Avery Dennison (AVY) Q1 2026 earnings summary

Executive summary

• Adjusted EPS for Q1 2026 rose 7.4% year-over-year to $2.47, with net sales up 7% to $2.3 billion, driven by strong productivity, cost control, and robust Materials Group performance, despite inflationary pressures and softer Solutions Group results.

• Organic sales grew 1.1%, led by base categories, while high-value and apparel categories were softer; strategic investments, including $75 million in Wiliot, aimed to accelerate intelligent labels adoption.

• Strong cash flow generation, with adjusted free cash flow at $104.4 million, supported by disciplined capital allocation and improved working capital.

• Proactive price increases, material reengineering, and productivity initiatives helped offset raw material inflation and macroeconomic uncertainty.

• Restructuring actions included $16 million in charges and workforce reductions, with expected incremental savings over $55 million in 2026.

Financial highlights

• Adjusted EPS was $2.47, up 7.4% year-over-year; reported EPS was $2.18; adjusted net income reached $190.5 million.

• Net sales reached $2.3 billion, with organic sales up 1.1% and reported sales up 7%; Materials Group sales up 11.4%, Solutions Group down 2.8%.

• Adjusted EBITDA margin was 16.4%, with adjusted operating margin at 12.6%.

• Adjusted free cash flow improved to $104.4 million from negative $53.1 million in the prior year.

• Returned $133 million to shareholders via $72 million in dividends and $61 million in share repurchases.

Outlook and guidance

• Q2 2026 guidance: adjusted EPS of $2.43–$2.53, reported sales growth of 2–4%, and organic sales growth of 0–2%.

• Full-year EPS expected to benefit from favorable currency and lower share count, partially offset by higher tax and interest; sequential earnings growth anticipated through 2026.

• Targeting ~100% adjusted free cash flow conversion and $260 million in fixed and IT capital spend for the year.

• Full-year effective tax rate expected in the high-twenty percent range.

• Guidance excludes an estimated ~$0.22 per share impact from other items and restructuring charges.