Avery Dennison Announces First Quarter 2024 Results

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Avery Dennison (AVY) reported strong first-quarter 2024 results with a 43% increase in reported EPS to $2.13 and a 35% increase in adjusted EPS to $2.29. Net sales rose by 4% to $2.2 billion, with sales growth across different segments. The company provided FY24 EPS guidance of $8.60 to $9.10 and adjusted EPS guidance of $9.00 to $9.50. Avery Dennison's Materials Group and Solutions Group both saw sales increases, with Materials Group reporting a 2% increase to $1.5 billion and Solutions Group reporting an 8% increase to $655 million. The company continues to focus on capital deployment, maintaining a strong balance sheet and returning cash to shareholders. Despite some challenges in the apparel industry, Avery Dennison remains optimistic about its growth prospects in 2024.

Positive

• 43% increase in 1Q24 reported EPS to $2.13, and 35% increase in adjusted EPS to $2.29
• 1Q24 net sales of $2.2 billion, up by 4%
• FY24 reported EPS guidance of $8.60 to $9.10 and adjusted EPS guidance of $9.00 to $9.50
• Materials Group reported sales increased by 2% to $1.5 billion
• Solutions Group reported sales increased by 8% to $655 million
• Company returned $81 million in cash to shareholders during 1Q24
• Net debt to adjusted EBITDA was 2.3x at the end of the first quarter
• Company realized $19 million in pre-tax savings from restructuring in 1Q24

Negative

• None.

Financial Analyst

Avery Dennison's first quarter results indicate a robust performance with a significant 43% increase in reported EPS and a 35% increase in adjusted EPS. Sales growth, particularly in the Materials Group, suggests resilience against economic headwinds. The 4% overall net sales increase is notable given the current global economic fluctuations. The company's strategy to focus on high-value categories within the Solutions Group is a smart move to stay competitive. The anticipation of the apparel industry's normalization could signal further potential for growth in the Intelligent Labels sector. From a financial perspective, the revision of the full-year EPS guidance is a sign of transparency and careful management. The company’s approach to capital deployment—evident from share repurchases and dividend payments—demonstrates a commitment to shareholder returns and the reduction in share count is generally a positive for earnings per share. However, investors should monitor the balance of capital discipline and investments in growth initiatives, as well as the impact of higher employee-related costs on future margins.

Market Research Analyst

The announced growth in Avery Dennison's Materials Group and the uptick in organic sales growth suggests strong market demand and an effective response to the destocking phase that previously impacted the industry. The company's efforts in expanding margins and initiating productivity measures appear to be successful. Nevertheless, the Solutions Group faces a slight disparity between demand and apparel imports which could affect stability in the short term. The focus on Intelligent Labels aligns with the increasing trend towards digitalization in the apparel industry, positioning the company favorably to capitalize on this technological shift. Long-term, this can be a game-changer for Avery Dennison, creating a possible competitive edge. Investors should consider the company's forward-looking statements on industry normalization cautiously and assess the overall market trend in apparel and related industries to gauge the potential impact on Avery Dennison's performance.

Highlights:

• 1Q24 Reported EPS of $2.13, up 43%
  • 1Q24 Adjusted EPS (non-GAAP) of $2.29, up 35%
• 1Q24 Net sales of $2.2 billion, up 4%
  • Sales change ex. currency (non-GAAP) up 4%
  • Organic sales change (non-GAAP) up 3%
• FY24 Reported EPS guidance of $8.60 to $9.10
  • Adjusted EPS guidance of $9.00 to $9.50

MENTOR, Ohio--(BUSINESS WIRE)-- Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its first quarter ended March 30, 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 are off to a strong start to the year. In the first quarter we delivered significant earnings growth, driven by higher volume and productivity gains,” said Deon Stander, president and CEO.

“Materials Group delivered significant volume growth and margin expansion, as downstream inventory destocking subsided and volumes continued to normalize. Solutions Group delivered strong top-line growth, driven by high-value categories, despite apparel imports continuing to be below demand.

“In Intelligent Labels, we are targeting to deliver another year of significant growth in 2024, as the apparel industry normalizes and we accelerate the adoption of our solutions that help address key industry challenges, further advancing our leadership position at the intersection of the physical and digital,” added Stander.

“We continue to expect strong earnings growth in 2024 and remain confident that the consistent execution of our strategies will enable us to meet our long-term goals for superior value creation through a balance of profitable growth and capital discipline.

“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.”

