Highlights:
- 1Q22 Reported EPS of $2.39
- Adjusted EPS (non-GAAP) of $2.40
- 1Q22 Net sales increased 14.5% to $2.3 billion
- Sales growth ex. currency (non-GAAP) of 18.0%
- Organic sales growth (non-GAAP) of 12.7%
- Raised FY 2022 EPS guidance
- Reported EPS of $9.35 to $9.75 (previously $9.25 to $9.65)
- Adjusted EPS of $9.45 to $9.85 (previously $9.35 to $9.75)
Avery Dennison Corporation (NYSE:AVY) today announced
preliminary, unaudited results for its first quarter ended April 2,
2022. Non-GAAP financial measures referenced in this document are
reconciled to GAAP in the attached financial schedules. Unless
otherwise indicated, comparisons are to the same period in the
prior year.
“We once again delivered strong financial results amidst a
challenging environment, with earnings ahead of expectations,” said
Mitch Butier, Avery Dennison chairman and CEO.
“Our strong performance comes at a difficult time as COVID-19
continues, supply chains remain tight and inflationary pressures
persist. Despite these challenges, we have raised our outlook and
we continue to expect strong top- and bottom-line growth for the
year,” said Butier. “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.
“Once again, I want to thank our entire team for their tireless
efforts to keep one another safe while continuing to deliver for
our customers during this challenging period. The team continues to
raise their game each quarter, to address the unique challenges at
hand.”
First Quarter 2022 Results by
Segment
Label and Graphic Materials
- Reported sales increased 8% to $1.5 billion. Sales were up 12%
ex. currency and 12% on an organic basis.
- Label and Packaging Materials sales were up low-double digits
on an organic basis, with strong growth in both high value product
categories and the base business.
- Sales increased by high-single digits organically in the
combined Graphics and Reflective Solutions businesses.
- On an organic basis, sales were up high teens in North America
and Western Europe and low-to-mid single digits in emerging
markets.
- Reported operating margin decreased 240 basis points to 14.0%.
Adjusted EBITDA margin (non-GAAP) decreased 280 basis points to
15.6%, largely driven by the net impact of pricing, freight, and
raw material costs. Adjusted EBITDA margin increased 110 basis
points sequentially.
- The higher revenue base from price increases alone, with no
corresponding incremental EBITDA as they offset inflation, reduced
margin by ~210 basis points.
- Inflation remains persistent in our materials businesses; we
are anticipating roughly 20% inflation in 2022 compared to prior
year.
Retail Branding and Information Solutions
- Reported sales increased 41% to $679 million. Sales were up 43%
ex. currency and 20% on an organic basis, reflecting strong growth
in both the high value product categories and the base business.
- Intelligent Labels was up over 20% organically.
- Reported operating margin increased 90 basis points to 13.3%.
Adjusted EBITDA margin increased 240 basis points to 19.1%, as the
benefits from higher organic volume and acquisitions were partially
offset by growth investments and higher employee-related
costs.
- The Vestcom business is achieving our acquisition
objectives.
Industrial and Healthcare Materials
- Reported sales decreased 1% to $190 million. Sales were up 1%
ex. currency and 1% on an organic basis, reflecting a low-single
digit decrease in industrial categories and a low-double digits
increase in healthcare categories.
- Reported operating margin decreased 410 basis points to 8.2%.
Adjusted EBITDA margin decreased 410 basis points to 11.8% driven
by lower volume/mix and the net impact of pricing, freight, and raw
material costs.
- The higher revenue base from price increases alone, with no
corresponding incremental EBITDA as they offset inflation, reduced
margin by ~120 basis points.
Other
Balance Sheet and Capital Deployment
During the first quarter of the year, the company deployed $33
million for acquisitions and returned $208 million in cash to
shareholders through a combination of share repurchases and
dividends, up from $107 million compared to last year. The company
repurchased 0.8 million shares at an aggregate cost of $152
million. Net of dilution from long-term incentive awards, the
company’s share count at the end of the quarter was down 1.2
million compared to the same time last year.
The company’s balance sheet remains strong, with ample capacity
to continue executing our long-term capital allocation strategy.
