is a global materials
science and digital identification solutions company that provides
a wide range of branding and information solutions that optimize
labor and supply chain efficiency, reduce waste, advance
sustainability, circularity and transparency, and better connect
brands and consumers. Our products and solutions include labeling
and functional materials, radio frequency identification (RFID)
inlays and tags, software applications that connect the physical
and digital, and a variety of products and solutions that enhance
branded packaging and carry or display information that improves
the customer experience. Serving an array of industries worldwide —
including home and personal care, apparel, general retail,
e-commerce, logistics, food and grocery, pharmaceuticals and
automotive — we employ approximately 35,000 employees in more than
50 countries. Our reported sales in 2023 were $8.4 billion. Learn
more at www.averydennison.com.
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995
Certain statements contained in this document are
"forward-looking statements" intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements,
and financial or other business targets, are subject to certain
risks and uncertainties.
We believe that the most significant risk factors that could
affect our financial performance in the near term include: (i) the
impact on underlying demand for our products from global economic
conditions, political uncertainty, and changes in environmental
standards, regulations, and preferences; (ii) competitors’ actions,
including pricing, expansion in key markets, and product offerings;
(iii) the cost and availability of raw materials; (iv) the degree
to which higher costs can be offset with productivity measures
and/or passed on to customers through price increases, without a
significant loss of volume; (v) foreign currency fluctuations; and
(vi) the execution and integration of acquisitions.
Actual results and trends may differ materially from historical
or anticipated results depending on a variety of factors, including
but not limited to, risks and uncertainties related to the
following:
- International Operations – worldwide economic, social,
political and market conditions; changes in political conditions,
including those related to China, the Russia-Ukraine war, and the
Israel-Hamas war and related hostilities in the Middle East;
fluctuations in foreign currency exchange rates; and other risks
associated with international operations, including in emerging
markets
- Our Business – fluctuations in demand affecting sales to
customers; fluctuations in the cost and availability of raw
materials and energy; changes in our markets due to competitive
conditions, technological developments, laws and regulations,
tariffs and customer preferences; increasing environmental
standards; the impact of competitive products and pricing;
execution and integration of acquisitions; selling prices; customer
and supplier concentrations or consolidations; financial condition
of distributors; outsourced manufacturers; product and service
quality; restructuring and other productivity actions; timely
development and market acceptance of new products, including
sustainable or sustainably-sourced products; investment in
development activities and new production facilities; successful
implementation of new manufacturing technologies and installation
of manufacturing equipment; our ability to generate sustained
productivity improvement; our ability to achieve and sustain
targeted cost reductions; collection of receivables from customers;
our sustainability and governance practices; and epidemics,
pandemics or other outbreaks of illness
- Information Technology – disruptions in information technology
systems, cyber attacks or other security breaches; and successful
installation of new or upgraded information technology systems
- Income Taxes – fluctuations in tax rates; changes in tax laws
and regulations, and uncertainties associated with interpretations
of such laws and regulations; retention of tax incentives; outcome
of tax audits; and the realization of deferred tax assets
- Human Capital – recruitment and retention of employees and
collective labor arrangements
- Our Indebtedness – credit risks; our ability to obtain adequate
financing arrangements and maintain access to capital; fluctuations
in interest rates; volatility in financial markets; and compliance
with our debt covenants
- Ownership of Our Stock – potential significant variability of
our stock price and amounts of future dividends and share
repurchases
- Legal and Regulatory Matters – protection and infringement of
intellectual property; impact of legal and regulatory proceedings,
including with respect to compliance and anti-corruption,
environmental, health and safety, and trade compliance
- Other Financial Matters – fluctuations in pension costs and
goodwill impairment
For a more detailed discussion of these factors, see “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our 2023 Form 10-K, filed
with the Securities and Exchange Commission on February 21, 2024,
and subsequent quarterly reports on Form 10-Q.
The forward-looking statements included in this document are
made only as of the date of this document, and we undertake no
obligation to update these statements to reflect subsequent events
or circumstances, other than as may be required by law.
For more information and to listen to a live broadcast or an
audio replay of the quarterly conference call with analysts, visit
the Avery Dennison website at
www.investors.averydennison.com.
