Avery Dennison results first quarter ended March 30, 2024.

Avery Dennison has announced preliminary, unaudited results for its first quarter ended March 30, 2024.

“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,” he concluded.

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