Net debt to adjusted EBITDA (non-GAAP) was 2.35 at the end of the
first quarter.
Income Taxes
The company’s reported first quarter effective tax rate was
26.5%. The adjusted tax rate (non-GAAP) for the quarter was 25.6%,
which is also the company’s current expectation for its full-year
adjusted tax rate.
Cost Reduction Actions
In 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
$1 million.
Guidance
In its supplemental presentation materials, “First Quarter 2022
Financial Review and Analysis,” the company provides a list of
factors that it believes will contribute to its 2022 financial
results. Based on the factors listed and other assumptions, the
company has raised its guidance range for 2022 reported earnings
per share from $9.25 to $9.65 to $9.35 to $9.75.
Excluding an estimated $0.10 per share related to restructuring
charges and other items, the company’s guidance range for adjusted
earnings per share has been raised from $9.35 to $9.75 to $9.45 to
$9.85.
For more details on the company’s results, see the summary
tables accompanying this news release, as well as the supplemental
presentation materials, “First Quarter 2022 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 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. The company employs approximately 36,000
employees in more than 50 countries. Reported sales in 2021 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. Forward-looking statements also include
those related to the acquisition of CB Velocity Holdings, LLC
(“Vestcom”), including its effect on our long-term targets and
future financial results.
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 and/or foreign
currency fluctuations from global economic conditions, political
uncertainty, changes in environmental standards and governmental
regulations, including as a result of COVID-19; (ii) the
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; and (v) the
execution and integration of acquisitions, including our
acquisition of Vestcom.
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:
- COVID-19
- International Operations – worldwide and local economic and
market conditions; changes in political conditions, including 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, including our acquisition of Vestcom; 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; and collection of receivables
from customers
- 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 2021 Form 10-K, filed
with the Securities and Exchange Commission on February 23,
2022.
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
First Quarter Financial Summary - Preliminary,
unaudited (In millions, except % and per share amounts)
1Q 1Q % Sales Change vs.
P/Y
2022
2021
Reported Ex. Currency Organic (a) (b) Net sales, by segment: Label
and Graphic Materials
$1,480.2
$1,377.0
7.5%
11.5%
11.8%
Retail Branding and Information Solutions
679.0
482.7
40.7%
42.8%
20.0%
Industrial and Healthcare Materials
190.1
191.6
(0.8%)
1.2%
0.5%
Total net sales
$2,349.3
$2,051.3
14.5%
18.0%
12.7%
As Reported (GAAP) Adjusted Non-GAAP (c)
1Q 1Q %
% of Sales
1Q 1Q %
% of Sales
2022
2021
Change
2022
2021
2022
2021
Change
2022
2021
Operating income (loss) / operating margins before interest, other
non-operating expense (income), and taxes, by segment: Label and
Graphic Materials
$207.2
$226.2
14.0%
16.4%
$204.0
$224.3
13.8%
16.3%
Retail Branding and Information Solutions
90.3
60.0
13.3%
12.4%
91.9
62.1
13.5%
12.9%
Industrial and Healthcare Materials
15.6
23.5
8.2%
12.3%
15.6
23.6
8.2%
12.3%
Corporate expense (d)
(25.2)
(25.9)
(25.2)
(25.3)
Total operating income / operating margins before interest, other
non-operating expense (income), and taxes
$287.9
$283.8
1%
12.3%
13.8%
$286.3
$284.7
1%
12.2%
13.9%
Interest expense
$19.6
$16.2
$19.6
$16.2
Other non-operating expense (income), net (e)
($1.4)
($1.3)
($1.4)
($1.7)
Income before taxes
$269.7
$268.9
---
11.5%
13.1%
$268.1
$270.2
(1%)
11.4%
13.2%
Provision for (benefit from) income taxes
$71.5
$58.1
$68.6
$67.6
Equity method investment (losses) gains
---
($1.3)
---
($1.3)
Net income
$198.2
$209.5
(5%)
8.4%
10.2%
$199.5
$201.3
(1%)
8.5%
9.8%
Net income per common share, assuming dilution
$2.39
$2.50
(4%)
$2.40
$2.40
---
Free Cash Flow (f)
$73.3
$182.0
See accompanying schedules A-4 to A-9 for reconciliations from GAAP
to non-GAAP financial measures.