Second Quarter Financial Summary - Preliminary, unaudited
(In millions, except % and per share amounts)
2Q
2Q % Sales Change vs.
PY
2024
2023
Reported
Ex. Currency
Organic
Net sales, by segment:
Materials Group
$
1,546.8
$
1,476.0
4.8
%
5.6
%
5.6
%
Solutions Group
688.5
614.5
12.0
%
13.7
%
10.8
%
Total net sales
$
2,235.3
$
2,090.5
6.9
%
8.0
%
7.1
%
As Reported (GAAP) Adjusted
Non-GAAP 2Q 2Q % %
of Sales 2Q 2Q % %
of Sales
2024
2023
Change
2024
2023
2024
2023
Change
2024
2023
Operating income (loss)/operating margins before interest, other
non-operating expense (income), and taxes, by segment:
Materials Group
$
223.4
$
193.8
14.4
%
13.1
%
$
244.5
$
199.9
15.8
%
13.5
%
Solutions Group
64.1
(7.2
)
9.3
%
(1.2
%)
69.8
55.0
10.1
%
9.0
%
Corporate expense
(25.7
)
(21.1
)
(25.5
)
(21.1
)
Total operating income/operating margins
before interest, other non-operating expense (income), and taxes
$
261.8
$
165.5
58
%
11.7
%
7.9
%
$
288.8
$
233.8
24
%
12.9
%
11.2
%
Interest
expense
$
29.2
$
31.9
$
29.2
$
31.9
Other non-operating expense (income), net
($
5.8
)
($
6.6
)
($
5.3
)
($
6.6
)
Income before taxes
$
238.4
$
140.2
70
%
10.7
%
6.7
%
$
264.9
$
208.5
27
%
11.9
%
10.0
%
Provision
for income taxes
$
61.6
$
39.8
$
68.9
$
53.1
Net income
$
176.8
$
100.4
76
%
7.9
%
4.8
%
$
196.0
$
155.4
26
%
8.8
%
7.4
%
Net income
per common share, assuming dilution
$
2.18
$
1.24
76
%
$
2.42
$
1.92
26
%
Adjusted free cash flow
$
142.5
$
134.9
YTD Adjusted free cash flow
$
200.6
$
63.7
Adjusted EBITDA:
Materials Group
$
277.3
$
231.9
17.9
%
15.7
%
Solutions Group
$
115.6
$
97.0
16.8
%
15.8
%
Corporate expense
($
25.5
)
($
21.1
)
Total Adjusted EBITDA
$
367.4
$
307.8
16.4
%
14.7
%
See accompanying schedules A-4 to A-9 for reconciliations of
non-GAAP financial measures from GAAP.
A-1
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per
share amounts) (UNAUDITED)
Three Months Ended Six Months Ended
Jun. 29, 2024
Jul. 1, 2023
Jun. 29, 2024
Jul. 1, 2023
Net sales $
2,235.3
$
2,090.5
$
4,386.6
$
4,155.5
Cost of products sold
1,572.6
1,537.1
3,091.7
3,059.8
Gross profit
662.7
553.4
1,294.9
1,095.7
Marketing, general and administrative expense
373.9
319.6
739.1
654.0
Other expense (income), net
27.0
68.3
39.6
86.1
Interest expense
29.2
31.9
57.8
58.3
Other non-operating expense (income), net
(5.8
)
(6.6
)
(14.4
)
(11.2
)
Income before taxes
238.4
140.2
472.8
308.5
Provision for income taxes
61.6
39.8
123.6
86.9
Net income $
176.8
$
100.4
$
349.2
$
221.6
Per share amounts:
Net income per common share, assuming dilution $
2.18
$
1.24
$
4.31
$
2.73
Weighted average
number of common shares outstanding, assuming dilution
81.0
81.0
81.0
81.2
A-2
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED BALANCE SHEETS (In millions)
(UNAUDITED)
ASSETS
Jun. 29, 2024
Jul. 1, 2023
Current assets: Cash and cash equivalents $
208.8
$
217.1
Trade accounts receivable, net
1,528.6
1,415.2
Inventories
979.9
990.5
Other current assets
250.5
228.2
Total current assets
2,967.8
2,851.0
Property, plant and equipment, net
1,590.0
1,567.0
Goodwill and other intangibles resulting from business
acquisitions, net
2,790.7
2,868.9
Deferred tax assets
113.0
119.7
Other assets
836.7
859.7
$
8,298.2
$
8,266.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings and
current portion of long-term debt and finance leases $
1,172.3
$
635.8
Accounts payable
1,313.4
1,234.8
Other current liabilities
814.5
738.1
Total current liabilities
