Avery Dennison (AVY) Q1 2025 earnings summary

Executive summary

• Q1 2025 delivered results in line with expectations, with net sales of $2.15 billion, organic sales up 2.3%, and strong performance in both Materials and Solutions Groups despite a dynamic macro environment.

• Adjusted EPS was $2.30, up ~4% ex-currency and 0.4% year-over-year; reported EPS was $2.09.

• Returned $331 million to shareholders via share repurchases and dividends, reducing share count by 2.3 million year-over-year.

• Net income declined to $166.3 million, primarily due to raw material price reductions, investment losses, and currency headwinds, partially offset by productivity gains.

• Macro uncertainty remains elevated due to trade policy, tariffs, and global GDP outlook, prompting a shift to quarterly guidance.

Financial highlights

• Adjusted EPS for Q1 was $2.30, up ~4% ex-currency; adjusted EBITDA margin was 16.4%, up 10 bps year-over-year.

• Adjusted operating margin reached 12.8%, up 10 bps; adjusted net income was $182.6 million.

• Free cash flow was negative $53.1 million, consistent with historical Q1 patterns.

• Returned $331 million to shareholders via buybacks and dividends.

Outlook and guidance

• Q2 2025 adjusted EPS expected to be $2.30–$2.50, with overall sales roughly flat year-over-year and a mid-single digit decline in apparel.

• Sequential earnings growth anticipated, driven by seasonality, high value category momentum, and currency benefits, partially offset by wage inflation and tariffs.

• Full-year visibility is limited; scenario planning and cost controls are in place to protect earnings.

• Effective tax rate expected to remain in the mid-twenty percent range.