(a)
Sales change ex. currency refers to the increase or decrease in net
sales, excluding the estimated impact of foreign currency
translation and the reclassification of sales between segments,
and, where applicable, an extra week in our fiscal year and the
calendar shift resulting from the extra week in the prior fiscal
year and currency adjustment for transitional reporting of highly
inflationary economies. The estimated impact of foreign currency
translation is calculated on a constant currency basis, with prior
period results translated at current period average exchange rates
to exclude the effect of currency fluctuations.
(b)
Organic sales change refers to sales change ex. currency, excluding
the estimated impact of acquisitions and product line divestitures.
(c)
Excludes impact of restructuring charges and other items.
(d)
As reported "Corporate expense" for the first quarter of 2021
includes severance and related costs of $.6.
(e)
As reported "Other non-operating expense (income), net" for the
first quarter of 2021 includes pension plan settlement loss of $.4.
(f)
Free cash flow refers to cash flow provided by operating
activities, less payments for property, plant and equipment,
software and other deferred charges, plus proceeds from sales of
property, plant and equipment, plus (minus) net proceeds from
insurance and sales (purchases) of investments. Free cash flow is
also adjusted for, where applicable, certain acquisition-related
transaction costs.
A-1
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per
share amounts)
(UNAUDITED)
Three Months Ended
Apr. 2, 2022
Apr. 3, 2021
Net sales $
2,349.3
$
2,051.3
Cost of products sold
1,708.0
1,454.3
Gross profit
641.3
597.0
Marketing, general and administrative expense
355.0
312.3
Other expense (income), net(1)
(1.6
)
0.9
Interest expense
19.6
16.2
Other non-operating expense (income), net(2)
(1.4
)
(1.3
)
Income before taxes
269.7
268.9
Provision for (benefit from) income taxes
71.5
58.1
Equity method investment (losses) gains
---
(1.3
)
Net income $
198.2
$
209.5
Per share amounts: Net income per common share, assuming
dilution $
2.39
$
2.50
Weighted average number of common shares outstanding,
assuming dilution
83.0
83.9
(1)
"Other expense (income), net" for the first quarter of 2022
includes gain on venture investment of $3.7, partially offset by
outcome of legal proceedings of $1, severance and related costs of
$.9, and transaction and related costs of $.2. "Other expense
(income), net" for the first quarter of 2021 includes severance and
related costs of $2.4, asset impairment and lease cancellation
charges of $.5, outcome of legal proceedings of $2.1, and
transaction and related costs of $.7, partially offset by gain on
sale of product line of $4.8.
(2)
"Other non-operating expense (income), net" for the first quarter
of 2021 includes pension plan settlement loss of $.4.
