Avery Dennison Announces Second Quarter 2015 Results
Thursday, July 30, 2015
Press release from the issuing company
GLENDALE, Calif. - Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its second quarter ended July 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.
“I’m pleased to report another solid quarter of progress against our long-term strategic and financial objectives,” said Dean Scarborough, Avery Dennison chairman and CEO. "Sales were up 4 percent on an organic basis, as exceptional performance in Pressure-sensitive Materials offset a decline in Retail Branding and Information Solutions. Despite the headwind from currency translation, we delivered mid-teens growth in adjusted earnings per share, continued to expand adjusted operating margin, and generated significantly higher cash flow compared to last year.
“Pressure-sensitive Materials delivered great results through the consistent execution of our strategy, leveraging our scale and strengths in innovation, quality, and service across the entire portfolio,” Scarborough added. “Results in Retail Branding and Information Solutions were disappointing. Actions are underway to build a better foundation for long-term profitable growth and value creation in all segments of this business.”
“Overall, I remain confident that the consistent execution of our strategies, including the turnaround in RBIS, 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, “Second 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.
Second 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)
Retail Branding and Information Solutions (RBIS)
The company repurchased 0.5 million shares in the second quarter of 2015 at an aggregate cost of $28 million.
The second quarter effective tax rate was 36 percent. The adjusted tax rate for the second quarter was 34 percent, consistent with the anticipated full year tax rate in the low to mid-thirty percent range.
Cost Reduction Actions and Product Line Divestiture
In the second quarter, the company realized approximately $18 million in savings from restructuring, net of transition costs, and incurred restructuring charges of approximately $20 million, most of which represent cash costs.
The company completed the sale of its Europe-based industrial printer product line that resulted in a pre-tax loss which, when combined with related exit costs, totaled approximately $8 million in the second quarter. Full year sales for the business in 2014 were approximately $70 million, with a negligible contribution to operating income.
In its supplemental presentation materials, “Second 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 has reduced its previous guidance for 2015 earnings per share by $0.03 to $2.82 to $3.02, reflecting the loss on sale of a product line and related exit costs in the second quarter. Excluding an estimated $0.43 per share for restructuring costs and other items, the company continues to expect adjusted (non-GAAP) earnings per share of $3.25 to $3.45.
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