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Avery Dennison Beats Q1 Earnings Estimates, Ups 2015 View

Thursday, April 30, 2015

Press release from the issuing company

GLENDALE, Calif. - Avery Dennison Corporation today announced preliminary, unaudited results for its first quarter ended April 4, 2015. 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.

“We’re off to a good start, with earnings above our expectations,” said Dean Scarborough, Avery Dennison chairman and CEO. "Sales were up 3 percent on an organic basis, reflecting another quarter of solid growth for Pressure-sensitive Materials, and strong sequential improvement for Retail Branding and Information Solutions. Despite the headwind from currency translation, we delivered significant growth in adjusted earnings, and expanded our operating margins through ongoing productivity initiatives and improved product mix.

“We have raised our outlook for full-year adjusted earnings per share, as we expect additional productivity improvement will offset the incremental pressure we’ve seen from a stronger dollar,” Scarborough added. “I am confident that the consistent execution of our strategies for profitable growth, combined with our continued focus on productivity and capital discipline, will enable us to meet our long-term goals."

For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “First Quarter 2015 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.

First Quarter 2015 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 prior 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 sales increased approximately 4 percent. Within the segment, Label and Packaging Materials increased low-single digits. Combined sales of Graphics and Performance Tapes increased mid-single digits.
  • Operating margin improved 120 basis points to 11 percent as the benefit of favorable product mix and higher volume, combined with productivity, more than offset higher employee-related costs and increased restructuring charges. Adjusted operating margin improved 160 basis points.

Retail Branding and Information Solutions (RBIS)

  • RBIS sales were up approximately 2 percent.
  • Operating margin improved 60 basis points to 4.9 percent as the benefit of productivity initiatives and higher volume more than offset higher employee-related costs. Adjusted operating margin also improved 60 basis points.


Share Repurchases

The company repurchased 0.6 million shares in the first quarter of 2015 at an aggregate cost of $34 million.

Income Taxes

The first quarter effective tax rate was 28 percent. The adjusted tax rate for the first quarter was 34 percent, consistent with the anticipated full year tax rate in the low to mid-thirty percent range.

Cost Reduction Actions

In the first quarter, the company realized approximately $10 million in savings from restructuring, net of transition costs, and incurred restructuring charges of approximately $14 million, nearly all of which represent cash costs.


In its supplemental presentation materials, “First Quarter 2015 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2015 financial results. Based on the factors listed and other assumptions, the company now expects 2015 earnings per share of $2.85 to $3.05. Excluding an estimated $0.40 per share for restructuring costs and other items, the company now expects adjusted (non-GAAP) earnings per share of $3.25 to $3.45.

Note: Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.


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