Financial Performance - In fiscal year 2025, Avery Dennison's total net sales were comprised of approximately 69% from the Materials Group and 31% from the Solutions Group[17]. - Net sales for 2025 reached $8,855.5 million, a 1.1% increase from $8,755.7 million in 2024, and a 5.9% increase from $8,364.3 million in 2023[171]. - Net income for 2025 was $688.0 million, a decrease from $704.9 million in 2024, with net income per share at $8.81[181]. - The effective tax rate for 2025 was 25.6%, down from 26.1% in 2024, attributed to benefits from a foreign restructuring transaction[182]. - Reported net sales change for 2025 was 1%, compared to 5% in 2024, with organic sales change remaining flat at 0% in 2025, reflecting higher volume offset by raw material deflation-related price reductions[156]. - Net cash provided by operating activities in 2025 was $881.4 million, a decrease from $938.8 million in 2024, primarily due to higher incentive compensation and tax payments[168]. - Adjusted free cash flow increased to $707.1 million in 2025, compared to $699.5 million in 2024, driven by lower purchases of property, plant, and equipment[168]. Acquisitions and Investments - The acquisition of W.F. Taylor Holdings, Inc. was completed in 2025 for an aggregate purchase consideration of approximately $390 million[29]. - In 2025, the company acquired Taylor Adhesives for approximately $390 million, with ongoing evaluations for additional acquisition targets[71]. - The aggregate purchase consideration for the 2023 acquisitions was approximately $231 million, funded through cash and commercial paper borrowings[165]. - The company expended approximately $47 million on restructuring actions in 2025, with incremental savings of over $60 million from these actions[79]. - Capital expenditures were approximately $200 million in 2025, including investments in fixed assets and IT infrastructure[81]. - The company paid approximately $401.8 million for acquisitions, net of cash acquired, significantly higher than $3.8 million in 2024 and $224.9 million in 2023[210]. Market and Sales Dynamics - International operations accounted for approximately 69% of total net sales in 2025, with over 200 manufacturing and distribution facilities in more than 50 countries[17]. - Approximately 40% of the company's net sales in 2025 originated in emerging markets, which are critical for long-term growth strategy[59]. - The indirect impact of tariffs resulted in an aggregate low single-digit rate decrease in sales in the overall apparel categories over the second, third, and fourth quarters of 2025[52]. - Sales in the overall apparel categories declined in 2025 as a result of tariff-related uncertainty[64]. - The company anticipates that tariff-related uncertainty will persist, with an indirect impact resulting in a low single-digit rate decrease in sales in overall apparel categories during the latter half of 2025[169]. Sustainability and Corporate Responsibility - The company has made substantial investments in sustainability-driven products, focusing on advancing the circular economy and increasing recyclability of packaging[66]. - Research and development efforts are directed towards sustainability, circular economy, and advanced technologies, with a focus on RFID and digital solutions[28]. - The company achieved a 60% absolute cumulative reduction in GHG emissions from its 2015 baseline, exceeding its 2025 sustainability goal of a 26% reduction[70]. - By 2030, the company aims to reduce Scope 1 and 2 GHG emissions by 70% compared to the 2015 baseline and work with its supply chain to reduce Scope 3 emissions[70]. - The company is facing increasing demands from stakeholders regarding sustainability and governance practices, which could impact its market valuation[83]. Workforce and Employee Engagement - The global workforce consisted of approximately 35,000 employees, with 83% located outside the U.S. and 67% in emerging markets[31]. - Approximately 98% of employees were paid above the applicable legal minimum wage at year-end 2025[35]. - Avery Dennison's commitment to employee engagement is reflected in annual surveys, which aim to improve workplace culture and retention[37]. - The company faces challenges in recruiting and retaining high-caliber talent, which is critical for its competitive position[95]. Financial Risks and Liabilities - The company had approximately $3.73 billion of debt as of December 31, 2025, which significantly impacts its ability to obtain financing on favorable terms[100]. - Average variable-rate borrowings were approximately $739 million in 2025, making the company sensitive to fluctuations in interest rates[101]. - Changes in foreign currency exchange rates, particularly unfavorable impacts from the Indian rupee and Brazilian real, may result in lower net sales and increased costs[56]. - The company is exposed to risks from geopolitical, social, and economic instability, which could materially adversely affect its business[53]. - The company is subject to ongoing compliance requirements and audits by various tax authorities, which could materially affect its effective tax rate[93]. - Changes in corporate tax policies and enforcement activities could have a material adverse effect on the company's business due to its international operations[92]. Cybersecurity and IT Risks - Cybersecurity risks persist, with potential threats from AI-driven attacks and the need for ongoing monitoring and updates to security measures[86]. - The company has implemented measures to mitigate risks related to information technology