3,300.2
2,608.7
Long-term debt and finance leases
2,046.5
2,909.7
Other long-term liabilities
664.4
732.7
Shareholders' equity: Common stock
124.1
124.1
Capital in excess of par value
833.1
851.3
Retained earnings
4,922.2
4,526.9
Treasury stock at cost
(3,154.6
)
(3,093.9
)
Accumulated other comprehensive loss
(437.7
)
(393.2
)
Total shareholders' equity
2,287.1
2,015.2
$
8,298.2
$
8,266.3
A-3
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)
(UNAUDITED) Six Months Ended
Jun. 29, 2024
Jul. 1, 2023
Operating Activities Net income $
349.2
$
221.6
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
98.7
91.5
Amortization
57.2
54.8
Provision for credit losses and sales returns
28.2
18.9
Stock-based compensation
17.4
12.2
Deferred taxes and other non-cash taxes
(3.8
)
(17.5
)
Other non-cash expense and loss (income and gain), net
46.6
17.0
Changes in assets and liabilities and other adjustments
(276.0
)
(207.0
)
Net cash provided by operating activities
317.5
191.5
Investing Activities Purchases of property, plant and
equipment
(96.3
)
(115.9
)
Purchases of software and other deferred charges
(12.9
)
(11.0
)
Purchases of Argentine Blue Chip Swap securities
(34.2
)
---
Proceeds from sales of Argentine Blue Chip Swap securities
24.0
---
Proceeds from sales of property, plant and equipment
0.3
0.3
Proceeds from insurance and sales (purchases) of investments, net
2.2
(1.2
)
Payments for acquisitions, net of cash acquired, and venture
investments
(1.9
)
(194.1
)
Net cash used in investing activities
(118.8
)
(321.9
)
Financing Activities Net increase (decrease) in borrowings
with maturities of three months or less
(2.2
)
281.8
Additional long-term borrowings
---
394.9
Repayments of long-term debt and finance leases
(3.5
)
(252.6
)
Dividends paid
(136.2
)
(126.2
)
Share repurchases
(40.7
)
(89.5
)
Net (tax withholding) proceeds related to stock-based compensation
(18.4
)
(23.7
)
Other
(1.1
)
(1.6
)
Net cash (used in) provided by financing activities
(202.1
)
183.1
Effect of foreign currency translation on cash balances
(2.8
)
(2.8
)
Increase (decrease) in cash and cash equivalents
(6.2
)
49.9
Cash and cash equivalents, beginning of year
215.0
167.2
Cash and cash equivalents, end of period $
208.8
$
217.1
A-4
Reconciliation of Non-GAAP Financial Measures from
GAAP
We report our financial results in conformity with accounting
principles generally accepted in the United States of America, or
GAAP, and also communicate with investors using certain non-GAAP
financial measures. These non-GAAP financial measures are not in
accordance with, nor are they a substitute for or superior to, the
comparable GAAP financial measures. These non-GAAP financial
measures are intended to supplement the presentation of our
financial results prepared in accordance with GAAP. We use these
non-GAAP financial measures internally to evaluate trends in our
underlying performance, as well as to facilitate comparisons with
the results of competitors for quarters and year-to-date periods,
as applicable. Based on feedback from investors and financial
analysts, we believe that the supplemental non-GAAP financial
measures we provide are also useful to their assessments of our
performance and operating trends, as well as liquidity.
Reconciliations of our non-GAAP financial measures from the most
directly comparable GAAP financial measures are provided in
accordance with Regulations G and S-K.
