Avery Dennison Q2 Earnings Rise, Tops Estimates
Monday, July 28, 2014
Press release from the issuing company
GLENDALE, Calif. - Avery Dennison Corporation today announced preliminary, unaudited results for its second quarter ended June 28, 2014. All non-GAAP financial measures referenced in this document are reconciled to GAAP in the attached tables. Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations, and comparisons are to the same period in the prior year.
“Second quarter results were in line with our overall expectations for both sales and earnings,” said Dean Scarborough, Avery Dennison chairman, president and CEO.
“Pressure-sensitive Materials delivered better-than-expected sales growth, driven by strong volume growth inEurope and the emerging markets. Adjusted operating margin was back above 10 percent, within our long-term target range, and we are on track with our consolidation of operations in Europe,” Scarborough added. “While sales were down modestly for Retail Branding and Information Solutions, reflecting soft market conditions in the U.S., the RBIS team continued to make solid progress against its long-term margin improvement goal, and reported another quarter of strong earnings growth.
“I want to thank all our employees for their outstanding contributions to innovation, service excellence, and productivity improvement,” said Scarborough. “With two solid quarters under our belt, we have narrowed our range of guidance for full-year adjusted earnings per share growth to 12 to 16 percent. We look forward to continuing to deliver exceptional value for our customers, employees, and shareholders.”
For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “Second Quarter 2014 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.
Second Quarter 2014 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, product line exits, acquisitions and divestitures, and, where applicable, the extra week in the fiscal year. Adjusted operating margin refers to income before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
Retail Branding and Information Solutions (RBIS)
The company repurchased 3.1 million shares in the first half of 2014 at an aggregate cost of $153 million.
On July 1, 2013, the company completed the sale of its OCP and DES businesses.
The effective tax rates for the second quarter and year-to-date were 42 percent and 30 percent, respectively. The adjusted tax rate for both the second quarter and year-to-date was 33 percent.
Cost Reduction Actions
In the second quarter, the company realized approximately $10 million in savings from restructuring, net of transition costs related to the consolidation of PSM operations in Europe, and incurred restructuring costs of approximately $40 million. The company expects to incur cash restructuring costs of approximately $50 millionin 2014.
In its supplemental presentation materials, “Second Quarter 2014 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2014 financial results. Based on the factors listed and other assumptions, the company expects 2014 earnings per share from continuing operations of $2.65 to $2.75. Excluding an estimated $0.35 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $3.00 to $3.10.
Note: Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.
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