disruptions, but vulnerabilities remain due to reliance on third-party vendors[84]. - The company’s cybersecurity risk management program includes a comprehensive incident response plan and is overseen by the Board, with updates provided to the Audit Committee[127]. - Cybersecurity risks, including ransomware attacks, continue to increase, necessitating ongoing improvements in the company's security measures[90]. Legal and Compliance Issues - The company is involved in litigation regarding intellectual property rights, which could result in significant costs and impact its competitive position[109]. - The company has accrued liabilities for environmental clean-up at ten sites designated by U.S. governmental agencies, with potential costs exceeding the accrued amounts due to uncertainties in remediation[115]. - The company is subject to evolving environmental, health, and safety laws, which could significantly increase compliance costs and impact production capabilities[114]. - Export control laws may impact the company's ability to compete in international markets, with potential penalties for non-compliance[116]. Shareholder Returns - The company repurchased 3.2 million shares of its common stock at an aggregate cost of $575.6 million in 2025, with $526.3 million remaining authorized for repurchase[106]. - A quarterly dividend rate increase of approximately 7% was implemented in April 2025, although future increases are not guaranteed[107]. - Dividends paid amounted to $288.4 million in 2025, slightly higher than $277.5 million in 2024[212]. - Share repurchases totaled $572.3 million in 2025, compared to $247.5 million in 2024[212].

With a market cap of $15.2 billion, Avery Dennison Corporation (AVY) is a global materials science and manufacturing company specializing in pressure-sensitive labeling, packaging materials, and functional materials used across consumer goods, retail, logistics, and industrial markets. Founded in 1935 and headquartered in Mentor, Ohio, the company supplies branding and information solutions that help customers identify, track, and protect products throughout the supply chain. Avery Dennison has substanti ...

Investor Presentation February 2026 February 2026 Investor Presentation 1 Classification: Avery Dennison - Public Forward-Looking Statements 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 fac ...

Core Viewpoint - Avery Dennison Corporation, a leading global materials science and digital identification solutions company, is set to participate in several upcoming investor events in 2026 [1] Group 1: Upcoming Investor Events - The company will attend Citi's 2026 Global Industrial Tech and Mobility Conference on February 17 [1] - The company will also participate in Bank of America's 2026 Global Agriculture and Materials Conference on February 25 [1] - Additionally, the company is scheduled to be at Jefferies' Europe Paper & Packaging Summit on March 3 [1]

Group 1 - Avery Dennison (NYSE:AVY) is recognized as one of the top 8 paper and plastic packaging stocks to buy according to hedge funds [1] - BMO Capital analyst John McNulty raised the price target for Avery Dennison from $215 to $224, maintaining an Outperform rating after the company's fourth-quarter earnings beat [1] - Truist Financial also increased its price target for Avery Dennison from $213 to $234, indicating an upside potential of over 22% [3] Group 2 - The company operates through two segments: Materials Group and Solutions Group, offering products such as pressure-sensitive label materials and performance tapes [5] - Avery Dennison sells its products under brands like Avery Dennison, Fasson, and JAC [5] - The firm anticipates slight weakness in packaging volumes in early 2026, but some consumer packaged goods (CPGs) are increasing volumes while retaining price gains [4]

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Core Insights - The company reported a solid performance for the full year 2025, with adjusted EPS of $9.53 and $700 million in adjusted free cash flow, demonstrating resilience despite macroeconomic challenges [3][25] - The adjusted EBITDA margin was maintained at 16.4%, reflecting effective productivity measures to offset higher employee-related costs and trade policy impacts [3][15] - The company is focused on driving growth in high-value categories, which now represent a significant portion of its portfolio, and aims to return to stronger organic revenue growth [7][12] Financial Performance - Adjusted EPS for Q4 was $2.45, up 3% year-over-year, driven by higher volume and productivity, despite challenges from trade policy changes [14][25] - Full-year 2025 free cash flow reached $700 million, with a conversion rate exceeding 100%, and a net debt to adjusted EBITDA ratio of 2.4 [15][25] - The company returned approximately $860 million to shareholders in 2025, including $572 million in buybacks and $288 million in dividends [15][25] Segment Performance - In the Solutions Group, sales increased by approximately 1.5%, with high-value categories now making up 60% of the portfolio, which helped offset declines in base solutions due to tariff-related uncertainties [1][19] - The Materials Group reported a 5% increase in sales, although organic sales were slightly down, with high-value categories contributing to low single-digit growth [2][16] - Intelligent Labels and other high-value categories showed strong growth, with Intelligent Labels growing mid-single digits, driven by food and logistics segments [20][21] Strategic Focus - The company is committed to expanding its