Our non-GAAP financial measures exclude the impact of certain
events, activities or strategic decisions. The accounting effects
of these events, activities or decisions, which are included in the
GAAP financial measures, may make it more difficult to assess our
underlying performance in a single period. By excluding the
accounting effects, positive or negative, of certain items (e.g.,
restructuring charges, outcomes of certain legal matters and
settlements, certain effects of strategic transactions and related
costs, losses from debt extinguishments, gains or losses from
curtailment or settlement of pension obligations, gains or losses
on sales of certain assets, gains or losses on venture investments,
currency adjustments due to highly inflationary economies, and
other items), we believe that we are providing meaningful
supplemental information that facilitates an understanding of our
core operating results and liquidity measures. While some of the
items we exclude from GAAP financial measures recur, they tend to
be disparate in amount, frequency or timing.
We use the non-GAAP financial measures described below in the
accompanying news release.
Sales change ex. currency refers to the increase or decrease in
net sales, excluding the estimated impact of foreign currency
translation, and, where applicable, an extra week in our fiscal
year, the calendar shift resulting from an extra week in the prior
fiscal year, currency adjustments for transitional reporting of
highly inflationary economies, and the reclassification of sales
between segments. The estimated impact of foreign currency
translation is calculated on a constant currency basis, with
prior-period results translated at current period average exchange
rates to exclude the effect of foreign currency fluctuations.
Organic sales change refers to sales change ex. currency,
excluding the estimated impact of acquisitions and product line
divestitures.
We believe that sales change ex. currency and organic sales
change assist investors in evaluating the sales change from the
ongoing activities of our businesses and enhance their ability to
evaluate our results from period to period.
Adjusted operating income refers to net income adjusted for
taxes; other expense (income), net; interest expense; other
non-operating expense (income), net; and other items.
Adjusted EBITDA refers to adjusted operating income before
depreciation and amortization.
Adjusted operating margin refers to adjusted operating income as
a percentage of net sales.
Adjusted EBITDA margin refers to adjusted EBITDA as a percentage
of net sales.
Adjusted tax rate refers to the projected full-year GAAP tax
rate, adjusted to exclude certain unusual or infrequent events that
are expected to significantly impact that rate, such as effects of
certain discrete tax planning actions, impacts related to
enactments of comprehensive tax law changes, and other items.
Adjusted net income refers to income before taxes, tax-effected
at the adjusted tax rate, and adjusted for tax-effected
restructuring charges, and other items.
Adjusted net income per common share, assuming dilution
(adjusted EPS) refers to adjusted net income divided by the
weighted average number of common shares outstanding, assuming
dilution.
We believe that adjusted operating margin, adjusted EBITDA
margin, adjusted net income, and adjusted EPS assist investors in
understanding our core operating trends and comparing our results
with those of our competitors.
Net debt to adjusted EBITDA ratio refers to total debt
(including finance leases) less cash and cash equivalents, divided
by adjusted EBITDA for the last twelve months. We believe that the
net debt to adjusted EBITDA ratio assists investors in assessing
our leverage position.
Adjusted free cash flow refers to cash flow provided by
operating activities, less payments for property, plant and
equipment, software and other deferred charges, plus proceeds from
company-owned life insurance policies, plus proceeds from sales of
property, plant and equipment, plus (minus) net proceeds from
insurance and sales (purchases) of investments, less net cash used
for Argentine Blue Chip Swap securities. Where applicable, adjusted
free cash flow is also adjusted for certain acquisition-related
transaction costs. We believe that adjusted free cash flow assists
investors by showing the amount of cash we have available for debt
reductions, dividends, share repurchases, and acquisitions.