A-2
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED BALANCE SHEETS (In millions)
(UNAUDITED)
ASSETS
Apr. 2, 2022
Apr. 3, 2021
Current assets: Cash and cash equivalents $
147.1
$
328.0
Trade accounts receivable, net
1,551.4
1,301.4
Inventories
960.9
786.7
Other current assets
234.9
216.3
Total current assets
2,894.3
2,632.4
Property, plant and equipment, net
1,477.5
1,329.0
Goodwill and other intangibles resulting from business
acquisitions, net
2,800.8
1,363.5
Deferred tax assets
128.8
201.4
Other assets
837.4
746.9
$
8,138.8
$
6,273.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings and
current portion of long-term debt and finance leases $
494.9
$
116.9
Accounts payable
1,372.5
1,178.0
Other current liabilities
855.8
763.6
Total current liabilities
2,723.2
2,058.5
Long-term debt and finance leases
2,773.8
2,025.9
Other long-term liabilities
709.3
606.9
Shareholders' equity: Common stock
124.1
124.1
Capital in excess of par value
844.6
845.8
Retained earnings
4,023.2
3,504.4
Treasury stock at cost
(2,799.4
)
(2,546.3
)
Accumulated other comprehensive loss
(260.0
)
(346.1
)
Total shareholders' equity
1,932.5
1,581.9
$
8,138.8
$
6,273.2
A-3
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)
(UNAUDITED)
Three Months Ended
Apr. 2, 2022
Apr. 3, 2021
Operating Activities: Net income $
198.2
$
209.5
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
43.8
40.0
Amortization
28.2
14.4
Provision for credit losses and sales returns
16.1
8.9
Stock-based compensation
11.1
9.9
Pension plan settlement loss
---
0.4
Deferred taxes and other non-cash taxes
1.9
1.5
Other non-cash expense and loss (income and gain), net
6.5
2.7
Changes in assets and liabilities and other adjustments
(179.6
)
(78.0
)
Net cash provided by operating activities
126.2
209.3
Investing Activities: Purchases of property, plant
and equipment
(49.7
)
(25.2
)
Purchases of software and other deferred charges
(5.6
)
(2.3
)
Proceeds from sales of property, plant and equipment
0.3
0.7
Proceeds from insurance and sales (purchases) of investments, net
1.8
(0.5
)
Proceeds from sale of product line
---
6.7
Payments for acquisitions, net of cash acquired, and investments in
businesses
(33.4
)
(30.6
)
Net cash used in investing activities
(86.6
)
(51.2
)
Financing Activities: Net increase (decrease) in
borrowings with maturities of three months or less
179.4
53.8
Repayments of long-term debt and finance leases
(1.9
)
(1.5
)
Dividends paid
(56.2
)
(51.6
)
Share repurchases
(151.5
)
(55.6
)
Net (tax withholding) proceeds related to stock-based compensation
(24.9
)
(25.3
)
Net cash used in financing activities
(55.1
)
(80.2
)
Effect of foreign currency translation on cash balances
(0.1
)
(2.2
)
Increase (decrease) in cash and cash equivalents
(15.6
)
75.7
Cash and cash equivalents, beginning of year
162.7
252.3
Cash and cash equivalents, end of period $
147.1
$
328.0
A-4
Reconciliation of Non-GAAP Financial
Measures to GAAP
We report our financial results in conformity with accounting
principles generally accepted in the United States of America, or
GAAP, and also communicate with investors using certain non-GAAP
financial measures. These non-GAAP financial measures are not in
accordance with, nor are they a substitute for or superior to, the
comparable GAAP financial measures. These non-GAAP financial
measures are intended to supplement the presentation of our
financial results that are prepared in accordance with GAAP. Based
on feedback from investors and financial analysts, we believe that
the supplemental non-GAAP financial measures we provide are useful
to their assessments of our performance and operating trends, as
well as liquidity.
Our non-GAAP financial measures exclude the impact of certain
events, activities or strategic decisions. The accounting effects
of these events, activities or decisions, which are included in the
GAAP financial measures, may make it difficult to assess our
underlying performance in a single period. By excluding the
accounting effects, positive or negative, of certain items (e.g.,
restructuring charges, outcomes of certain legal proceedings,
certain effects of strategic transactions and related costs, losses
from debt extinguishments, gains or losses from curtailment or
settlement of pension obligations, gains or losses on sales of
certain assets, gains or losses on venture investments and other
items), we believe that we are providing meaningful supplemental
information that facilitates an understanding of our core operating
results and liquidity measures. While some of the items we exclude
from GAAP financial measures recur, they tend to be disparate in
amount, frequency, or timing.
We use these non-GAAP financial measures internally to evaluate
trends in our underlying performance, as well as to facilitate
comparison to the results of competitors for quarters and
year-to-date periods, as applicable.
We use the non-GAAP financial measures described below in the
accompanying news release and presentation.
Sales change ex. currency refers to the increase or decrease in
net sales, excluding the estimated impact of foreign currency
translation and the reclassification of sales between segments,
and, where applicable, an extra week in our fiscal year and the
calendar shift resulting from the extra week in the prior fiscal
year and currency adjustment for transitional reporting of highly
inflationary economies. The estimated impact of foreign currency
translation is calculated on a constant currency basis, with prior
period results translated at current period average exchange rates
to exclude the effect of currency fluctuations.
