Highlights:
- 1Q21 Reported EPS of $2.50, up 56%
- Adjusted EPS (non-GAAP) of $2.40, up 45%
- 1Q21 Net sales increased 19.1% to $2.05 billion
- Sales growth ex. currency (non-GAAP) of 10.9%
- Organic sales growth (non-GAAP) of 8.8%
- Raised FY 2021 EPS guidance ranges
- Reported EPS range of $8.25 to $8.65 (previously $7.50 to
$7.90)
- Adjusted EPS range of $8.40 to $8.80 (previously $7.65 to
$8.05)
Avery Dennison Corporation (NYSE:AVY) today announced
preliminary, unaudited results for its first quarter ended April 3,
2021 and provided an update related to the impact of the COVID-19
pandemic on the company. Non-GAAP financial measures referenced in
this document are reconciled to GAAP in the attached tables. Unless
otherwise indicated, comparisons are to the same period in the
prior year.
“We are off to a strong start to the year, with earnings growth
well above expectations, driven by higher volume and productivity
gains across the portfolio,” said Mitch Butier, Avery Dennison
president and CEO.
“All three of our operating segments delivered strong sales
growth and significant margin expansion. Our strong performance
comes at a time when the global health crisis is resurging in many
parts of the world and supply chains are tightening. The current
environment further reinforces our determination to remain vigilant
in ensuring the health and well-being of our employees, delivering
for our customers, supporting our communities, and creating value
for our shareholders.
“We have raised our full-year outlook for adjusted earnings per
share, reflecting the strong performance in the first quarter, and
a higher organic growth assumption for the balance of the year,”
said Butier. “We continue to remain confident that the consistent
execution of our strategies will enable us to meet our long-term
goals for superior value creation for all our stakeholders."
“Once again, I want to thank our entire team for their tireless
efforts to keep one another safe while delivering for our customers
during this challenging period, bringing a whole new level of
agility and dedication to address the unique challenges at
hand.”
COVID-19/Operational
Update
Uncertainty surrounding the global health crisis remains
elevated as many parts of the world are experiencing a resurgence
in COVID-19 cases. The safety and well-being of employees has been
and will continue to be the company’s top priority. The company has
taken steps to ensure employee safety, quickly implementing
world-class safety protocols and continuing to adapt guidelines as
the pandemic evolves.
As supply chains remain tight, the company continues to actively
manage through a dynamic supply and demand environment. The company
is leveraging its global scale and working closely with customers
and suppliers to deliver industry-leading products and services.
The company continues to mitigate risk to keep supply chain
disruptions negligible and the team continues to demonstrate
agility and preparedness through robust scenario planning.
First Quarter 2021 Results by
Segment
Label and Graphic Materials
- Reported sales increased 17.3% to $1.38 billion. Sales were up
8.4% ex. currency and 7.6% on an organic basis.
- Label and Packaging Materials sales were up approximately 7%
from prior year on an organic basis, with strong growth in both the
high value product categories and the base business.
- Sales increased by approximately 9% organically in the combined
Graphics and Reflective Solutions businesses.
- On an organic basis, sales were up low-single digits in North
America and Western Europe, and up mid-teens in emerging
markets.
- Reported operating margin increased 170 basis points to 16.4%.
Adjusted operating margin increased 150 basis points to 16.3%, as
the benefits from higher volume/mix, lower receivables reserves and
productivity more than offset higher employee-related costs and the
net impact of pricing and raw material costs.
Retail Branding and Information Solutions
- Reported sales increased 20.1% to $483 million. Sales were up
15.0% ex. currency and 9.3% on an organic basis, reflecting strong
growth in both the high value categories and the base business.
- Intelligent Labels were up approximately 40% ex. currency with
the benefit of the Smartrac acquisition, and up approximately 20%
organically.
- Reported operating margin increased 470 basis points to 12.4%.
Adjusted operating margin increased 440 basis points to 12.9%, as
the benefits from higher volume, lower receivables reserves and
productivity more than offset higher employee-related costs and
growth investments.
Industrial and Healthcare Materials
- Reported sales increased 29.8% to $192 million. Sales were up
18.8% ex. currency and 16.3% on an organic basis, reflecting an
approximately 20% increase in industrial categories and a
low-single digit decline in healthcare categories.
- Reported operating margin increased 220 basis points to 12.3%.