A-5
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES FROM GAAP (In millions, except %
and per share amounts)
(UNAUDITED)
Three Months Ended
Six Months Ended
Jun. 29, 2024
Jul. 1, 2023
Jun. 29, 2024
Jul. 1, 2023
Reconciliation of
non-GAAP operating and EBITDA margins from GAAP:
Net sales
$
2,235.3
$
2,090.5
$
4,386.6
$
4,155.5
Income before taxes
$
238.4
$
140.2
$
472.8
$
308.5
Income before taxes as a percentage of net sales
10.7
%
6.7
%
10.8
%
7.4
%
Adjustments: Interest expense
$
29.2
$
31.9
$
57.8
$
58.3
Other non-operating expense (income), net
(5.8
)
(6.6
)
(14.4
)
(11.2
)
Operating income before interest expense, other non-operating
expense (income) and taxes
$
261.8
$
165.5
$
516.2
$
355.6
Operating margins
11.7
%
7.9
%
11.8
%
8.6
%
As reported net income
$
176.8
$
100.4
$
349.2
$
221.6
Adjustments: Restructuring charges, net of
reversals: Severance and related costs, net of
reversals
6.3
8.8
11.2
25.9
Asset impairment and lease cancellation charges
0.9
1.2
2.0
1.7
(Gain) loss on venture investments
15.0
---
17.2
---
Losses from Argentine peso remeasurement and Blue Chip Swap
transactions(1)
4.1
---
15.4
---
Outcomes of legal matters and settlements, net
0.4
53.8
0.2
53.8
Transaction and related costs
0.3
4.0
0.3
4.2
(Gain) loss on sales of assets
---
0.5
---
0.5
Interest expense
29.2
31.9
57.8
58.3
Other non-operating expense (income), net(2)
(5.8
)
(6.6
)
(14.4
)
(11.2
)
Provision for income taxes
61.6
39.8
123.6
86.9
Adjusted operating income (non-GAAP)
$
288.8
$
233.8
$
562.5
$
441.7
Adjusted operating margins (non-GAAP)
12.9
%
11.2
%
12.8
%
10.6
%
Depreciation and amortization
$
78.6
$
74.0
$
155.9
$
146.3
Adjusted EBITDA (non-GAAP)
$
367.4
$
307.8
$
718.4
$
588.0
Adjusted EBITDA margins (non-GAAP)
16.4
%
14.7
%
16.4
%
14.1
%
Reconciliation of non-GAAP net income from
GAAP: As reported net income
$
176.8
$
100.4
$
349.2
$
221.6
Adjustments: Restructuring charges and other
items
27.0
68.3
46.3
86.1
Argentine interest income(1)
(0.5
)
---
(4.1
)
---
Tax effect on restructuring charges and other items, and impact of
adjusted tax rate
(7.3
)
(13.3
)
(10.3
)
(13.7
)
Adjusted net income (non-GAAP)
$
196.0
$
155.4
$
381.1
$
294.0
(1)
The total pretax net loss from the Argentine peso-related
items was $3.6 and $11.3 for the three and six months ended June
29, 2024, respectively.
(2)
"Other non-operating expense (income), net" includes
Argentine interest income of $.5 and $4.1 for the three and six
months ended June 29, 2024, respectively.
A-5
(continued)
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES FROM GAAP (In millions, except %
and per share amounts)
(UNAUDITED)
Three Months Ended
Six Months Ended
Jun. 29, 2024
Jul. 1, 2023
Jun. 29, 2024
Jul. 1, 2023
Reconciliation of
non-GAAP net income per common share from GAAP:
As reported net income per common share, assuming dilution
$
2.18
$
1.24
$
4.31
$
2.73
Adjustments per common share, net of tax:
Restructuring charges and other items
0.33
0.84
0.57
1.06
Argentine interest income
---
---
(0.05
)
---
Tax effect on restructuring charges and other items, and impact of
adjusted tax rate
(0.09
)
(0.16
)
(0.13
)
(0.17
)
Adjusted net income per common share, assuming
dilution (non-GAAP)
$
2.42
$
1.92
$
4.70
$
3.62
Weighted average number of common shares outstanding, assuming
dilution
81.0
81.0
81.0
81.2
Our adjusted tax rate was 26% for the three and six
months ended June 29, 2024 and 25.5% for the three and six months
ended July 1, 2023, respectively.