Organic sales change refers to sales change ex. currency,
excluding the estimated impact of acquisitions and product line
divestitures.
We believe that sales change ex. currency and organic sales
change assist investors in evaluating the sales change from the
ongoing activities of our businesses and enhance their ability to
evaluate our results from period to period.
Adjusted operating income refers to income before taxes;
interest expense; other non-operating expense (income), net; and
other expense (income), net.
Adjusted EBITDA refers to adjusted operating income before
depreciation and amortization.
Adjusted operating margin refers to adjusted operating income as
a percentage of net sales.
Adjusted EBITDA margin refers to adjusted EBITDA as a percentage
of net sales.
Adjusted tax rate refers to the projected full-year GAAP tax
rate, adjusted to exclude certain unusual or infrequent events that
are expected to significantly impact that rate, such as effects of
certain discrete tax planning actions, impacts related to the
enactment of the U.S. Tax Cuts and Jobs Act ("TCJA"), where
applicable, and other items.
Adjusted net income refers to income before taxes, tax-effected
at the adjusted tax rate, and adjusted for tax-effected
restructuring charges and other items.
Adjusted net income per common share, assuming dilution
(adjusted EPS) refers to adjusted net income divided by the
weighted average number of common shares outstanding, assuming
dilution.
We believe that adjusted operating margin, adjusted EBITDA
margin, adjusted net income, and adjusted EPS assist investors in
understanding our core operating trends and comparing our results
with those of our competitors.
Net debt to adjusted EBITDA ratio refers to total debt
(including finance leases) less cash and cash equivalents, divided
by adjusted EBITDA for the last twelve months. We believe that the
net debt to adjusted EBITDA ratio assists investors in assessing
our leverage position.
Free cash flow refers to cash flow provided by operating
activities, less payments for property, plant and equipment,
software and other deferred charges, plus proceeds from sales of
property, plant and equipment, plus (minus) net proceeds from
insurance and sales (purchases) of investments. Free cash flow is
also adjusted for, where applicable, certain acquisition-related
transaction costs. We believe that free cash flow assists investors
by showing the amount of cash we have available for debt
reductions, dividends, share repurchases, and acquisitions.
Reconciliations are provided in accordance with Regulations G
and S-K and reconcile our non-GAAP financial measures with the most
directly comparable GAAP financial measures.
A-5
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION
FROM GAAP TO NON-GAAP FINANCIAL MEASURES (In millions,
except % and per share amounts)
(UNAUDITED)
Three Months Ended
Apr. 2, 2022
Apr. 3, 2021
Reconciliation from GAAP to Non-GAAP operating
margins: Net sales $
2,349.3
$
2,051.3
Income before taxes $
269.7
$
268.9
Income before taxes as a percentage of net sales
11.5
%
13.1
%
Adjustments: Interest expense $
19.6
$
16.2
Other non-operating expense (income), net
(1.4
)
(1.3
)
Operating income before interest expense, other non-operating
expense (income), and taxes $
287.9
$
283.8
Operating margins
12.3
%
13.8
%
Income before taxes $
269.7
$
268.9
Adjustments: Restructuring charges: Severance and related costs
0.9
2.4
Asset impairment and lease cancellation charges
---
0.5
Outcomes of legal proceedings
1.0
2.1
Transaction and related costs
0.2
0.7
Gain on venture investment
(3.7
)
---
Gain on sale of product line
---
(4.8
)
Interest expense
19.6
16.2
Other non-operating expense (income), net
(1.4
)
(1.3
)
Adjusted operating income (non-GAAP) $
286.3
$
284.7
Adjusted operating margins (non-GAAP)
12.2
%
13.9
%
Reconciliation from GAAP to Non-GAAP net income: As
reported net income $
198.2
$
209.5
Adjustments: Restructuring charges and other items(1)
(1.6
)
0.9
Pension plan settlement loss
---
0.4
Tax effect on restructuring charges and other items and impact of
adjusted tax rate
2.9
(9.5
)
Adjusted net income (non-GAAP) $
199.5
$
201.3
(1)
Includes pretax restructuring
charges, outcomes of legal proceedings, transaction and related
costs, gain on venture investment, and gain on sale of product
line.