First Quarter 2024 Results by Segment

Materials Group

• Reported sales increased 2% to $1.5 billion. Sales were up 2% ex. currency and on an organic basis.
  • Label Materials sales were up mid-single digits on an organic basis.
    • Volume/mix was up low-double digits, partially offset by deflation-related price reductions.
  • Graphics and Reflectives, and Performance Tapes and Medical were down mid-single digits organically
• Reported operating margin was 15.1%. Adjusted EBITDA margin (non-GAAP) was 18.3%, up 410 basis points driven by productivity initiatives and higher volume/mix, partially offset by higher employee-related costs.

Solutions Group

• Reported sales increased 8% to $655 million. Sales were up 10% ex. currency and 6% on an organic basis.
  • Sales in high-value categories were up low double-digits on an organic basis.
  • Sales were up low-single digits organically in base solutions.
  • Apparel imports remain below demand; continue to anticipate the apparel industry to normalize in mid-2024.
• Reported operating margin was 8.6%. Adjusted EBITDA margin was 16.1%, up 40 basis points, driven by productivity initiatives and higher volume, partially offset by higher employee-related costs and investments.
  • Margin was down sequentially, driven by seasonality and the add-back of 2023 temporary cost reductions; sequential margin improvement is anticipated in the second quarter.

Other

Balance Sheet and Capital Deployment

During the first quarter of 2024, the company returned $81 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.1 million shares at an aggregate cost of $16 million. 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. 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 26.5% 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 realized approximately $19 million in pre-tax savings from restructuring, net of transition costs, and incurred approximately $6 million in pre-tax restructuring charges.

Guidance

In its supplemental presentation materials, “First 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 $8.65 to $9.15 to $8.60 to $9.10.

Excluding an estimated $0.40 per share impact of restructuring charges and other items, the company continues to expect 2024 adjusted earnings per share of $9.00 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, “First 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 impacts to underlying demand for our products from global economic conditions, political uncertainty, and changes in environmental standards and governmental regulations; (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, 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 environmental, 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.

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.

First Quarter Financial Summary - Preliminary, unaudited
(In millions, except % and per share amounts)
	1Q		1Q		% Sales Change vs. PY
	2024		2023		Reported		Ex. Currency		Organic
Net sales, by segment:
Materials Group	$1,496.5		$1,460.5		2.5	%	1.9	%	1.9	%
Solutions Group	654.8		604.5		8.3	%	9.8	%	5.8	%
Total net sales	$2,151.3		$2,065.0		4.2	%	4.2	%	3.1	%
	As Reported (GAAP)											Adjusted Non-GAAP
	1Q		1Q		%		% of Sales					1Q		1Q		%		% 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	$226.1		$160.5				15.1	%	11.0	%		$240.5		$174.8				16.1	%	12.0	%
Solutions Group	56.1		51.5				8.6	%	8.5	%		60.9		55.1				9.3	%	9.1	%
Corporate expense	(27.8	)	(21.9	)								(27.7	)	(22.0	)
Total operating income/operating margins before interest,
other non-operating expense (income), and taxes	$254.4		$190.1		34	%	11.8	%	9.2	%		$273.7		$207.9		32	%	12.7	%	10.1	%
Interest expense	$28.6		$26.4									$28.6		$26.4
Other non-operating expense (income), net	($8.6	)	($4.6	)								($5.0	)	($4.6	)
Income before taxes	$234.4		$168.3		39	%	10.9	%	8.2	%		$250.1		$186.1		34	%	11.6	%	9.0	%
Provision for income taxes	$62.0		$47.1									$65.0		$47.5
Net income	$172.4		$121.2		42	%	8.0	%	5.9	%		$185.1		$138.6		34	%	8.6	%	6.7	%
Net income per common share, assuming dilution	$2.13		$1.49		43	%						$2.29		$1.70		35	%
Adjusted free cash flow												$58.1		($71.2	)
Adjusted EBITDA:
Materials Group												$273.3		$207.5				18.3	%	14.2	%
Solutions Group												$105.4		$94.7				16.1	%	15.7	%
Corporate expense												($27.7	)	($22.0	)
Total Adjusted EBITDA												$351.0		$280.2				16.3	%	13.6	%

See accompanying schedules A-4 to A-8 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
			Mar. 30, 2024			Apr. 1, 2023
Net sales		$	2,151.3		$	2,065.0
Cost of products sold			1,519.1			1,522.7
Gross profit			632.2			542.3
Marketing, general and administrative expense			365.2			334.4
Other expense (income), net(1)			12.6			17.8
Interest expense			28.6			26.4
Other non-operating expense (income), net(2)			(8.6	)		(4.6	)
Income before taxes			234.4			168.3
Provision for income taxes			62.0			47.1
Net income		$	172.4		$	121.2
Per share amounts:
Net income per common share, assuming dilution		$	2.13		$	1.49
Weighted average number of common shares outstanding,
assuming dilution			81.0			81.5

(1)	Refer to schedule A-5 for details of "Other expense (income), net" and other items.
(2)	"Other non-operating expense (income), net" for the first quarter of 2024 includes Argentine interest income of $3.6.

