Market Overview

Avery Dennison Announces Third Quarter 2019 Results

  • 3Q19 Reported EPS of $1.71
    • Adjusted EPS (non-GAAP) of $1.66
  • 3Q19 Net sales increased 0.1% to $1.76 billion
    • Organic sales growth (non-GAAP) of 2.1%
  • FY 2019 EPS guidance ranges revised
    • FY19 reported EPS guidance of $3.15 to $3.25 (previously $3.15 to $3.30)
    • FY19 adjusted EPS guidance of $6.50 to $6.60 (previously $6.50 to $6.65)

Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its third quarter ended September 28, 2019. All non-GAAP financial measures referenced in this document are defined and reconciled to GAAP in the attached pages A-4 through A-8. Unless otherwise indicated, comparisons are to the same period in the prior year.

"We continue to deliver solid profit growth despite soft market demand," said Mitch Butier, Chairman, President and CEO. "Our focus in this slower growth environment has been to protect our margins in the base business, while driving faster-than-average growth in high value categories like RFID, and we're executing well on both fronts.

"For the quarter, Label and Graphic Materials delivered modest organic growth, as volumes improved relative to the first half of the year, and operating margin was strong; Retail Branding and Information Solutions delivered solid organic growth, as continued strength in RFID more than offset a slowdown in the base business, and operating margin remained strong; and IHM outperformed expectations on both the top and bottom lines, delivering solid organic growth and strong margin expansion.

"We have revised the high end of our guidance range for 2019 earnings per share, reflecting the incremental negative impact from currency translation, largely offset by stronger operational results and a modestly lower tax rate," added Butier. "We're confident in our ability to achieve our long-term targets, reflecting the resilience of our business and ability of our team to adapt to changing market conditions."

Third Quarter 2019 Results by Segment

Label and Graphic Materials

  • Reported sales declined 0.8 percent; on an organic basis, sales grew 1.2 percent, as volume/mix improved modestly. On an organic basis, sales were up low-single digits in both Label and Packaging Materials and the combined Graphics and Reflective Solutions businesses.
  • Reported operating margin increased 60 basis points to 13.4 percent, reflecting the benefit from productivity initiatives, including restructuring and material re-engineering, partially offset by higher restructuring charges, net of reversals, and increased employee-related costs. Adjusted operating margin increased 120 basis points to 13.5 percent.

Retail Branding and Information Solutions

  • Reported sales increased 2.1 percent; on an organic basis, sales grew 4.1 percent, driven primarily by continued strength in sales of radio frequency identification (RFID) solutions, which increased by approximately 20 percent.
  • Reported operating margin increased 60 basis points to 11.2 percent, as productivity, higher volume, and lower restructuring charges more than offset higher employee-related costs and growth-related investments. Adjusted operating margin increased 10 basis points to 11.5 percent.


Industrial and Healthcare Materials

  • Reported sales increased 1.4 percent; on an organic basis, sales increased 3.7 percent, driven by a low-to-mid single digit increase in industrial categories and a high-single digit increase in healthcare categories.
  • Reported operating margin increased 120 basis points to 10.4 percent, as the benefits from higher volume/mix and productivity more than offset higher restructuring charges and employee-related costs. Adjusted operating margin increased 180 basis points to 11.0 percent.


Share Repurchases / Equity Dilution

The company repurchased 0.8 million shares in the third quarter at an aggregate cost of $87.6 million. Net of dilution from long-term incentive awards, the company's share count at the end of the quarter was down by 3.8 million compared to the same time last year.

During the first three quarters of the year, the company returned $346 million in cash to shareholders through a combination of share repurchases and dividends, up from $306 million for the same period last year.

Income Taxes

The company's third quarter effective tax rate was 19.2 percent, compared to 10.5 percent in the prior year. The adjusted tax rate (non-GAAP) for the quarter was 24.1 percent, reflecting the company's current expectation for a full year adjusted tax rate of 24.7 percent.

Cost Reduction Actions

In the third quarter, the company realized approximately $18 million in pretax savings from restructuring, net of transition costs, and incurred pretax restructuring charges of approximately $3 million, related to cash severance costs.


In its supplemental presentation materials, "Third Quarter 2019 Financial Review and Analysis," the company provides a list of factors that it believes will contribute to its 2019 financial results. Based on the factors listed and other assumptions, the company has revised its guidance range for 2019 reported earnings per share from a range of $3.15 to $3.30 to a range of $3.15 to $3.25.

Excluding an estimated $3.35 per share related to pension settlement charges, restructuring charges and other items, the company's guidance for adjusted earnings per share has been revised to a range of $6.50 to $6.60.

For more details on the company's results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, "Third Quarter Financial Review and Analysis," posted on the company's website at, 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 (NYSE:AVY) is a global materials science company specializing in the design and manufacture of a wide variety of labeling and functional materials. The company's products, which are used in nearly every major industry, include pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical, and retail applications; tags, labels and embellishments for apparel; and radio frequency identification (RFID) solutions serving retail apparel and other markets. Headquartered in Glendale, California, the company employs approximately 30,000 employees in more than 50 countries. Reported sales in 2018 were $7.2 billion. Learn more at

"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. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but are not limited to, risks and uncertainties relating to the following: fluctuations in demand affecting sales to customers; worldwide and local economic conditions; changes in political conditions; changes in governmental laws and regulations; fluctuations in foreign currency exchange rates and other risks associated with foreign operations, including in emerging markets; the financial condition and inventory strategies of customers; changes in our markets due to competitive conditions, technological developments, laws and regulations, and customer preferences; fluctuations in cost and availability of raw materials; our ability to generate sustained productivity improvement; our ability to achieve and sustain targeted cost reductions; the impact of competitive products and pricing; loss of significant contracts or customers; collection of receivables from customers; selling prices; business mix shift; execution and integration of acquisitions; timely development and market acceptance of new products, including sustainable or sustainably-sourced products; investment in development activities and new production facilities; amounts of future dividends and share repurchases; customer and supplier concentrations; successful implementation of new manufacturing technologies and installation of manufacturing equipment; disruptions in information technology systems, including cyber-attacks or other intrusions to network security; successful installation of new or upgraded information technology systems; data security breaches; volatility of financial markets; impairment of capitalized assets, including goodwill and other intangibles; credit risks; our ability to obtain adequate financing arrangements and maintain access to capital; fluctuations in interest and tax rates; changes in tax laws and regulations, including the U.S. Tax Cuts and Jobs Act, and regulations issued thereto, and uncertainties associated with interpretations of such laws and regulations; outcome of tax audits; fluctuations in pension, insurance, and employee benefit costs; the impact of legal and regulatory proceedings, including with respect to environmental, health and safety; protection and infringement of intellectual property; the impact of epidemiological events on the economy and our customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.

We believe that the most significant risk factors that could affect our financial performance in the near-term include: (1) the impacts of global economic conditions and political uncertainty on underlying demand for our products and foreign currency fluctuations; (2) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through selling price increases, without a significant loss of volume; (3) competitors' actions, including pricing, expansion in key markets, and product offerings; and (4) the execution and integration of acquisitions.

For a more detailed discussion of these and other factors, see "Risk Factors" and "Management's Discussion and Analysis of Results of Operations and Financial Condition" in our 2018 Form 10-K, filed with the Securities and Exchange Commission on February 27, 2019 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

Third Quarter Financial Summary - Preliminary, unaudited
(In millions, except % and per share amounts)





% Sales Change vs. P/Y







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