Avery Dennison Corporation
MENTOR, Ohio, February 2, 2023 – Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its fourth quarter and full year ended December 31, 2022. Non-GAAP financial measures referenced in this release are reconciled from GAAP in the attached financial schedules. Unless otherwise indicated, comparisons are to the same period in the prior year.
“We delivered impressive results in 2022, once again achieving double-digit earnings growth on a constant currency basis,” said Mitch Butier, Chairman and CEO. “Both our Materials and Solutions Groups delivered strong top-and bottom-line results while accelerating adoption of Intelligent Labels.
“Our strong performance came amidst a very challenging environment that was capped by volume declines in the fourth quarter due to significant inventory reductions downstream,” added Butier. “Recent volume trends are indicative of patterns in previous slowdowns; we have been activating countermeasures accordingly.
“Despite the challenges in the macro environment, we remain well-positioned to continue our long track record of earnings growth in 2023, including accelerating growth in Intelligent Labels,” said Butier.
“Once again, I want to thank our entire team for continuing to raise their game to address the unique challenges at hand and deliver value for all our stakeholders.”
Fourth Quarter 2022 Results by Segment
Balance Sheet and Capital Deployment
During 2022, the company deployed $40 million for acquisitions and returned $618 million in cash to shareholders, up $217 million, through a combination of share repurchases and dividends. The company repurchased 2.2 million shares at an aggregate cost of $380 million. Net of dilution from long-term incentive awards, the company’s year-end share count was down 2.0 million compared to the same time last year.
The company’s balance sheet remains strong, with ample capacity to continue executing its long-term capital allocation strategy. Net debt to adjusted EBITDA (non-GAAP) was 2.2 at the end of the fourth quarter.
In January 2023, the company extended the maturity date of its revolving credit facility (“Revolver”) to February 2026 and increased its capacity to $1.2 billion in support of the company’s continued growth.
The company’s reported effective tax rate was 27.4% for the fourth quarter and 24.2% for the full year. The company’s adjusted tax rate (non-GAAP) was 21.1% for the fourth quarter and 24.7% for the full year.
The company’s 2023 adjusted tax rate is expected to be in the mid-twenty percent range based on current tax regulations.
Cost Reduction Actions
During 2022, the company realized approximately $26 million in pre-tax savings from restructuring, net of transition costs, and incurred pre-tax restructuring charges of approximately $8 million.
In its supplemental presentation materials, “Fourth Quarter and Full Year 2022 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2023 financial results. Based on the factors listed and other assumptions, the company expects 2023 reported earnings per share of $8.85 to $9.25.
Excluding an estimated $0.30 per share impact of restructuring charges and other items, the company expects 2023 adjusted earnings per share of $9.15 to $9.55.
For more details on the company’s results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, “Fourth Quarter and Full Year 2022 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.
Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.
Avery Dennison Corporation (NYSE: AVY) is a global materials science and digital identification solutions company that provides branding and information labeling solutions, including pressure-sensitive materials, radio-frequency identification (RFID) inlays and tags, and a variety of converted products and solutions. The company designs and manufactures a wide range of labeling and functional materials that enhance branded packaging, carry or display information that connects the physical and the digital, and improve customers’ product performance. The company serves an array of industries worldwide, including home and personal care, apparel, e-commerce, logistics, food and grocery, pharmaceuticals and automotive. The company employs approximately 36,000 employees in more than 50 countries. Reported sales in 2022 were $9.0 billion. Learn more at www.averydennison.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties.
We believe that the most significant risk factors that could affect our financial performance in the near term include: (I) the impacts to underlying demand for our products from global economic conditions, political uncertainty, and changes in environmental standards and governmental regulations, including as a result of COVID-19; (ii) the cost and availability of raw materials; (iii) competitors' actions, including pricing, expansion in key markets, and product offerings; (iv) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through price increases, without a significant loss of volume; (v) foreign currency fluctuations; and (vi) the execution and integration of acquisitions.
Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but are not limited to, risks and uncertainties relating to the following:
For a more detailed discussion of these factors, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K, filed with the Securities and Exchange Commission on February 23, 2022, and subsequent quarterly reports on Form 10-Q.
The forward-looking statements included in this document are made only as of the date of this document, and we undertake no obligation to update these statements to reflect subsequent events or circumstances, other than as may be required by law.
For more information and to listen to a live broadcast or an audio replay of the quarterly conference call with analysts, visit the Avery Dennison website at www.investors.averydennison.com
Avery Dennison Corporation
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