Avery Dennison (AVY) Q4 2025 earnings summary

Executive summary

• Delivered solid full-year 2025 results with adjusted EPS of $9.53, up 1% year-over-year, and $707 million in adjusted free cash flow, reflecting business resilience amid macro headwinds and tariff impacts.

• Q4 adjusted EPS was $2.45, up 3% year-over-year, driven by higher volume and productivity, partially offset by higher employee-related costs and growth investments.

• High-value categories now represent 45% of sales, growing at a mid-single-digit CAGR since 2019, and are central to the growth strategy, with significant innovation in Intelligent Labels and software platforms.

• Achieved 2025 sustainability objectives and made progress toward 2030 goals.

• Balanced capital allocation, returning $861 million to shareholders and expanding high-value category exposure through strategic acquisitions.

Financial highlights

• Full-year net sales reached $8.9 billion, up 1% from the prior year; Q4 reported sales increased 3.9% to $2.3 billion, with organic sales flat year-over-year due to deflation-related price reductions offsetting volume growth.

• Adjusted EBITDA margin for FY25 was 16.4%; Q4 adjusted EBITDA margin was 16.2%.

• Generated $707 million in adjusted free cash flow for 2025, with free cash flow conversion above 100%.

• Returned $861 million to shareholders in 2025, including buybacks and dividends.

• Net debt to adjusted EBITDA ratio at year-end was 2.4.

Outlook and guidance

• Q1 2026 adjusted EPS expected between $2.40 and $2.46, with organic sales growth of 0%-2%.

• Full-year 2026 guidance not provided; company will continue with quarterly outlooks due to market uncertainty.

• Anticipates sequential earnings growth through 2026, with stronger H2 performance, especially from Walmart food rollout and a ~4% currency tailwind.

• Expects $0.25 EPS benefit from favorable currency and lower share count, offset by higher tax and interest; restructuring savings of ~$50 million expected in 2026.

• Targeting ~100% adjusted free cash flow conversion and fixed/IT capital spend of ~$260 million.