Avery Dennison (AVY) Q3 2024 earnings summary

Executive summary

• Adjusted EPS for Q3 was $2.33, up 9% year-over-year, with reported EPS at $2.25, and net income rising 31% to $181.7 million; full-year adjusted EPS guidance raised to $9.35–$9.50, targeting nearly 20% annual growth.

• Net sales for Q3 reached $2.2 billion, up 4% year-over-year, driven by higher volumes and strong performance in both Materials and Solutions Groups.

• Intelligent Labels segment saw robust mid-teens organic sales growth, especially in apparel, general retail, and food, with a major Kroger RFID rollout announced.

• Productivity initiatives, restructuring savings, and higher volume contributed to improved profitability despite inflationary and employee-related cost pressures.

• Settled Adasa RFID patent litigation for $75 million, securing a perpetual license and mutual release of claims.

Financial highlights

• Q3 net sales were $2.2 billion, up 4% year-over-year; organic sales up 4–5% and adjusted EBITDA margin improved to 16.4%, up 40 bps.

• Net income for Q3 was $181.7 million, up 31% year-over-year; operating income rose 28% to $264.4 million.

• Adjusted free cash flow for the first nine months was $420 million, up nearly $50 million year-over-year.

• Returned $315 million to shareholders in the first nine months via share repurchases and dividends.

• Dividends per share increased to $2.57 for the nine months, up from $2.37 year-over-year.

Outlook and guidance

• Full-year adjusted EPS guidance raised to $9.35–$9.50, reflecting nearly 20% growth over prior year.

• Organic sales growth for 2024 expected at 4.5%–5%, with high single-digit volume growth partially offset by deflation-related price reductions.

• Incremental restructuring savings expected to exceed $55 million, with a $5 million currency translation headwind.

• Full-year effective tax rate projected in the mid-twenty percent range; adjusted tax rate at 26%.

• 2025 expected to align with long-term framework of 5% top-line and 10% EPS growth.