Adjusted operating margin increased 190 basis points to 12.3%, as
the benefit from higher volume/mix more than offset higher
employee-related costs.
Other
Balance Sheet, Liquidity, and Capital Deployment
The company’s balance sheet remains strong, with ample
liquidity. The company deployed $31 million for acquisitions and
equity investments in the first quarter, including two strategic
acquisitions, JDC Solutions, Inc. in the IHM segment and ZippyYum,
LLC in the RBIS segment.
The company recently announced it raised its quarterly dividend
rate by 10%, following a 7% increase in 2020. Additionally, the
company repurchased 0.3 million shares in the first quarter at an
aggregate cost of $56 million. Net of dilution from long-term
incentive awards, the company’s share count at the end of the
quarter was down by 0.2 million compared to the same time last
year. During the first quarter, the company returned $107 million
in cash to shareholders through a combination of share repurchases
and dividends.
Income Taxes
The company’s first quarter effective tax rate was 21.6%. The
adjusted (non-GAAP) tax rate for the quarter was 25.0%, reflecting
the company’s current expectation for the full-year adjusted tax
rate.
Cost Reduction Actions
In the first quarter, the company realized approximately $19
million in pre-tax savings from restructuring, net of transition
costs, and incurred pre-tax restructuring charges of approximately
$3 million, the vast majority of which represents cash charges.
Outlook
In its supplemental presentation materials, “First Quarter 2021
Financial Review and Analysis,” the company provides a list of
factors that it believes will contribute to its 2021 financial
results. Based on the factors listed and other assumptions, the
company has raised its guidance range for 2021 reported earnings
per share from a range of $7.50 to $7.90 to a range of $8.25 to
$8.65. Excluding an estimated $0.15 per share related to
restructuring charges and other items, the company’s guidance for
adjusted earnings per share has been raised from a range of $7.65
to $8.05 to a range of $8.40 to $8.80.
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 2021 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. Headquartered in Glendale, California,
the company employs more than 32,000 employees in more than 50
countries. Reported sales in 2020 were $7.0 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. 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
the coronavirus/COVID-19 pandemic; (ii) competitors’ actions,
including pricing, expansion in key markets, and product offerings;
(iii) 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 (iv) the
execution and integration of acquisitions.
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; and
fluctuations in foreign currency exchange rates and other risks
associated with foreign operations, including in emerging
markets.
- Our Business – changes in our markets due to competitive
conditions, technological developments, environmental standards,
laws and regulations, and customer preferences; fluctuations in
demand affecting sales to customers; execution and integration of
acquisitions; selling prices; fluctuations in the cost and
availability of raw materials and energy; the impact of competitive
products and pricing; 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, including cyber-attacks or other intrusions to network
security; successful installation of new or upgraded information
technology systems; and data security breaches.
- Human Capital – recruitment and retention of employees;
fluctuations in employee benefit costs; and collective labor
arrangements.
- Our Indebtedness – credit risks; our ability to obtain adequate
financing arrangements and maintain access to capital; volatility
of financial markets; fluctuations in interest rates; 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 and impact of legal and regulatory
proceedings, including with respect to environmental, health and
safety, anti-corruption 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 2020 Form 10-K, filed
with the Securities and Exchange Commission on February 25,
2021.
