Avery Dennison Beats Q3 Profit Forecast
Monday, October 27, 2014
GLENDALE, Calif. - Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its third quarter ended September 27, 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.
“Third quarter EPS was in line with our expectations, despite a modest decline in sales in Retail Branding and Information Solutions, and higher-than-expected transition costs associated with the consolidation of Pressure-sensitive Materials operations in Europe,” said Dean A. Scarborough, Avery Dennison chairman, president and CEO.
“We expect to deliver improved operational performance in the fourth quarter, with a reduction in the transition costs impacting PSM,” said Scarborough. “However, given recent top-line trends and headwinds from currency, we have modestly lowered our guidance for full-year adjusted earnings per share growth to approximately 13 percent. Meanwhile, we continue to execute our disciplined capital allocation strategy, reflected in the increased level of share repurchase during the past quarter.”
For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “Third 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.
Third 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)
- PSM segment sales increased approximately 5 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes also increased mid-single digits.
- Operating margin declined 10 basis points to 10.1 percent as the net impact of raw material input costs and pricing, transition costs in Europe, and country and product mix roughly offset the benefit of higher volume and productivity. Wage inflation was largely offset by lower incentive compensation. Adjusted operating margin declined 20 basis points.
Retail Branding and Information Solutions (RBIS)
- RBIS segment sales were down approximately 2 percent, reflecting softer demand from U.S.-based apparel retailers and brands.
- Operating margin improved 220 basis points to 5.4 percent as the benefit of productivity, lower restructuring costs, and lower incentive compensation more than offset the impact of wage inflation and lower volume. Adjusted operating margin improved 80 basis points.