Avery Dennison (AVY) Q4 2012 earnings summary

Executive summary

• FY12 continuing-operations sales were $6.04B, essentially flat YoY; organic sales increased 4%, while currency translation offset underlying growth.

• Continuing-operations income rose to $169.1M from $154.4M; net income was $215.4M, or $2.10/share, including $46.3M from discontinued operations.

• Productivity and restructuring benefits supported improved gross margin and segment operating income; a $57.7M restructuring program and a $7M intangible impairment were notable charges.

Financial highlights

• Net sales were $6,035.6M vs. $6,026.3M; gross profit was $1,577.1M vs. $1,521.4M, and gross margin was 26.1% vs. 25.2%.

• Operating income before interest and taxes was $414.5M, comprising segment and other-business results; continuing-operations pretax income was $255.5M vs. $232.9M.

• Continuing-operations income was $169.1M vs. $154.4M; diluted continuing-operations EPS was $1.63 vs. $1.45, and diluted net EPS was $2.08 vs. $1.78.

• Operating cash flow rose to $513.4M from $422.7M; free cash flow increased to $352.6M from $292.0M.

Outlook and guidance

• FY13 organic sales and earnings from continuing operations were expected to increase.

• FY13 restructuring costs and other items were estimated at $25M; the 2012 restructuring program was expected to incur another $25M and deliver over $100M in annualized savings.

• FY13 pension contributions were expected to total $60M, excluding any additional contribution from OCP and DES sale proceeds; capital and software spending was estimated at $175M.

• The expected OCP and DES sale proceeds were approximately $400M net, intended for share repurchases and an additional pension contribution.