A-5 (continued)
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION
FROM GAAP TO NON-GAAP FINANCIAL MEASURES (In millions,
except % and per share amounts)
(UNAUDITED)
Three Months Ended
Apr. 2, 2022
Apr. 3, 2021
Reconciliation from GAAP to Non-GAAP net income per
common share: As reported net income per common share, assuming
dilution $
2.39
$
2.50
Adjustments per common share, net of tax: Restructuring charges and
other items(1)
(0.02
)
0.01
Tax effect on restructuring charges and other items and impact of
adjusted tax rate
0.03
(0.11
)
Adjusted net income per common share, assuming dilution
(non-GAAP) $
2.40
$
2.40
Weighted average number of common shares outstanding, assuming
dilution
83.0
83.9
Our adjusted tax rate was 25.6% and 25% for the three months ended
April 2, 2022 and April 3, 2021, respectively.
(1) Includes pretax restructuring
charges, outcomes of legal proceedings, transaction and related
costs, gain on venture investment, and gain on sale of product
line.
(UNAUDITED)
Three Months Ended
Apr. 2, 2022
Apr. 3, 2021
Reconciliation of free cash flow: Net cash provided
by operating activities $
126.2
$
209.3
Purchases of property, plant and equipment
(49.7
)
(25.2
)
Purchases of software and other deferred charges
(5.6
)
(2.3
)
Proceeds from sales of property, plant and equipment
0.3
0.7
Proceeds from insurance and sales (purchases) of investments, net
1.8
(0.5
)
Payments for certain acquisition-related transaction costs
0.3
---
Free cash flow (non-GAAP) $
73.3
$
182.0
A-6
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
First Quarter Ended
NET SALES
OPERATING INCOME (LOSS)
OPERATING MARGINS
2022
2021
2022
2021
2022
2021
Label and Graphic Materials
$
1,480.2
$
1,377.0
$
207.2
$
226.2
14.0
%
16.4
%
Retail Branding and Information Solutions
679.0
482.7
90.3
60.0
13.3
%
12.4
%
Industrial and Healthcare Materials
190.1
191.6
15.6
23.5
8.2
%
12.3
%
Corporate Expense
N/A
N/A
(25.2
)
(25.9
)
N/A
N/A
TOTAL FROM OPERATIONS
$
2,349.3
$
2,051.3
$
287.9
$
283.8
12.3
%
13.8
%
RECONCILIATION FROM GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION
First Quarter Ended
2022
2021
2022
2021
Label and Graphic Materials
Operating income and margins, as reported
$
207.2
$
226.2
14.0
%
16.4
%
Adjustments: Restructuring charges: Severance and related costs
0.5
0.6
---
---
Asset impairment charges
---
0.1
---
---
Outcome of legal proceedings
---
2.1
---
0.2
%
Transaction and related costs
---
0.1
---
---
Gain on venture investment
(3.7
)
---
(0.2
%)
---
Gain on sale of product line
---
(4.8
)
---
(0.3
%)
Adjusted operating income and margins (non-GAAP)
$
204.0
$
224.3
13.8
%
16.3
%
Depreciation and amortization
27.6
29.0
1.8
%
2.1
%
Adjusted EBITDA and margins (non-GAAP)
$
231.6
$
253.3
15.6
%
18.4
%
Retail Branding and Information
Solutions Operating income and margins, as reported
$
90.3
$
60.0
13.3
%
12.4
%
Adjustments: Restructuring charges: Severance and related costs
0.4
1.2
0.1
%
0.3
%
Asset impairment and lease cancellation charges
---
0.4
---
0.1
%
Outcome of legal proceedings
1.0
---
0.1
%
---
Transaction and related costs