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
2021
2020
Reported Ex. Currency Organic (a) (b) Net sales, by segment: Label
and Graphic Materials
$1,377.0
$1,173.5
17.3%
8.4%
7.6%
Retail Branding and Information Solutions
482.7
401.9
20.1%
15.0%
9.3%
Industrial and Healthcare Materials
191.6
147.6
29.8%
18.8%
16.3%
Total net sales
$2,051.3
$1,723.0
19.1%
10.9%
8.8%
As Reported (GAAP) Adjusted Non-GAAP (c)
1Q 1Q % % of Sales 1Q
1Q % % of Sales
2021
2020
Change
2021
2020
2021
2020
Change
2021
2020
Operating income (loss) / operating margins before interest, other
non-operating expense (income), and taxes, by segment:
Label and Graphic Materials
$226.2
$172.5
16.4%
14.7%
$224.3
$173.6
16.3%
14.8%
Retail Branding and Information Solutions
60.0
30.9
12.4%
7.7%
62.1
34.2
12.9%
8.5%
Industrial and Healthcare Materials
23.5
14.9
12.3%
10.1%
23.6
15.4
12.3%
10.4%
Corporate expense
(25.9)
(19.1)
(25.3)
(19.1)
Total operating income / operating margins before interest, other
non-operating expense (income), and taxes
$283.8
$199.2
42%
13.8%
11.6%
$284.7
$204.1
39%
13.9%
11.8%
Interest expense
$16.2
$18.8
$16.2
$18.8
Other non-operating expense (income), net (d)
($1.3)
($0.5)
($1.7)
($0.5)
Income before taxes
$268.9
$180.9
49%
13.1%
10.5%
$270.2
$185.8
45%
13.2%
10.8%
Provision for (benefit from) income taxes
$58.1
$46.3
$67.6
$45.9
Equity method investment (losses) gains
($1.3)
($0.4)
($1.3)
($0.4)
Net income
$209.5
$134.2
56%
10.2%
7.8%
$201.3
$139.5
44%
9.8%
8.1%
Net income per common share, assuming dilution
$2.50
$1.60
56%
$2.40
$1.66
45%
Free Cash Flow (e)
$182.0
($35.3)
See accompanying schedules A-4 to A-8 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, where applicable, 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
product line exits, acquisitions and divestitures. (c)
Excludes impact of restructuring charges and other items. Corporate
expense excludes impact of severance and related costs of $.6 in
the first quarter of 2021. (d) As reported "Other
non-operating expense (income), net" includes pension plan
settlement loss of $.4 in the first quarter of 2021. (e)
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.
A-1
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per
share amounts) (UNAUDITED) Three
Months Ended
Apr. 3, 2021
Mar. 28, 2020
Net sales $
2,051.3
$
1,723.0
Cost of products sold
1,454.3
1,237.9
Gross profit
597.0
485.1
Marketing, general and administrative expense
312.3
281.0
Other expense (income), net(1)
0.9
4.9
Interest expense
16.2
18.8
Other non-operating expense (income), net(2)
(1.3
)
(0.5
)
Income before taxes
268.9
180.9
Provision for (benefit from) income taxes
58.1
46.3
Equity method investment (losses) gains
(1.3
)
(0.4
)
Net income $
209.5
$
134.2
Per share amounts: Net income per common share, assuming
dilution $
2.50
$
1.60
Weighted average number of common shares outstanding,
assuming dilution
83.9
84.1
(1)
"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. "Other expense
(income), net" for the first quarter of 2020 includes severance and
related costs of $2.4 and transaction and related costs of $2.5.
(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. 3, 2021 Mar.
28, 2020 Current assets: Cash and cash
equivalents $
328.0
$
742.0
Trade accounts receivable, net
1,301.4
1,222.5
Inventories, net
786.7
723.3
Other current assets
216.3
225.8
Total current assets
2,632.4
2,913.6
Property, plant and equipment, net
1,329.0
1,232.0
Goodwill and other intangibles resulting from business
acquisitions, net
1,363.5
1,225.7
Deferred tax assets
201.4
224.8
Other assets
746.9
664.8
$
6,273.2
$
6,260.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings and
current portion of long-term debt and finance leases $
116.9
$
832.3
Accounts payable
1,178.0
1,030.8
Other current liabilities
763.6
697.0
Total current liabilities
2,058.5
2,560.1
Long-term debt and finance leases
2,025.9
1,988.0
Other long-term liabilities
606.9
539.4
Shareholders' equity: Common stock
124.1
124.1
Capital in excess of par value
845.8
852.5
Retained earnings
3,504.4
3,064.8
Treasury stock at cost
(2,546.3
)
(2,456.0
)
Accumulated other comprehensive loss
(346.1
)
(412.0
)
Total shareholders' equity
1,581.9
1,173.4
$
6,273.2
$
6,260.9
A-3
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)
(UNAUDITED) Three Months Ended
Apr. 3, 2021 Mar. 28, 2020
Operating Activities: Net income $
209.5
$
134.2
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation
40.0
36.8
Amortization
14.4