A-2
AVERY DENNISON CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
				(UNAUDITED)
ASSETS				Mar. 30, 2024				Apr. 1, 2023
Current assets:
Cash and cash equivalents				$	185.7				$	351.3
Trade accounts receivable, net					1,478.0					1,369.1
Inventories					972.5					1,050.6
Other current assets					250.6					218.2
Total current assets					2,886.8					2,989.2
Property, plant and equipment, net					1,598.2					1,565.6
Goodwill and other intangibles resulting from business acquisitions, net					2,817.5					2,720.6
Deferred tax assets					115.5					118.3
Other assets					837.2					828.6
				$	8,255.2				$	8,222.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt and finance leases				$	1,170.5				$	648.3
Accounts payable					1,301.5					1,236.2
Other current liabilities					836.2					759.2
Total current liabilities					3,308.2					2,643.7
Long-term debt and finance leases					2,069.9					2,910.8
Other long-term liabilities					673.1					624.9
Shareholders' equity:
Common stock					124.1					124.1
Capital in excess of par value					834.0					850.8
Retained earnings					4,809.1					4,486.4
Treasury stock at cost					(3,141.2	)				(3,057.4	)
Accumulated other comprehensive loss					(422.0	)				(361.0	)
Total shareholders' equity					2,204.0					2,042.9
				$	8,255.2				$	8,222.3

A-3
AVERY DENNISON CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
						(UNAUDITED)
						Three Months Ended
					Mar. 30, 2024					Apr. 1, 2023
Operating Activities
Net income						$	172.4				$	121.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation							49.0					44.8
Amortization							28.3					27.5
Provision for credit losses and sales returns							11.8					10.6
Stock-based compensation							7.5					10.5
Deferred taxes and other non-cash taxes							(3.0	)				(4.5	)
Other non-cash expense and loss (income and gain), net							18.1					10.1
Changes in assets and liabilities and other adjustments							(164.3	)				(218.3	)
Net cash provided by operating activities							119.8					1.9
Investing Activities
Purchases of property, plant and equipment							(48.8	)				(64.5	)
Purchases of software and other deferred charges							(6.9	)				(5.3	)
Purchases of Argentine Blue Chip Swap securities							(20.2	)				---
Proceeds from sales of Argentine Blue Chip Swap securities							14.0					---
Proceeds from sales of property, plant and equipment							0.1					0.2
Proceeds from insurance and sales (purchases) of investments, net							0.1					(3.5	)
Payments for acquisitions, net of cash acquired, and venture investments							(0.3	)				(43.5	)
Net cash used in investing activities							(62.0	)				(116.6	)
Financing Activities
Net increase (decrease) in borrowings with maturities of three months or less							15.9					42.9
Additional long-term borrowings							---					394.9
Repayments of long-term debt and finance leases							(1.7	)				(1.4	)
Dividends paid							(65.3	)				(60.8	)
Share repurchases							(15.6	)				(50.7	)
Net (tax withholding) proceeds related to stock-based compensation							(18.3	)				(23.6	)
Other							---					(1.5	)
Net cash (used in) provided by financing activities							(85.0	)				299.8
Effect of foreign currency translation on cash balances							(2.1	)				(1.0	)
Increase (decrease) in cash and cash equivalents							(29.3	)				184.1
Cash and cash equivalents, beginning of year							215.0					167.2
Cash and cash equivalents, end of period						$	185.7				$	351.3