high-value categories, which have shown a mid-single-digit CAGR over the past six years, and aims to increase their share of total sales to approximately 45% by 2025 [7][12] - Innovation and digital capabilities are key areas of focus, with efforts to enhance operational productivity and shorten innovation cycles through AI and automation [10][11][76] - The company plans to continue its disciplined capital allocation strategy while investing in productivity and innovation to drive long-term value [11][12] Outlook - For 2026, the company anticipates adjusted EPS growth of approximately 6% and reported sales growth of 5% to 7%, with organic sales growth expected to be between 0% and 2% [12][23] - The company expects to see stronger growth in the second half of 2026, driven by new program rollouts and a recovery in apparel and general retail [6][12] - Continued focus on productivity and effective capital deployment will be essential to navigate the current economic environment and achieve growth targets [12][26]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][15] - Adjusted EBITDA margin was 16.4% for the full year, reflecting resilience despite headwinds from trade policy changes and softer consumer sentiment [3][15] - Fourth quarter adjusted EPS was $2.45, up 3% compared to the prior year, driven by higher volume and productivity [15][25] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, although organic sales were slightly down due to deflation-related price reductions [4][17] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories now representing 60% of the portfolio, which helped offset declines in base solutions [6][19] - Intelligent Labels within the enterprise-wide platform grew mid-single digits, driven by strong performance in food, logistics, and other categories [7][20] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [17] - Emerging markets in Asia Pacific and Latin America were up low single digits, indicating some resilience in these regions [17] - The apparel business was down roughly 7%, impacted by tariff-related uncertainties, while other categories like food and logistics showed high teens growth in Q4 [6][8] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent approximately 45% of total sales, and aims to expand this further [9][10] - There is a strong emphasis on innovation and digital capabilities to enhance operational productivity and customer solutions [10][11] - The company plans to maintain a disciplined capital allocation strategy while continuing to invest in productivity and innovation to strengthen market positions [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth despite ongoing macroeconomic challenges, with expectations for adjusted EPS growth of approximately 6% in Q1 2026 [13][25] - The company anticipates that growth in high-value categories will continue to be a key driver, with a focus on expanding customer adoption and market penetration [9][39] - Management acknowledged the need to improve organic revenue growth and is taking decisive actions to address this trajectory [9][13] Other Important Information - The company achieved its 2025 sustainability objectives, including reducing energy intensity and enabling more sustainable products [11][12] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.4, and the company returned approximately $860 million to shareholders in 2025 [16][25] Q&A Session Questions and Answers Question: Can you provide more detail on the 40 basis point drop in margin? - The drop was attributed to soft base volumes, wage inflation, and some one-time benefits in the prior year, along with the impact of extra calendar days in Q4 [28][30] Question: What are the growth expectations for Intelligent Labels in 2026? - Growth is anticipated to be above the low single digits seen in 2025, driven by increased adoption in apparel and logistics sectors [37][39] Question: How do high-value categories compare in margin to core categories? - High-value categories typically have higher variable margins than the rest of the portfolio, contributing to overall margin expansion [44][46] Question: Has the Walmart partnership increased inquiries from other grocery sellers? - Yes, the partnership has catalyzed interest from other grocery sellers, leading to a growing pipeline of inquiries [52][53] Question: What is the expected impact of temporary savings on 2026? - Temporary savings from incentive compensation in 2025 will be a headwind in 2026, similar in magnitude to the $50 million restructuring actions [55][56] Question: What is the outlook for the apparel market in 2026? - There is uncertainty due to tariff policies, but growth is expected as retailers adjust their supply chain strategies [61][63]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and generated $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][14] - Adjusted EBITDA margin was maintained at 16.4% for the full year, despite headwinds from trade policy changes and softer consumer sentiment [3][14] - In Q4, adjusted EPS was $2.45, up 3% compared to the prior year, with reported sales increasing by 3.9% [13][14] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, with low single-digit volume and mix growth offset by deflation-related price reductions [4][15] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories representing 60% of the portfolio [5][19] - Intelligent Labels within the Solutions Group grew mid-single digits, driven by food, logistics, and industrial categories [6][18] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [15] - Emerging markets