Avery Dennison Corporation (NYSE:AVY) has revealed preliminary, unaudited outcomes for the first quarter ending on March 30, 2024. Any non-GAAP financial measures mentioned in this announcement are reconciled from GAAP in the attached financial schedules. Unless specified otherwise, all comparisons are made with the corresponding period of the prior year.
Deon Stander, the president and CEO, stated, We have commenced the year on a robust note. Our first-quarter results demonstrate significant earnings growth, primarily propelled by increased volume and productivity enhancements.
Stander further elaborated, The Materials Group has witnessed substantial volume growth and margin expansion. This is attributed to the easing of downstream inventory destocking and the continued normalization of volumes. Meanwhile, the Solutions Group has achieved strong top-line growth, particularly in high-value categories, despite apparel imports lagging behind demand.”
Regarding Intelligent Labels, Stander added, We are poised to achieve another year of substantial growth in 2024 within this segment. As the apparel industry stabilizes, we anticipate accelerating the adoption of our solutions, thereby solidifying our leadership position at the intersection of physical and digital realms.
Stander expressed confidence in the company’s future, stating, We anticipate robust earnings growth throughout 2024. Our steadfast commitment to executing our strategies positions us well to achieve our long-term objectives of creating superior value through a blend of profitable growth and capital discipline.
Acknowledging the efforts of the team, Stander concluded,I extend my gratitude to our entire team for their unwavering resilience, dedication to excellence, and commitment to overcoming the unique challenges we face.
Highlights of the First Quarter 2024 Results by Segment:
Materials Group:
Reported sales increased by 2% to $1.5 billion, with a 2% increase excluding currency effects and on an organic basis. Label Materials sales experienced mid-single-digit growth organically. Volume/mix saw a low-double-digit increase, partially offset by deflation-related price reductions. Reported operating margin stood at 15.1%, with adjusted EBITDA margin (non-GAAP) at 18.3%, marking a 410 basis point increase driven by productivity initiatives and higher volume/mix. Solutions Group:
Reported sales rose by 8% to $655 million, with a 10% increase excluding currency effects and a 6% increase organically. Sales in high-value categories grew by low double-digits organically. Reported operating margin was 8.6%, with adjusted EBITDA margin at 16.1%, up 40 basis points, driven by productivity initiatives and higher volume. Other Highlights:
During the first quarter of 2024, the company returned $81 million in cash to shareholders through dividends and share repurchases, repurchasing 0.1 million shares at an aggregate cost of $16 million. The company’s capital deployment strategy remained disciplined, maintaining a strong balance sheet with a net debt to adjusted EBITDA (non-GAAP) ratio of 2.3x at the end of the first quarter. Income Taxes:
The reported effective tax rate was 26.5% in the first quarter, with the adjusted tax rate (non-GAAP) at 26.0%.
Cost Reduction Actions:
The company achieved approximately $19 million in pre-tax savings from restructuring in the first quarter, net of transition costs, while incurring approximately $6 million in pre-tax restructuring charges.
Guidance:
Based on various factors outlined in its supplemental presentation materials, the company has adjusted its guidance range for 2024 reported earnings per share from $8.65 to $9.15 to $8.60 to $9.10. Excluding an estimated $0.40 per share impact of restructuring charges and other items, the company continues to expect 2024 adjusted earnings per share of $9.00 to $9.50.
For more detailed information on the company’s results, including summary tables and supplemental presentation materials, visit the company’s website at www.investors.averydennison.com and refer to the First Quarter 2024 Financial Review and Analysis” furnished to the SEC on Form 8-K.
Throughout this release and accompanying materials, amounts on a per share basis reflect fully diluted shares outstanding.
