Avery Dennison Q4 and Full Year 2023 Results

Avery Dennison has announced preliminary, unaudited results for its fourth quarter and full year ended December 30, 2023. Non-GAAP financial measures referenced in this release are reconciled from GAAP. Unless otherwise indicated, comparisons are to the same period in the prior year.“Earnings per share were in line with our expectations for the fourth quarter, increasing sequentially for the fourth consecutive quarter,” said Deon Stander, president and CEO. “Volume in both Label Materials and Apparel Solutions improved sequentially, continuing to recover from slow market conditions, largely due to inventory destocking, while our Intelligent Labels platform continues to accelerate.

“In Intelligent Labels, we are targeting to deliver significant growth in 2024 as apparel rebounds, and we accelerate the adoption of our solutions that help address key industry challenges in logistics, food and general retail, further advancing our leadership position at the intersection of the physical and digital.“Following a challenging 2023, which included significant inventory destocking downstream from us, we expect to deliver strong earnings growth in 2024 and make progress toward our 2025 goals,” added Stander.

“We 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,” concluded Stander.

Highlights:

4Q23 Reported EPS of $1.77

• 4Q23 Adjusted EPS (non-GAAP) of $2.16, up 31%

4Q23 Net sales of $2.1 billion, up 4%

• Sales change ex. currency (non-GAAP) up 3%

• Organic sales change (non-GAAP) up 1%

FY23 Reported EPS of $6.20

• FY23 Adjusted EPS of $7.90

FY23 Net sales of $8.4 billion, down 8%

• Sales change ex. currency down 7%

• Organic sales change down 8%

FY24 Reported EPS guidance of $8.65 to $9.15

• Adjusted EPS guidance of $9.00 to $9.50

Fourth Quarter 2023 Results by Segment

Materials Group

Reported sales decreased 2% to $1.4 billion. Sales were down 4% ex. currency and on an organic basis.

• Label Materials sales were down mid-single digits on an organic basis.

  • Volume was up single digits.

  • Inventory destocking was largely complete as of year-end.

• Sales increased by mid-single digits organically in the Graphics and Reflective businesses.

• Sales decreased by low-to-mid single digits organically in the combined Performance Tapes and Medical businesses.

Reported operating margin was 12.0%. Adjusted EBITDA margin (non-GAAP) was 16.2%, up 340 basis points, driven by productivity and the net benefit of pricing and raw material input costs.

Solutions Group

Reported sales increased 18% to $692 million. Sales were up 19% ex. currency and 14% on an organic basis.

• Apparel Solutions volume was up sequentially.

• Sales in high-value categories were up more than 20% on an organic basis.

• Sales were up mid-single digits organically in base solutions.

• The reported operating margin was 10.2%. Adjusted EBITDA margin was 18.2%, up 230 basis points compared to the prior year and 180 basis points sequentially, driven primarily by volume.

Other