0.2
0.2
---
---
Loss on sale of asset
---
0.3
---
0.1
%
Adjusted operating income and margins (non-GAAP)
$
91.9
$
62.1
13.5
%
12.9
%
Depreciation and amortization
37.5
18.6
5.6
%
3.8
%
Adjusted EBITDA and margins (non-GAAP)
$
129.4
$
80.7
19.1
%
16.7
%
Industrial and Healthcare
Materials Operating income and margins, as reported
$
15.6
$
23.5
8.2
%
12.3
%
Adjustments: Transaction and related costs
---
0.4
---
0.2
%
Gain on sale of assets
---
(0.3
)
---
(0.2
%)
Adjusted operating income and margins (non-GAAP)
$
15.6
$
23.6
8.2
%
12.3
%
Depreciation and amortization
6.9
6.8
3.6
%
3.6
%
Adjusted EBITDA and margins (non-GAAP)
$
22.5
$
30.4
11.8
%
15.9
%
A-7
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION Reconciliation of Adjusted EBITDA Margins
(In millions, except %) (UNAUDITED)
QTD
Label and Graphic Materials
1Q22
1Q21
1Q20
4Q21
Net sales
$
1,480.2
$
1,377.0
$
1,173.5
$
1,331.4
Operating income before interest expense, other non-operating
expense (income) and taxes, as reported
$
207.2
$
226.2
$
172.5
$
162.5
Operating margins, as reported
14.0
%
16.4
%
14.7
%
12.2
%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
0.5
$
0.6
$
0.4
$
1.1
Asset impairment and lease cancellation charges
---
0.1
---
0.9
Other items
(3.7
)
(2.6
)
0.7
0.1
Adjusted operating income (non-GAAP)
$
204.0
$
224.3
$
173.6
$
164.6
Adjusted operating margins (non-GAAP)
13.8
%
16.3
%
14.8
%
12.4
%
Depreciation and amortization
$
27.6
$
29.0
$
26.1
$
27.8
Adjusted EBITDA (non-GAAP)
$
231.6
$
253.3
$
199.7
$
192.4
Adjusted EBITDA margins (non-GAAP)
15.6
%
18.4
%
17.0
%
14.5
%
Retail Branding and Information
Solutions
1Q22
1Q21
1Q20
4Q21
Net sales
$
679.0
$
482.7
$
401.9
$
659.1
Operating income before interest expense, other non-operating
expense (income) and taxes, as reported
$
90.3
$
60.0
$
30.9
$
96.6
Operating margins, as reported
13.3
%
12.4
%
7.7
%
14.7
%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
0.4
$
1.2
$
1.5
$
3.5
Asset impairment and lease cancellation charges
---
0.4
---
0.3
Other items
1.2
0.5
1.8
(11.4
)
Adjusted operating income (non-GAAP)
$
91.9
$
62.1
$
34.2
$
89.0
Adjusted operating margins (non-GAAP)
13.5
%
12.9
%
8.5
%
13.5
%
Depreciation and amortization
$
37.5
$
18.6
$
14.9
$
37.9
Adjusted EBITDA (non-GAAP)
$
129.4
$
80.7
$
49.1
$
126.9
Adjusted EBITDA margins (non-GAAP)
19.1
%
16.7
%
12.2
%
19.3
%
Industrial and Healthcare
Materials
1Q22
1Q21
1Q20
4Q21
Net sales
$
190.1
$
191.6
$
147.6
$
192.7
Operating income before interest expense, other non-operating
expense (income) and taxes, as reported
$
15.6
$
23.5
$
14.9
$
16.9
Operating margins, as reported
8.2
%
12.3
%
10.1
%
8.8
%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
---
$
---
$
0.5
$
0.8
Asset impairment charges
---
---
---
---
Other items
---
0.1
---
0.3
Adjusted operating income (non-GAAP)
$
15.6
$
23.6
$
15.4
$
18.0
Adjusted operating margins (non-GAAP)
8.2
%
12.3
%
10.4
%
9.3
%
Depreciation and amortization
$
6.9
$
6.8
$
6.5
$
6.9
Adjusted EBITDA (non-GAAP)
$
22.5
$
30.4
$
21.9
$
24.9
Adjusted EBITDA margins (non-GAAP)
11.8
%
15.9
%