10.7
Provision for credit losses and sales returns
8.9
31.2
Stock-based compensation
9.9
6.3
Pension plan settlement loss
0.4
---
Deferred taxes and other non-cash taxes
1.5
6.4
Other non-cash expense and loss (income and gain), net
2.7
4.4
Changes in assets and liabilities and other adjustments
(78.0
)
(225.6
)
Net cash provided by operating activities
209.3
4.4
Investing Activities: Purchases of property, plant
and equipment
(25.2
)
(33.2
)
Purchases of software and other deferred charges
(2.3
)
(6.2
)
Proceeds from sales of property, plant and equipment
0.7
---
Proceeds from insurance and sales (purchases) of investments, net
(0.5
)
(0.3
)
Proceeds from sale of product line
6.7
---
Payments for acquisitions, net of cash acquired, and investments in
businesses
(30.6
)
(245.9
)
Net cash used in investing activities
(51.2
)
(285.6
)
Financing Activities: Net increase (decrease) in
borrowings (maturities of three months or less)
53.8
(106.0
)
Additional borrowings under revolving credit facility
---
500.0
Additional long-term borrowings
---
494.4
Repayments of long-term debt and finance leases
(1.5
)
(1.1
)
Dividends paid
(51.6
)
(48.4
)
Share repurchases
(55.6
)
(45.2
)
Net (tax withholding) proceeds related to stock-based compensation
(25.3
)
(20.0
)
Net cash (used in) provided by financing activities
(80.2
)
773.7
Effect of foreign currency translation on cash balances
(2.2
)
(4.2
)
Increase (decrease) in cash and cash equivalents
75.7
488.3
Cash and cash equivalents, beginning of year
252.3
253.7
Cash and cash equivalents, end of period $
328.0
$
742.0
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
upon 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, outcome 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 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 a single period and full year, as applicable.
We use the following non-GAAP financial measures 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, where
applicable, 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 product line exits,
acquisitions and 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 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. 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.
The following 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. 3, 2021 Mar. 28, 2020
Reconciliation from GAAP to Non-GAAP operating margins: Net
sales $
2,051.3
$
1,723.0
Income before taxes $
268.9
$
180.9
Income before taxes as a percentage of net sales
13.1
%
10.5
%
Adjustments: Interest expense $
16.2
$
18.8
Other non-operating expense (income), net
(1.3
)
(0.5
)
Operating income before interest expense, other non-operating
expense (income), and taxes $
283.8
$
199.2
Operating margins
13.8
%
11.6
%
Income before taxes $
268.9
$
180.9
Adjustments: Restructuring charges: Severance and related costs
2.4
2.4
Asset impairment and lease cancellation charges
0.5
---
Outcome of legal proceedings
2.1
---
Transaction and related costs
0.7
2.5
Gain on sale of product line
(4.8
)
---
Interest expense
16.2
18.8
Other non-operating expense (income), net
(1.3
)
(0.5
)
Adjusted operating income (non-GAAP) $
284.7
$
204.1
Adjusted operating margins (non-GAAP)
13.9
%
11.8
%
Reconciliation from GAAP to Non-GAAP net income: As
reported net income $
209.5
$
134.2
Adjustments: Restructuring charges and other items(1)
0.9
4.9
Pension plan settlement loss
0.4
---
Tax effect on restructuring charges and other items and impact of
adjusted tax rate
(9.5
)
0.4
Adjusted net income (non-GAAP) $
201.3
$
139.5
(1) Includes pretax restructuring and related charges, outcome of
legal proceedings, transaction and related costs, 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. 3, 2021 Mar. 28, 2020
Reconciliation from GAAP to Non-GAAP net income per common
share: As reported net income per common share, assuming
dilution $
2.50
$
1.60
Adjustments per common share, net of tax: Restructuring charges and
other items(1)
0.01
0.06
Tax effect on restructuring charges and other items and impact of
adjusted tax rate
(0.11
)
---
Adjusted net income per common share, assuming dilution
(non-GAAP) $
2.40
$
1.66
Weighted average number of common shares outstanding, assuming
dilution
83.9
84.1
Our adjusted tax rate was 25% and 24.7% for the three months ended
Apr. 3, 2021 and Mar. 28, 2020, respectively. (1) Includes pretax
restructuring and related charges, outcome of legal proceedings,
transaction and related costs, and gain on sale of product line.