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 comparison to 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 and the calendar shift resulting from the 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
		Mar. 30, 2024			Apr. 1, 2023
Reconciliation of non-GAAP operating and EBITDA margins from GAAP:
Net sales	$	2,151.3		$	2,065.0
Income before taxes	$	234.4		$	168.3
Income before taxes as a percentage of net sales		10.9	%		8.2	%
Adjustments:
Interest expense	$	28.6		$	26.4
Other non-operating expense (income), net		(8.6	)		(4.6	)
Operating income before interest expense, other non-operating expense (income) and taxes	$	254.4		$	190.1
Operating margins		11.8	%		9.2	%
As reported net income	$	172.4		$	121.2
Adjustments:
Restructuring charges, net of reversals:
Severance and related costs, net of reversals		4.9			17.1
Asset impairment and lease cancellation charges		1.1			0.5
Losses from Argentine peso remeasurement and Blue Chip Swap transactions(1)		11.3			---
(Gain) loss on venture investment		2.2			---
Outcomes of legal matters and settlements, net		(0.2	)		---
Transaction and related costs		---			0.2
Interest expense		28.6			26.4
Other non-operating expense (income), net(2)		(8.6	)		(4.6	)
Provision for income taxes		62.0			47.1
Adjusted operating income (non-GAAP)	$	273.7		$	207.9
Adjusted operating margins (non-GAAP)		12.7	%		10.1	%
Depreciation and amortization	$	77.3		$	72.3
Adjusted EBITDA (non-GAAP)	$	351.0		$	280.2
Adjusted EBITDA margins (non-GAAP)		16.3	%		13.6	%
Reconciliation of non-GAAP net income from GAAP:
As reported net income	$	172.4		$	121.2
Adjustments:
Restructuring charges and other items		19.3			17.8
Argentine interest income(1)		(3.6	)		---
Tax effect on restructuring charges and other items and impact of adjusted tax rate		(3.0	)		(0.4	)
Adjusted net income (non-GAAP)	$	185.1		$	138.6

(1)	The total pretax net loss from the above-referenced Argentine peso-related items was $7.7.
(2)	"Other non-operating expense (income), net" for the first quarter of 2024 includes Argentine interest income of $3.6.

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
		Mar. 30, 2024			Apr. 1, 2023
Reconciliation of non-GAAP net income per common share from GAAP:
As reported net income per common share, assuming dilution	$	2.13		$	1.49
Adjustments per common share, net of tax:
Restructuring charges and other items		0.24			0.22
Argentine interest income		(0.04	)		---
Tax effect on restructuring charges and other items and impact of adjusted tax rate		(0.04	)		(0.01	)
Adjusted net income per common share, assuming dilution (non-GAAP)	$	2.29		$	1.70
Weighted average number of common shares outstanding, assuming dilution		81.0			81.5
Our adjusted tax rate was 26% and 25.5% for the three months ended March 30, 2024 and April 1, 2023, respectively.
		(UNAUDITED)
		Three Months Ended
		Mar. 30, 2024			Apr. 1, 2023
Reconciliation of adjusted free cash flow:
Net cash provided by operating activities	$	119.8		$	1.9
Purchases of property, plant and equipment		(48.8	)		(64.5	)
Purchases of software and other deferred charges		(6.9	)		(5.3	)
Purchases of Argentine Blue Chip Swap securities		(20.2	)		---
Proceeds from sales of Argentine Blue Chip Swap securities		14.0			---
Proceeds from sales of property, plant and equipment		0.1			0.2
Proceeds from insurance and sales (purchases) of investments, net		0.1			(3.5	)
Adjusted free cash flow (non-GAAP)	$	58.1		$	(71.2	)

A-6
AVERY DENNISON CORPORATION
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions, except %)
(UNAUDITED)
		First Quarter Ended
		NET SALES					OPERATING INCOME (LOSS)							OPERATING MARGINS
			2024		2023			2024			2023			2024		2023
Materials Group		$	1,496.5	$	1,460.5		$	226.1		$	160.5			15.1	%	11.0	%
Solutions Group			654.8		604.5			56.1			51.5			8.6	%	8.5	%
Corporate Expense			N/A		N/A			(27.8	)		(21.9	)		N/A		N/A
TOTAL FROM OPERATIONS		$	2,151.3	$	2,065.0		$	254.4		$	190.1			11.8	%	9.2	%
RECONCILIATION OF NON-GAAP SUPPLEMENTARY INFORMATION FROM GAAP
							First Quarter Ended
								2024			2023			2024		2023
Materials Group
Operating income and margins, as reported							$	226.1		$	160.5			15.1	%	11.0	%
Adjustments:
Restructuring charges, net of reversals:
Severance and related costs, net of reversals								2.4			14.3			0.2	%	1.0	%
Asset impairment charges								0.1			---			---		---
Losses from Argentine peso remeasurement and Blue Chip Swap transactions								11.3			---			0.8	%	---
Outcomes of legal matters and settlements, net								0.6			---			---		---
Adjusted operating income and margins (non-GAAP)							$	240.5		$	174.8			16.1	%	12.0	%
Depreciation and amortization								32.8			32.7			2.2	%	2.2	%
Adjusted EBITDA and margins (non-GAAP)							$	273.3		$	207.5			18.3	%	14.2	%
Solutions Group
Operating income and margins, as reported							$	56.1		$	51.5			8.6	%	8.5	%
Adjustments:
Restructuring charges, net of reversals:
Severance and related costs, net of reversals								2.4			2.9			0.4	%	0.5	%
Asset impairment and lease cancellation charges								1.0			0.5			0.1	%	0.1	%
(Gain) loss on venture investment								2.2			---			0.3	%	---
Outcomes of legal matters and settlements, net								(0.8	)		---			(0.1	%)	---
Transaction and related costs								---			0.2			---		---
Adjusted operating income and margins (non-GAAP)							$	60.9		$	55.1			9.3	%	9.1	%
Depreciation and amortization								44.5			39.6			6.8	%	6.6	%
Adjusted EBITDA and margins (non-GAAP)							$	105.4		$	94.7			16.1	%	15.7	%

