Avery Dennison Announces Second Quarter 2023 Results

Q2 2023 Results


  • 2Q23 Net sales of $2.1 billion
    • Sales change ex. currency (non-GAAP) down 10%
    • Organic sales change (non-GAAP) down 10%
  • 2Q23 Reported EPS of $1.24
    • Increased accrual for legacy legal matter; preparing for appeal
    • Adjusted EPS (non-GAAP) of $1.92, up 13% sequentially
  • 3Q23 Reported EPS guidance of $1.70 to $1.90
    • Adjusted EPS guidance of $2.00 to $2.20

MENTOR, Ohio, July 25, 2023 – Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its second quarter ended July 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 increased sequentially in the second quarter, a trend we expect to continue in coming quarters,” said Mitch Butier, Chairman and CEO. “Volumes in our Materials businesses continue to recover from slow market conditions, largely destocking, while our Intelligent Labels platform accelerates adoption into new categories.


"While it's good to see the continuing sequential improvements in our Materials businesses and the building momentum in Intelligent Labels, the pace of our recovery is slower than anticipated. Our results for the quarter were below our expectation due to lower revenue, something the team was able to largely offset through cost reduction actions,” Butier added.


“We remain confident this period of challenging results will soon pass. Our leadership positions in large diverse growing markets, the strategic foundations we have laid, and the dedication and expertise of our team positions us well to continue to deliver GDP+ growth and top-quartile returns over the long-run,” said Deon Stander, President and COO.


Second Quarter 2023 Results by Segment


Materials Group

  • Reported sales decreased 13% to $1.5 billion. Sales were down 12% ex. currency and on an organic basis.
    • Label materials sales were down mid-teens on an organic basis.
      • Lower volume was driven primarily by inventory destocking.
      • Volume increased sequentially, particularly in Europe, as the negative impact of destocking moderated.
    • Sales increased by high-single digits organically in the Graphics and Reflective Solutions businesses.
    • Sales decreased by low-to-mid single digits organically in the combined Performance Tapes and Medical businesses.
  • Reported operating margin decreased 150 basis points to 13.1%. Adjusted EBITDA margin (non-GAAP) was strong, increasing 150 basis points sequentially to 15.7%. Adjusted EBITDA margin decreased 100 basis points compared to prior year, as productivity initiatives and temporary cost-saving actions largely offset lower volume/mix.
  • The company anticipates adjusted EBITDA margin will improve sequentially.

Solutions Group

  • Reported sales decreased 7% to $615 million. Sales were down 4% ex. currency and 7% on an organic basis.
    • Sales in high-value categories were up low-single digits on an organic basis.
    • Sales were down high-teens organically in base solutions as retailer and brand sentiment remains muted.
  • Reported operating margin decreased approximately 14 points to (1.2%) with an increased accrual for a legacy legal matter, which the company is preparing for appeal. Adjusted EBITDA margin decreased 320 basis points to 15.8% driven by lower volume and growth investments, partially offset by productivity initiatives and temporary cost-saving actions.
  • The company anticipates adjusted EBITDA margin will improve sequentially.



Balance Sheet and Capital Deployment

During the first half of the year, the company deployed $194 million for acquisitions and returned $216 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.5 million shares at an aggregate cost of $90 million during the first half of the year. Net of dilution from long-term incentive awards, the company’s share count at the end of the quarter was down 0.8 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 2.75x at the end of the second quarter.


Income Taxes

The company’s reported second quarter effective tax rate was 28.4%. 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 half of the year, the company realized approximately $24 million in pre-tax savings from restructuring, net of transition costs, and incurred approximately $28 million in pre-tax restructuring charges.




In its supplemental presentation materials, “Second Quarter 2023 Financial Review and Analysis”, the company provides a list of factors that it believes will contribute to its third quarter 2023 financial results. Based on the factors listed and other assumptions, the company expects third quarter 2023 reported earnings per share of $1.70 to $1.90.

Excluding an estimated $0.30 per share impact of restructuring charges and other items, the company expects third quarter 2023 adjusted earnings per share of $2.00 to $2.20.


For more details on the company’s results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, “Second Quarter 2023 Financial Review and Analysis,” 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 35,000 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; and our environmental, social and governance practices
  • 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 dividends 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, and subsequent quarterly reports on Form 10-Q.


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