Avery Dennison reports Q1 net income of US$71.2M, up 23% from US$57.8M a year ago, on 3% year-over-year rise in net sales to US$1.55B, with significant growth in pressure-sensitive materials division
Aimee Bellah
GLENDALE, California
,
April 23, 2014
(press release)
–
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Operating income (loss) before interest and taxes, by segment: Total operating income before interest and taxes/operating margin Loss from discontinued operations, net of tax
Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its first quarter ended March 29, 2014. All non-GAAP financial measures referenced in this document are reconciled to GAAP in the attached tables. Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations, and comparisons are to the same period in the prior year.
“I’m pleased to report a solid start to 2014, with earnings in line with our expectations,” said Dean Scarborough, Avery Dennison chairman, president and CEO. “Sales were up nearly 5 percent on an organic basis, driven by strong volume growth in Pressure-sensitive Materials. Retail Branding and Information Solutions delivered another quarter of strong earnings growth, reflecting the successful execution of productivity initiatives across the business.”
“We are maintaining our guidance for full-year adjusted earnings per share growth in the range of 8 to 19 percent, and remain committed to our disciplined strategy for capital allocation,” Scarborough added. “I am confident that the consistent execution of our strategies for long-term value creation will continue to benefit our customers, employees, and shareholders.”
For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “First Quarter 2014 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.
First Quarter 2014 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, product line exits, acquisitions and divestitures and, where applicable, the extra week in the fiscal year. Adjusted operating margin refers to earnings before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
Retail Branding and Information Solutions (RBIS)
Other
Share Repurchases
The company repurchased 1.2 million shares in the first quarter of 2014 at an aggregate cost of $59 million.
Discontinued Operations
On July 1, 2013, the company completed the sale of its OCP and DES businesses.
Income Taxes
The first quarter effective tax rate was 18 percent. The adjusted tax rate for the first quarter was 33 percent.
Cost Reduction Actions
In the first quarter, the company realized approximately $10 million in savings from restructuring, and incurred restructuring costs of approximately $7 million. The company expects to incur cash restructuring costs of $45 million in 2014.
Outlook
In its supplemental presentation materials, “First Quarter 2014 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2014 financial results. Based on the factors listed and other assumptions, the company expects 2014 earnings per share from continuing operations of $2.60 to $2.90. Excluding an estimated $0.30 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $2.90 to $3.20.
Note: Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.
About Avery Dennison
Avery Dennison (NYSE:AVY) is a global leader in labeling and packaging materials and solutions. The company’s applications and technologies are an integral part of products used in every major market and industry. With operations in more than 50 countries and 26,000 employees worldwide, Avery Dennison serves customers with insights and innovations that help make brands more inspiring and the world more intelligent. Headquartered in Glendale, California, the company reported sales from continuing operations of $6.1 billion in 2013. 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. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but not limited to risks and uncertainties relating to the following: fluctuations in demand affecting sales to customers; the financial condition and inventory strategies of customers; changes in customer order patterns; worldwide and local economic conditions; fluctuations in cost and availability of raw materials; our ability to generate sustained productivity improvement; our ability to achieve and sustain targeted cost reductions; impact of competitive products and pricing; loss of significant contracts or customers; collection of receivables from customers; selling prices; business mix shift; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; outcome of tax audits; timely development and market acceptance of new products, including sustainable or sustainably-sourced products; investment in development activities and new production facilities; fluctuations in currency exchange rates and other risks associated with foreign operations; integration of acquisitions and completion of potential dispositions; amounts of future dividends and share repurchases; customer and supplier concentrations; successful implementation of new manufacturing technologies and installation of manufacturing equipment; disruptions in information technology systems; successful installation of new or upgraded information technology systems; data security breaches; volatility of financial markets; impairment of capitalized assets, including goodwill and other intangibles; credit risks; our ability to obtain adequate financing arrangements and maintain access to capital; fluctuations in interest and tax rates; fluctuations in pension, insurance, and employee benefit costs; impact of legal and regulatory proceedings, including with respect to environmental, health and safety; changes in governmental laws and regulations; changes in political conditions; impact of epidemiological events on the economy and our customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.
We believe that the most significant risk factors that could affect our financial performance in the near-term include: (1) the impact of economic conditions on underlying demand for our products; (2) competitors' actions, including pricing, expansion in key markets, and product offerings; and (3) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through selling price increases, without a significant loss of volume.
For a more detailed discussion of these and other factors, see “Risk Factors” and “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in our 2013 Form 10-K, filed on February 26, 2014 with the Securities and Exchange Commission. 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.
First Quarter Financial Summary - Preliminary, unaudited
(in millions, except per share amounts)
1Q
1Q
% Change vs. P/Y
Reported
Organic (a)
Net sales, by segment:
Pressure-sensitive Materials
$
1,143.5
$
1,098.0
4%
6%
Retail Branding and Information Solutions
387.7
382.7
1%
2%
Vancive Medical Technologies
18.9
18.2
4%
2%
Total net sales
$
1,550.1
$
1,498.9
3%
5%
As Reported (GAAP)
Adjusted Non-GAAP (b)
1Q
1Q
% of Sales
1Q
1Q
% of Sales
% Change
% Change
Pressure-sensitive Materials
$
112.0
$
104.9
9.8
%
9.6
%
$
113.3
$
108.5
9.9
%
9.9
%
Retail Branding and Information Solutions
16.6
14.6
4.3
%
3.8
%
22.6
17.6
5.8
%
4.6
%
Vancive Medical Technologies
(2.6
)
(2.7
)
-13.8
%
-14.8
%
(2.6
)
(2.7
)
-13.8
%
-14.8
%
Corporate expense
(22.8
)
(23.5
)
(22.8
)
(22.6
)
$
103.2
$
93.3
11
%
6.7
%
6.2
%
$
110.5
$
100.8
10
%
7.1
%
6.7
%
Interest expense
$
15.4
$
12.2
$
15.4
$
12.2
Income from continuing operations before taxes
$
87.8
$
81.1
8
%
5.7
%
5.4
%
$
95.1
$
88.6
7
%
6.1
%
5.9
%
Provision for income taxes
$
16.2
$
14.3
$
31.4
$
28.9
Net income from continuing operations
$
71.6
$
66.8
7
%
4.6
%
4.5
%
$
63.7
$
59.7
7
%
4.1
%
4.0
%
($0.4
)
($9.0
)
n/m
0.0
%
-0.6
%
Net income
$
71.2
$
57.8
23
%
4.6
%
3.9
%
- See more at: http://news.averydennison.com/press-release/corporate/avery-dennison-announces-first-quarter-2014-results#sthash.ZrKLmF2k.dpuf
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