(UNAUDITED)
Three Months Ended
Six Months Ended
Jun. 29, 2024
Jul. 1, 2023
Jun. 29, 2024
Jul. 1, 2023
Reconciliation of
adjusted free cash flow: Net cash provided by operating
activities(1)
$
197.7
$
189.6
$
317.5
$
191.5
Purchases of property, plant and equipment
(47.5
)
(51.4
)
(96.3
)
(115.9
)
Purchases of software and other deferred charges
(6.0
)
(5.7
)
(12.9
)
(11.0
)
Purchases of Argentine Blue Chip Swap securities
(14.0
)
---
(34.2
)
---
Proceeds from sales of Argentine Blue Chip Swap securities
10.0
---
24.0
---
Proceeds from sales of property, plant and equipment
0.2
0.1
0.3
0.3
Proceeds from insurance and sales (purchases) of investments, net
2.1
2.3
2.2
(1.2
)
Adjusted free cash flow (non-GAAP)
$
142.5
$
134.9
$
200.6
$
63.7
(1)
Net cash provided by operating activities for the three and
six months ended June 29, 2024 included payments associated with
the settlement of a significant legal matter, net of taxes. The
full-year 2024 cash payment, net of cash tax benefit, related to
this settlement is estimated to be $56.6.
A-6
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
Second Quarter Ended NET
SALES OPERATING INCOME (LOSS) OPERATING MARGINS
2024
2023
2024
2023
2024
2023
Materials Group
$
1,546.8
$
1,476.0
$
223.4
$
193.8
14.4
%
13.1
%
Solutions Group
688.5
614.5
64.1
(7.2
)
9.3
%
(1.2
%)
Corporate Expense
N/A
N/A
(25.7
)
(21.1
)
N/A
N/A
TOTAL FROM OPERATIONS
$
2,235.3
$
2,090.5
$
261.8
$
165.5
11.7
%
7.9
%
RECONCILIATION OF NON-GAAP SUPPLEMENTARY INFORMATION FROM
GAAP Second Quarter Ended
2024
2023
2024
2023
Materials Group
Operating income and margins, as reported
$
223.4
$
193.8
14.4
%
13.1
%
Adjustments: Restructuring charges, net of
reversals: Severance and related costs, net of
reversals
1.6
4.5
0.1
%
0.3
%
Asset impairment charges
---
1.1
---
0.1
%
(Gain) loss on venture investment
15.0
---
1.0
%
---
Losses from Argentine peso remeasurement and Blue Chip Swap
transactions
4.1
---
0.3
%
---
Outcomes of legal matters and settlements, net
0.4
---
---
---
(Gain) loss on sales of assets
---
0.5
---
---
Adjusted operating income and margins (non-GAAP)
$
244.5
$
199.9
15.8
%
13.5
%
Depreciation and amortization
32.8
32.0
2.1
%
2.2
%
Adjusted EBITDA and margins (non-GAAP)
$
277.3
$
231.9
17.9
%
15.7
%
Solutions
Group Operating income (loss) and
margins, as reported
$
64.1
$
(7.2
)
9.3
%
(1.2
%)
Adjustments: Restructuring charges, net of
reversals: Severance and related costs, net of
reversals
4.5
4.3
0.7
%
0.7
%
Asset impairment charges
0.9
0.1
0.1
%
---
Transaction and related costs
0.3
4.0
---
0.7
%
Outcomes of legal matters and settlements, net
---
53.8
---
8.8
%
Adjusted operating income and margins (non-GAAP)
$
69.8
$
55.0
10.1
%
9.0
%
Depreciation and amortization
45.8
42.0
6.7
%
6.8
%
Adjusted EBITDA and margins (non-GAAP)
$
115.6
$
97.0
16.8
%
15.8
%
A-7
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
Six Months Ended NET
SALES OPERATING INCOME (LOSS) OPERATING MARGINS
2024
2023
2024
2023
2024
2023
Materials Group
$
3,043.3
$
2,936.5
$
449.5
$
354.3
14.8
%
12.1
%
Solutions Group
1,343.3
1,219.0
120.2
44.3
8.9
%
3.6
%
Corporate Expense
N/A
N/A
(53.5
)
(43.0
)
N/A
N/A
TOTAL FROM OPERATIONS
$
4,386.6
$
4,155.5
$
516.2
$
355.6
11.8
%
8.6
%
RECONCILIATION OF NON-GAAP SUPPLEMENTARY INFORMATION FROM
GAAP Six Months Ended