in Asia Pacific and Latin America were up low single digits [15] - The apparel business was down approximately 7%, impacted by tariff-related uncertainties [5][56] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent 45% of sales, and aims to expand this further [8][10] - There is a commitment to accelerating innovation and enhancing digital capabilities to improve operational productivity and customer solutions [9][10] - The company achieved its 2025 sustainability objectives and is making progress towards its 2030 goals [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth in 2026, anticipating adjusted earnings per share growth of approximately 6% at the midpoint [11][21] - The company does not expect macroeconomic tailwinds in the near term, focusing instead on internal levers to drive performance [11][38] - There is a recognition of the need to improve organic revenue growth, with decisive actions being taken to address this [8][12] Other Important Information - The company returned approximately $860 million to shareholders in 2025, including $572 million in buybacks and $288 million in dividends [14] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.4 [14] Q&A Session Summary Question: Can you provide more details on the 40 basis point drop in margin? - The drop was attributed to soft base volumes, wage inflation, and some one-time benefits in the prior year [26][28] Question: What are the growth expectations for Intelligent Labels in 2026? - Growth is anticipated to be above the low single digits achieved in 2025, driven by increased adoption in apparel and logistics [32][34] Question: How do high-value categories compare in margin to core categories? - High-value categories typically have higher variable margins than the rest of the portfolio, contributing to overall margin expansion [40][42] Question: What impact has the Walmart partnership had on inquiries from other grocery sellers? - The partnership has increased interest and inquiries from other grocery sellers, leading to potential pilots and trials [47][48] Question: What is the expected timing for restructuring benefits throughout 2026? - Restructuring benefits are expected to be balanced across the year, with a more significant impact in the middle quarters [68][70] Question: What actions are being taken to drive organic growth in high-value categories? - The company is focusing on new customer acquisition, accelerating innovation outcomes, and leveraging digital capabilities [75][78]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and generated $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][16] - Adjusted EBITDA margin was maintained at 16.4% for the year, despite headwinds from trade policy changes and softer consumer sentiment [3] - In Q4, adjusted EPS was $2.45, up 3% year-over-year, with reported sales increasing by 3.9% [15][16] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, although organic sales were slightly down due to deflation-related price reductions [4] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories now representing 60% of the portfolio [5] - Intelligent Labels within the Solutions Group grew mid-single digits, driven by strong performance in food and logistics categories [6][19] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [17] - Emerging markets in Asia Pacific and Latin America saw low single-digit growth [17] - The apparel business was down approximately 7%, impacted by tariff-related uncertainties [5][19] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent 45% of total sales, and aims to expand this further [9] - There is a strategic shift towards innovation and digital capabilities to enhance operational productivity and customer solutions [10][11] - The company achieved its 2025 sustainability objectives and is making progress towards its 2030 goals [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth in 2026, anticipating organic sales growth of 0%-2% in Q1 2026 [12][23] - The company does not expect macroeconomic tailwinds in the near term, focusing instead on internal levers to drive performance [12][23] - Management acknowledged the need to improve organic revenue growth and is taking decisive actions to address this [9][12] Other Important Information - The company returned approximately $860 million to shareholders in 2025, including $572 million in buybacks and $288 million in dividends [16] - The net debt to adjusted EBITDA ratio at the end of the quarter was 2.4, indicating a strong balance sheet [16] Q&A Session Summary Question: Can you provide more details on the 40 basis point drop in margin? - Management explained that the drop was due to soft base volumes, wage inflation, and some one-time benefits in the prior year [28][30] Question: What are the growth expectations for Intelligent Labels in 2026? - Management anticipates growth above 2025 levels, driven by increased adoption in apparel and logistics sectors [36][38] Question: How has the Walmart partnership impacted inquiries from other grocery sellers? - The Walmart partnership has increased interest from other grocery sellers, leading to more inquiries and potential pilots [52][53] Question: What is the expected impact of temporary savings on 2026? - Temporary savings from incentive compensation will be a headwind in 2026, similar in magnitude to the $50 million restructuring actions [54] Question: What is the outlook for the apparel market in 2026? - Management noted ongoing tariff uncertainty but expects some growth in the apparel market as retailers adjust their strategies [60][62]