A-7
AVERY DENNISON CORPORATION
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions, except ratios)
(UNAUDITED)
	QTD
		2Q23			3Q23			4Q23			1Q24
Reconciliation of adjusted EBITDA from GAAP:
As reported net income	$	100.4		$	138.3		$	143.1		$	172.4
Adjustments(1)(2)		68.3			54.1			40.7			19.3
Interest expense		31.9			31.0			29.7			28.6
Other non-operating expense (income), net		(6.6	)		(8.7	)		(10.9	)		(8.6	)
Provision for income taxes		39.8			46.3			58.5			62.0
Depreciation and amortization		74.0			75.1			77.0			77.3
Adjusted EBITDA (non-GAAP)	$	307.8		$	336.1		$	338.1		$	351.0
Total Debt										$	3,240.4
Less: Cash and cash equivalents											185.7
Net Debt										$	3,054.7
Net Debt to Adjusted EBITDA LTM* (non-GAAP)											2.3
*LTM = Last twelve months (2Q23 to 1Q24)

(1)	Includes "Other expense (income), net" and other items. Refer to schedule A-5 for details of the adjustments.
(2)	Includes loss from Argentine peso remeasurement in the third and fourth quarters of 2023 and first quarter of 2024.

A-8
AVERY DENNISON CORPORATION
PRELIMINARY SUPPLEMENTARY INFORMATION
(UNAUDITED)
	First Quarter 2024
	Total Company	Materials Group	Solutions Group
Reconciliation of organic sales change from GAAP:
Reported net sales change	4.2%	2.5%	8.3%
Foreign currency translation	---	(0.5%)	1.5%
Sales change ex. currency (non-GAAP)(1)	4.2%	1.9%	9.8%
Acquisitions	(1.1%)	---	(4.0%)
Organic sales change (non-GAAP)(1)	3.1%	1.9%	5.8%
(1) Totals may not sum due to rounding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424348830/en/

John Eble

Vice President, Finance and Investor Relations

investorcom@averydennison.com

Kristin Robinson

Vice President, Global Communications

kristin.robinson@averydennison.com

Source: Avery Dennison Corporation

FAQ

What was Avery Dennison's reported EPS for the first quarter of 2024?

Avery Dennison reported a first-quarter 2024 EPS of $2.13, representing a 43% increase.

What was the adjusted EPS for Avery Dennison in the first quarter of 2024?

Avery Dennison's adjusted EPS for the first quarter of 2024 was $2.29, up by 35%.

What was the percentage increase in net sales for Avery Dennison in 1Q24?

Avery Dennison's net sales increased by 4% to $2.2 billion in the first quarter of 2024.

What is the FY24 reported EPS guidance range provided by Avery Dennison?

Avery Dennison provided FY24 reported EPS guidance of $8.60 to $9.10.

What is the adjusted EPS guidance range for FY24 given by Avery Dennison?

Avery Dennison's adjusted EPS guidance for FY24 is between $9.00 to $9.50.

How much did Avery Dennison's Materials Group sales increase in 1Q24?

Avery Dennison's Materials Group reported a 2% increase in sales to $1.5 billion in the first quarter of 2024.

What was the reported sales increase for Avery Dennison's Solutions Group in 1Q24?

Avery Dennison's Solutions Group reported an 8% increase in sales to $655 million in the first quarter of 2024.

How much cash did Avery Dennison return to shareholders in 1Q24?

Avery Dennison returned $81 million in cash to shareholders during the first quarter of 2024.

What was Avery Dennison's net debt to adjusted EBITDA ratio at the end of the first quarter of 2024?

Avery Dennison's net debt to adjusted EBITDA ratio was 2.3x at the end of the first quarter of 2024.

How much pre-tax savings did Avery Dennison realize from restructuring in 1Q24?

Avery Dennison realized approximately $19 million in pre-tax savings from restructuring in the first quarter of 2024.