Avery Dennison(AVY)2025-02-26 18:36Financial Performance - Net sales for 2024 were $8,755.7 million, an increase of 4.67% compared to $8,364.3 million in 2023[294]. - Gross profit rose to $2,530.7 million in 2024, up from $2,277.5 million in 2023, reflecting a gross margin improvement[294]. - Net income for 2024 was $704.9 million, representing a 39.9% increase from $503.0 million in 2023[294]. - Total assets increased to $8,404.2 million in 2024, compared to $8,209.8 million in 2023, indicating a growth of 2.37%[293]. - Retained earnings grew to $5,151.2 million in 2024, up from $4,691.8 million in 2023, marking an increase of 9.8%[298]. - Total current liabilities rose to $2,862.6 million in 2024, compared to $2,699.5 million in 2023, an increase of 6.04%[293]. - Net cash provided by operating activities increased to $938.8 million in 2024 from $826.0 million in 2023, reflecting a growth of 13.6%[299]. - Cash and cash equivalents at the end of 2024 were $329.1 million, up from $215.0 million at the end of 2023, representing a 53.1% increase[299]. - Dividends paid in 2024 totaled $277.5 million, compared to $256.7 million in 2023, an increase of 8.1%[299]. - The company reported a decrease in inventories by $90.7 million in 2024, contrasting with an increase of $111.7 million in 2023[299]. Shareholder Returns - The company repurchased 1,184,780 shares for treasury at a cost of $247.5 million during the year[298]. - Dividends per share increased to $3.45 in 2024 from $3.18 in 2023, reflecting a commitment to returning value to shareholders[298]. - The weighted average number of common shares outstanding was 80.4 million in 2024, slightly down from 80.7 million in 2023[294]. - The company had $346.9 million remaining authorized for share repurchase as of December 28, 2024, under the Board's authorization from April 2022[445]. Risk Management - The company aims to manage foreign currency exchange risks by entering into forward, option, and swap contracts, although it does not fully hedge its foreign currency translation exposure[272]. - The estimated maximum potential one-day loss in earnings for foreign exchange positions and contracts was not significant at year-end 2024 or 2023[277]. - The company faces risks related to international operations, including geopolitical conditions, fluctuations in foreign currency exchange rates, and changes in demand affecting sales[1]. - The company is exposed to fluctuations in the cost and availability of raw materials and energy, which can impact its business operations[1]. - The company is subject to risks associated with legal and regulatory matters, including compliance and anti-corruption, environmental, health and safety, and trade compliance[1]. Product Development and Innovation - The company has a focus on the timely development and market acceptance of new products, including sustainable or sustainably-sourced products[1]. - Research and development costs related to new products and applications are expensed as incurred, reflecting the company's commitment to innovation[337]. Acquisitions and Investments - The company completed three business acquisitions in 2023, including Silver Crystal Group, LG Group, and Thermopatch, with an aggregate purchase consideration of approximately $231 million[349][350]. - The 2022 acquisitions of TexTrace and Rietveld had an aggregate purchase consideration of approximately $35 million, funded through cash and commercial paper borrowings[352]. - Approximately $94 million of identifiable finite-lived intangible assets were acquired in 2023, including $68.8 million in customer relationships with a weighted average amortization period of 11 years[357][359]. Debt and Financing - Long-term borrowings increased to $539.2 million in 2024 from $394.9 million in 2023, reflecting a growth of 36.5%[299]. - The company issued €500 million of senior notes in November 2024, with net proceeds of approximately $539 million intended for repaying maturing senior notes and general corporate purposes[369]. - The fair value of total debt was $3.01 billion as of December 28, 2024, down from $3.11 billion as of December 30, 2023[379]. - The company had no outstanding borrowings from U.S. commercial paper as of December 28, 2024, down from $112 million as of December 30, 2023, with a weighted average interest rate of 5.54%[364]. Pension and Employee Benefits - The projected benefit obligations for U.S. pension benefits decreased from $51.8 million in 2023 to $49.3 million in 2024, while non-U.S. obligations increased from $586.9 million to $679.9 million[401]. - The funded status of U.S. pension plans showed a deficit of $44.6 million in 2024 compared to a deficit of $49.3 million in 2023, indicating an improvement of approximately 9.5%[403]. - The net periodic benefit cost for U.S. pension plans in 2024 was $2.5 million, compared to a credit of $1.4 million in 2023, indicating a shift in cost[407]. - Expected contributions for U.S. pension plans in 2025 are projected at $6.2 million, while Non-U.S. pension plans are expected to receive $17.5 million[409]. Stock-Based Compensation - Stock-based compensation expenses increased to $28.7 million in 2024 from $22.3 million in 2023, a rise of 28.8%[299]. - The company had approximately $38 million of unrecognized compensation expense related to unvested stock-based awards as of December 28, 2024, expected to be recognized over two years[451]. - The total intrinsic value of stock options exercised in 2024 was $19.5 million, with approximately $10 million received from these exercises[455]. Restructuring and Operational Changes - Total restructuring charges for 2024 amounted to $28.8 million, net of reversals, related to the reduction of approximately 1,280 positions[468]. - Restructuring charges of $13.1 million were recorded in Q4 2024 related to the reduction of approximately 90 positions[466]. - Restructuring charges of $49.0 million were recorded in 2023, net of reversals, related to the reduction of approximately 1,450 positions[468].