Avery Dennison Announces First Quarter 2023 Results

Q1 2023 Results


  • 1Q23 Reported EPS of $1.49
    • Adjusted EPS (non-GAAP) of $1.70, down 29%
  • 1Q23 Net sales declined 12% to $2.1 billion
    • Sales change ex. currency (non-GAAP) of (9%)
    • Organic sales change (non-GAAP) of (9%)
  • Revised FY 2023 EPS guidance
    • Reported EPS of $8.35 to $8.70 (previously $8.85 to $9.25)
    • Adjusted EPS of $8.85 to $9.20 (previously $9.15 to $9.55)

MENTOR, Ohio, April 26, 2023 – Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its first quarter ended April 1, 2023. 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.


“Earnings per share were in line with our expectations for the first quarter, despite lower revenue due to higher-than-anticipated inventory destocking,” said Mitch Butier, Chairman and CEO. “We continue to expect a strong second half as the pace of destocking moderates and intelligent label programs accelerate. We have revised our guidance range for 2023 earnings per share to reflect a softer outlook for the second quarter.


“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,” added Butier.


“Once again, I want to thank our entire team for continuing to raise their game to address the unique challenges at hand.”


First Quarter 2023 Results by Segment


Materials Group

  • Reported sales decreased 13% to $1.5 billion. Sales were down 9% ex. currency and on an organic basis.
    • Label materials sales were down by low-double digits on an organic basis.
      • Lower volume, driven by inventory destocking, was partially offset by pricing actions.
      • On an organic basis, sales were down low-double digits in North America, high-single digits in Western Europe, and mid-to-high single digits in emerging markets.
    • Sales increased by low-single digits organically in the Graphics and Reflective Solutions businesses.
    • Sales increased by mid-single digits organically in the combined Performance Tapes and Medical businesses.
  • Reported operating margin decreased 230 basis points to 11.0%. Adjusted EBITDA margin (non-GAAP) decreased 100 basis points to 14.2% driven by lower volume/mix, partially offset by benefits from the net impact of pricing and raw material input costs, and productivity. Adjusted EBITDA margin increased 140 basis points sequentially.
  • The company anticipates label destocking to be largely complete by mid-year, and Materials Group adjusted EBITDA margin improving sequentially throughout 2023.

Solutions Group

  • Reported sales decreased 11% to $605 million. Sales were down 8% ex. currency and 9% on an organic basis.
    • Sales in high-value categories were up low-single digits on an organic basis.
    • Sales decreased by roughly 20% organically in base solutions as customers adjusted inventory levels.
    • Enterprise-wide Intelligent Labels sales were up low-single digits on an organic basis.
  • Reported operating margin decreased 480 basis points to 8.5%. Adjusted EBITDA margin decreased 340 basis points to 15.7% driven by lower volume.
  • The company anticipates apparel volume to rebound in the second half of 2023; throughout the year, Intelligent Labels programs are expected to accelerate and Solutions Group adjusted EBITDA margin to sequentially improve.
  • The company announced an agreement to acquire Lion Brothers, a leading designer and manufacturer of apparel brand embellishments with sales of approximately $65 million in 2022.



Balance Sheet and Capital Deployment

In March, the company issued $400 million of 5.75% Senior Notes due 2033. The company used the net proceeds from the offering to repay existing indebtedness under the company’s commercial paper programs and to repay the $250 million aggregate principal amount of 3.35% Senior Notes that was due April 15, 2023.


During the first quarter, the company deployed $44 million for acquisitions and returned $112 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.3 million shares at an aggregate cost of $51 million. Net of dilution from long-term incentive awards, the company’s share count at the end of the quarter was down 1.3 million compared to the same time last year.


The company’s balance sheet remains strong, with ample capacity to continue executing its long-term capital allocation strategy. Net debt to adjusted EBITDA (non-GAAP) was 2.5 at the end of the first quarter.


Income Taxes

The company’s reported first-quarter effective tax rate was 28.0%. The adjusted tax rate (non-GAAP) for the quarter was 25.5%.


The company’s 2023 adjusted tax rate is expected to be in the mid-twenty percent range based on current tax regulations.


Cost Reduction Actions

During the first quarter, the company realized approximately $9 million in pre-tax savings from restructuring, net of transition costs, and incurred pre-tax restructuring charges of approximately $18 million.




In its supplemental presentation materials, “Financial Review and Analysis First Quarter 2023,” the company provides a list of factors that it believes will contribute to its 2023 financial results. Based on the factors listed and other assumptions, the company has revised its guidance range for 2023 reported earnings per share from $8.85 to $9.25 to $8.35 to $8.70.


Excluding an estimated $0.50 per share related to restructuring charges and other items, the company revised its guidance range for adjusted earnings per share from $9.15 to $9.55 to $8.85 to $9.20.


For more details on the company’s results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, “Financial Review and Analysis First Quarter 2023,” 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 34,000 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) the cost and availability of raw materials; (iii) competitors' actions, including pricing, expansion in key markets, and product offerings; (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 and local economic and market conditions; changes in political conditions, including those related to China and those related to the Russian invasion of Ukraine; and fluctuations in foreign currency exchange rates and other risks associated with foreign 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, environmental standards, laws and regulations, and customer preferences; 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; 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 environmental, social and governance practices; and impacts from COVID-19
  • 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
  • Information Technology – disruptions in information technology systems or data security breaches, including cyber-attacks or other intrusions to network security; and successful installation of new or upgraded information technology systems
  • 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 of financial markets; and compliance with our debt covenants
  • Ownership of Our Stock – potential significant variability of our stock price and amounts of future dividend and share repurchases
  • Legal and Regulatory Matters – protection and infringement of intellectual property; impact of legal and regulatory proceedings, including with respect to environmental, anti-corruption, 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 2022 Form 10-K, filed with the Securities and Exchange Commission on February 22, 2023.


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

Media Contacts


Kristin Robinson

Vice President, Global Communications




John Eble

Vice President, Finance and Investor Relations