(UNAUDITED) Three Months Ended
Apr. 3, 2021 Mar. 28, 2020
Reconciliation of free cash flow: Net cash provided
by operating activities $
209.3
$
4.4
Purchases of property, plant and equipment
(25.2
)
(33.2
)
Purchases of software and other deferred charges
(2.3
)
(6.2
)
Proceeds from sales of property, plant and equipment
0.7
---
Proceeds from insurance and sales (purchases) of investments, net
(0.5
)
(0.3
)
Free cash flow (non-GAAP) $
182.0
$
(35.3
)
A-6
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
First Quarter Ended NET SALES OPERATING INCOME
(LOSS) OPERATING MARGINS
2021
2020
2021
2020
2021
2020
Label and Graphic Materials
$
1,377.0
$
1,173.5
$
226.2
$
172.5
16.4
%
14.7
%
Retail Branding and Information Solutions
482.7
401.9
60.0
30.9
12.4
%
7.7
%
Industrial and Healthcare Materials
191.6
147.6
23.5
14.9
12.3
%
10.1
%
Corporate Expense
N/A
N/A
(25.9
)
(19.1
)
N/A
N/A
TOTAL FROM OPERATIONS
$
2,051.3
$
1,723.0
$
283.8
$
199.2
13.8
%
11.6
%
RECONCILIATION FROM GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION First Quarter Ended OPERATING INCOME
OPERATING MARGINS
2021
2020
2021
2020
Label and Graphic Materials
Operating income and margins, as reported
$
226.2
$
172.5
16.4
%
14.7
%
Adjustments: Restructuring charges: Severance and related costs
0.6
0.4
---
---
Asset impairment charges
0.1
---
---
---
Outcome of legal proceedings
2.1
---
0.2
%
---
Transaction and related costs
0.1
0.7
---
0.1
%
Gain on sale of product line
(4.8
)
---
(0.3
%)
---
Adjusted operating income and margins (non-GAAP)
$
224.3
$
173.6
16.3
%
14.8
%
Depreciation and amortization
29.0
26.1
2.1
%
2.2
%
Adjusted EBITDA and margins (non-GAAP)
$
253.3
$
199.7
18.4
%
17.0
%
Retail Branding and Information
Solutions Operating income and margins, as reported
$
60.0
$
30.9
12.4
%
7.7
%
Adjustments: Restructuring charges: Severance and related costs
1.2
1.5
0.3
%
0.4
%
Asset impairment and lease cancellation charges
0.4
---
0.1
%
---
Loss on sale of asset
0.3
---
0.1
%
---
Transaction and related costs
0.2
1.8
---
0.4
%
Adjusted operating income and margins (non-GAAP)
$
62.1
$
34.2
12.9
%
8.5
%
Depreciation and amortization
18.6
14.9
3.8
%
3.7
%
Adjusted EBITDA and margins (non-GAAP)
$
80.7
$
49.1
16.7
%
12.2
%
Industrial and Healthcare
Materials Operating income and margins, as reported
$
23.5
$
14.9
12.3
%
10.1
%
Adjustments: Restructuring charges: Severance and related costs
---
0.5
---
0.3
%
Transaction and related costs
0.4
---
0.2
%
---
Gain on sale of assets
(0.3
)
---
(0.2
%)
---
Adjusted operating income and margins (non-GAAP)
$
23.6
$
15.4
12.3
%
10.4
%
Depreciation and amortization
6.8
6.5
3.6
%
4.4
%
Adjusted EBITDA and margins (non-GAAP)
$
30.4
$
21.9
15.9
%
14.8
%
A-7
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION Reconciliation of Adjusted EBITDA Margins and
Net Debt to Adjusted EBITDA (In millions, except %)
(UNAUDITED) (13 weeks) (13 weeks) (13 weeks) (14
weeks) (13 weeks) QTD QTD
Total Company
1Q20
2Q20
3Q20
4Q20
1Q21
Net sales
$
1,723.0
$
1,528.5
$
1,729.1
$
1,990.9
$
2,051.3
Operating income before interest expense, other non-operating
expense (income), and taxes, as reported
$
199.2
$
123.5
$
213.5
$
273.0
$
283.8
Operating margins, as reported
11.6%
8.1%
12.3%
13.7%
13.8%
Non-GAAP adjustments: Restructuring
charges: Severance and related costs
$
2.4
$
37.5