2024
2023
2024
2023
Materials Group
Operating income and margins, as reported
$
449.5
$
354.3
14.8
%
12.1
%
Adjustments: Restructuring charges, net of
reversals: Severance and related costs, net of
reversals
4.0
18.8
0.1
%
0.6
%
Asset impairment charges
0.1
1.1
---
0.1
%
Losses from Argentine peso remeasurement and Blue Chip Swap
transactions
15.4
---
0.5
%
---
(Gain) loss on venture investment
15.0
---
0.5
%
---
Outcomes of legal matters and settlements, net
1.0
---
---
---
(Gain) loss on sales of assets
---
0.5
---
---
Adjusted operating income and margins (non-GAAP)
$
485.0
$
374.7
15.9
%
12.8
%
Depreciation and amortization
65.6
64.7
2.2
%
2.2
%
Adjusted EBITDA and margins (non-GAAP)
$
550.6
$
439.4
18.1
%
15.0
%
Solutions
Group Operating income and margins,
as reported
$
120.2
$
44.3
8.9
%
3.6
%
Adjustments: Restructuring charges, net of
reversals: Severance and related costs, net of
reversals
6.9
7.2
0.5
%
0.6
%
Asset impairment and lease cancellation charges
1.9
0.6
0.2
%
0.1
%
(Gain) loss on venture investment
2.2
---
0.2
%
---
Outcomes of legal matters and settlements, net
(0.8
)
53.8
(0.1
%)
4.4
%
Transaction and related costs
0.3
4.2
---
0.3
%
Adjusted operating income and margins (non-GAAP)
$
130.7
$
110.1
9.7
%
9.0
%
Depreciation and amortization
90.3
81.6
6.8
%
6.7
%
Adjusted EBITDA and margins (non-GAAP)
$
221.0
$
191.7
16.5
%
15.7
%
A-8
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except ratios)
(UNAUDITED)
QTD
3Q23
4Q23
1Q24
2Q24
Reconciliation of adjusted EBITDA
from GAAP: As reported net income
$
138.3
$
143.1
$
172.4
$
176.8
Adjustments(1)
54.1
40.7
19.3
27.0
Interest expense
31.0
29.7
28.6
29.2
Other non-operating expense (income), net
(8.7
)
(10.9
)
(8.6
)
(5.8
)
Provision for income taxes
46.3
58.5
62.0
61.6
Depreciation and amortization
75.1
77.0
77.3
78.6
Adjusted EBITDA (non-GAAP)
$
336.1
$
338.1
$
351.0
$
367.4
Total Debt
$
3,218.8
Less: Cash and cash equivalents
208.8
Net Debt
$
3,010.0
Net Debt to Adjusted EBITDA LTM* (non-GAAP)
2.2
*LTM = Last twelve months (3Q23 to 2Q24)
(1)
Includes "Other expense (income), net" and other items.
Refer to schedule A-5.
A-9
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (UNAUDITED)
Second Quarter 2024 TotalCompany
MaterialsGroup SolutionsGroup
Reconciliation of organic sales change from GAAP:
Reported net sales change
6.9
%
4.8
%
12.0
%
Foreign currency translation
1.1
%
0.8
%
1.7
%
Sales change ex. currency (non-GAAP)(1)
8.0
%
5.6
%
13.7
%
Acquisitions
(0.9
%)
---
(3.0
%)
Organic sales change (non-GAAP)(1)
7.1
%
5.6
%
10.8
%
(1) Totals may not sum due to rounding.
Six Months Ended 2024 TotalCompany
MaterialsGroup SolutionsGroup
Reconciliation of organic sales change from GAAP:
Reported net sales change
5.6
%
3.6
%
10.2
%
Foreign currency translation
0.5
%
0.1
%
1.6
%
Sales change ex. currency (non-GAAP)(1)
6.1
%
3.8
%
11.8
%
Acquisitions
(1.0
%)
---
(3.5
%)
Organic sales change (non-GAAP)(1)
5.1
%
3.8
%
8.3
%
(1)
Totals may not sum due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240723276689/en/
John Eble Vice President, Finance and Investor Relations
investorcom@averydennison.com
Kristin Robinson Vice President, Global Communications
kristin.robinson@averydennison.com
Avery Dennison (NYSE:AVY)
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