14.8
%
12.9
%
Corporate expense
1Q22
1Q21
1Q20
4Q21
Corporate expense, as reported
$
(25.2
)
$
(25.9
)
$
(19.1
)
$
(12.5
)
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
---
$
0.6
$
---
$
---
Other items
---
---
---
(6.3
)
Corporate expense (non-GAAP)
$
(25.2
)
$
(25.3
)
$
(19.1
)
$
(18.8
)
Total Company
1Q22
1Q21
1Q20
4Q21
Net sales
$
2,349.3
$
2,051.3
$
1,723.0
$
2,183.2
Operating income before interest expense, other non-operating
expense (income) and taxes, as reported
$
287.9
$
283.8
$
199.2
$
263.5
Operating margins, as reported
12.3
%
13.8
%
11.6
%
12.1
%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
0.9
$
2.4
$
2.4
$
5.4
Asset impairment and lease cancellation charges
---
0.5
---
1.2
Other items
(2.5
)
(2.0
)
2.5
(17.3
)
Adjusted operating income (non-GAAP)
$
286.3
$
284.7
$
204.1
$
252.8
Adjusted operating margins (non-GAAP)
12.2
%
13.9
%
11.8
%
11.6
%
Depreciation and amortization
$
72.0
$
54.4
$
47.5
$
72.6
Adjusted EBITDA (non-GAAP)
$
358.3
$
339.1
$
251.6
$
325.4
Adjusted EBITDA margins (non-GAAP)
15.3
%
16.5
%
14.6
%
14.9
%
A-8
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION Reconciliation of Adjusted EBITDA Margins and
Net Debt to Adjusted EBITDA (In millions, except %)
(UNAUDITED)
QTD
Total Company
2Q21
3Q21
4Q21
1Q22
Net sales
$
2,102.0
$
2,071.8
$
2,183.2
$
2,349.3
Operating income before interest expense, other non-operating
expense (income) and taxes, as reported
$
269.9
$
241.5
$
263.5
$
287.9
Operating margins, as reported
12.8
%
11.7
%
12.1
%
12.3
%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
1.6
$
1.1
$
5.4
$
0.9
Asset impairment and lease cancellation charges
0.1
1.3
1.2
---
Other items
(2.3
)
13.6
(17.3
)
(2.5
)
Adjusted operating income (non-GAAP)
$
269.3
$
257.5
$
252.8
$
286.3
Adjusted operating margins (non-GAAP)
12.8
%
12.4
%
11.6
%
12.2
%
Depreciation and amortization
$
55.2
$
61.9
$
72.6
$
72.0
Adjusted EBITDA (non-GAAP)
$
324.5
$
319.4
$
325.4
$
358.3
Adjusted EBITDA margins (non-GAAP)
15.4
%
15.4
%
14.9
%
15.3
%
Total Debt
$
3,268.7
Less: Cash and cash equivalents
147.1
Net Debt
$
3,121.6
Net Debt to Adjusted EBITDA LTM* (non-GAAP)
2.35
*LTM = Last twelve months (2Q21 to 1Q22)
A-9
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (UNAUDITED) First Quarter
2022 TotalCompany Label andGraphicMaterials RetailBranding
andInformationSolutions Industrial andHealthcareMaterials
Reconciliation from GAAP to Non-GAAP sales change Reported
net sales change
14.5
%
7.5
%
40.7
%
(0.8
%)
Reclassification of sales between segments
---
0.1
%
(0.3
%)
---
Foreign currency translation
3.4
%
3.9
%
2.5
%
2.0
%
Sales change ex. currency (non-GAAP)(1)
18.0
%
11.5
%
42.8
%
1.2
%
Acquisitions
(5.3
%)
0.3
%
(22.8
%)
(0.7
%)
Organic sales change (non-GAAP)(1)
12.7
%
11.8
%
20.0
%
0.5
%
(1) Totals may not sum due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220425005907/en/
Media Relations: Kristin Robinson (626) 304-4592
kristin.robinson@averydennison.com Investor Relations: John
Eble (440) 534-6290 john.eble@averydennison.com
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