$
6.5
$
2.7
$
2.4
Asset impairment and lease cancellation charges
-
1.8
4.4
-
0.5
Other items
2.5
0.7
1.5
(6.4)
(2.0)
Adjusted operating income (non-GAAP)
$
204.1
$
163.5
$
225.9
$
269.3
$
284.7
Adjusted operating margins (non-GAAP)
11.8%
10.7%
13.1%
13.5%
13.9%
Depreciation and amortization
$
47.5
$
50.3
$
52.0
$
55.5
$
54.4
Adjusted EBITDA (non-GAAP)
$
251.6
$
213.8
$
277.9
$
324.8
$
339.1
Adjusted EBITDA margins (non-GAAP)
14.6%
14.0%
16.1%
16.3%
16.5%
Total Debt
$
2,142.8
Less: Cash and cash equivalents
328.0
Net Debt
$
1,814.8
Net Debt to Adjusted EBITDA LTM* (non-GAAP)
1.6
*LTM = Last twelve months (2Q20 to 1Q21)
A-8
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (UNAUDITED) First Quarter
2021 TotalCompany Label andGraphicMaterials RetailBranding
andInformationSolutions Industrial andHealthcareMaterials
Reconciliation from GAAP to Non-GAAP sales change Reported
net sales change
19.1%
17.3%
20.1%
29.8%
Foreign currency translation
(4.4%)
(5.0%)
(1.8%)
(6.5%)
Extra week impact
(3.8%)
(3.9%)
(3.3%)
(4.5%)
Sales change ex. currency (non-GAAP)(1)
10.9%
8.4%
15.0%
18.8%
Acquisitions and divestiture
(2.1%)
(0.8%)
(5.7%)
(2.5%)
Organic sales change (non-GAAP)(1)
8.8%
7.6%
9.3%
16.3%
Fourth Quarter 2020 TotalCompany Label
andGraphicMaterials RetailBranding andInformationSolutions
Industrial andHealthcareMaterials
Reconciliation from GAAP to
Non-GAAP sales change Reported net sales change
12.3%
10.1%
19.0%
10.8%
Foreign currency translation
(2.3%)
(2.5%)
(0.9%)
(4.0%)
Extra week impact
(4.9%)
(4.1%)
(6.6%)
(6.1%)
Sales change ex. currency (non-GAAP)(1)
5.2%
3.6%
11.6%
0.7%
Acquisitions
(2.0%)
---
(8.4%)
---
Organic sales change (non-GAAP)(1)
3.2%
3.6%
3.1%
0.7%
Third Quarter 2020 TotalCompany Label andGraphic
Materials RetailBranding andInformationSolutions Industrial
andHealthcareMaterials
Reconciliation from GAAP to Non-GAAP
sales change Reported net sales change
(1.8%)
(3.3%)
4.7%
(7.0%)
Foreign currency translation
0.5%
0.7%
0.5%
(0.5%)
Sales change ex. currency (non-GAAP)(1)
(1.3%)
(2.6%)
5.2%
(7.6%)
Acquisitions
(2.3%)
---
(10.0%)
---
Organic sales change (non-GAAP)(1)
(3.6%)
(2.6%)
(4.7%)
(7.6%)
Second Quarter 2020 TotalCompany Label
andGraphicMaterials RetailBranding andInformationSolutions
Industrial andHealthcareMaterials
Reconciliation from GAAP to
Non-GAAP sales change Reported net sales change
(14.9%)
(8.7%)
(29.5%)
(22.8%)
Foreign currency translation
2.9%
3.8%
1.3%
1.9%
Sales change ex. currency (non-GAAP)(1)
(12.0%)
(4.9%)
(28.2%)
(20.9%)
Acquisitions
(1.7%)
---
(7.3%)
---
Organic sales change (non-GAAP)(1)
(13.7%)
(4.9%)
(35.5%)
(20.9%)
First Quarter 2020 TotalCompany Label
andGraphicMaterials RetailBranding andInformationSolutions
Industrial andHealthcareMaterials
Reconciliation from GAAP to
Non-GAAP sales change Reported net sales change
(1.0%)
(0.4%)
0.9%
(9.7%)
Foreign currency translation
1.9%
2.2%
1.0%
2.0%
Sales change ex. currency (non-GAAP)(1)
1.0%
1.8%
2.0%
(7.8%)
Acquisitions
(0.7%)
---
(3.1%)
---
Organic sales change (non-GAAP)(1)
0.3%
1.8%
(1.1%)
(7.8%)
(1) Totals may not sum due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428005134/en/
Media Relations: Rob Six (626) 304-2361
rob.six@averydennison.com
Investor Relations: John Eble (440) 534-6290
john.eble@averydennison.com
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