Avery Dennison Corporation · NYSE:AVY
Avery Dennison — Q2 2020 Earnings Presentation
21 slides from Avery Dennison's earnings presentation, Jul 27, 2020
Slide 1: Second Quarter 2020 Financial Review and Analysis
1 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Second Quarter 2020 Financial Review and Analysis (preliminary, unaudited) July 27, 2020 Supplemental Presentation Materials Unless otherwise indicated, comparisons are to the same period in the prior year.
Slide 2: Safe Harbor Statement
2 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Safe Harbor Statement Certain statements contained in this document are "forward - looking statements" intended to qualify for the safe harbor from liab ility established by the Private Securities Litigation Reform Act of 1995. These
Slide 3: Use of Non-GAAP Financial Measures
3 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Use of Non - GAAP Financial Measures This presentation contains certain non - GAAP financial measures as defined by SEC rules. We report our financial results in conf ormity with accounting principles generally accepted in the United
Slide 4: Actively managing dynamic environment through robust scenario planning and strong execution
4 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Actively managing dynamic environment through robust scenario planning and strong execution ● Safety and well - being of employees remains our top priority during continuing global health crisis ● Q2 revenue better than expected, thou
Slide 5: Second Quarter Review
5 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Second Quarter Review Reported EPS of $0.95; adj. EPS (non - GAAP) of $1.27, above our expectations in April ● Reported sales declined 14.9% ○ Sales change ex. currency (non - GAAP) of (12.0%) ○ Organic sales change (non - GAAP) of (1
Slide 6: Operations / Market Update in Light of COVID
6 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Operations / Market Update in Light of COVID - 19 Label and Graphic Materials (LGM) 67% of 2019 sales Retail Branding and Info. Solutions (RBIS) 23% of 2019 sales Industrial and Healthcare Materials (IHM) 10% of 2019 sales ● Most plan
Slide 7: Monthly Organic Sales Trends
7 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Q2 LGM (5%) RBIS (36%) IHM (21%) Total Company (14%) Monthly Organic Sales Trends (comparison to prior year)
Slide 8: Agile teams effectively managing through crisis
8 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Agile teams effectively managing through crisis Ensuring Safety and Well - being of Our Team ● Continue to adapt safety protocols based on new information; focus has shifted to ensuring safe “back to work” environment ● During initial
Slide 9: Broad exposure to diverse end markets
9 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Broad exposure to diverse end markets, with ~60% tied to non - durable consumer goods, logistics & shipping, and medical products 2019 Sales by Product Category Non - durable consumer goods Retail Apparel Industrial / Durable Logistic
Slide 10: Diversified geographic exposure
10 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Diversified geographic exposure 2019 Sales by Manufacturing Location 2019 Sales by End Market, estimated (1) Other includes Canada, South Africa, Australia, and New Zealand U.S. Western Europe China Other Asia (ex - China) E. Europe
Slide 11: Our businesses are resilient through economic cycles
11 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Our businesses are resilient through economic cycles * Externally reported organic growth by segment has been adjusted to reflect divestitures and transfers between segments. Organic growth trends* during 2009/2010
Slide 12: Key Cost Saving Initiatives
12 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Key Cost Saving Initiatives ● Continuing to execute long - term, strategic restructuring plans, reflecting our relentless focus on productivity ● Temporary sources of cost savings to weather the downturn: ○ Short - term belt - tighte
Slide 13: Strong Balance Sheet and Ample Liquidity
13 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Strong Balance Sheet and Ample Liquidity Leverage @ 6/27/20 Total Debt Outstanding $2.27 B Cash and cash equivalents $0.26 B Net Debt $2.00 B Adjusted EBITDA, trailing 4 qtrs $0.97B Net Debt to Adj. EBITDA (non - GAAP) 2.1 X Debt / L
Slide 14: 2020 Outlook
14 July 27, 2020 Second Quarter 2020 Financial Review and Analysis ● Lower sales due principally due to declining volumes and currency translation, with trough in Q2: ○ Anticipate Q3 sales decline ex. currency of 5% to 9% (organic sales decline of 7% to 11%) ○ Currency translation headwinds at recen
Slide 15: Q2 Results Detail
15 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Q2 Results Detail
Slide 16: Quarterly Sales Trend Analysis
16 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Quarterly Sales Trend Analysis 2Q19 3Q19 4Q19 1Q20 2Q20 Reported Sales Change (3.2%) 0.1% 0.2% (1.0%) (14.9%) Organic Sales Change 1.6% 2.1% 2.1% 0.3% (13.7%) Acquisitions 0.7% 1.7% Sales Change Ex. Currency* 1.6% 2.1% 2.1% 1.0% (12.
Slide 17: Second Quarter Sales Change and Operating Margin Comparison
17 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Second Quarter Sales Change and Operating Margin Comparison Reported Adjusted (Non - GAAP) Operating Margin 2Q20 2Q19 2Q20 2Q19 Label and Graphic Materials 12.5% 13.4% 14.8% 13.8% Retail Branding and Information Solutions (3.6%) 12.0
Slide 18: Label and Graphic Materials
18 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Label and Graphic Materials ● Reported sales declined 9% to $1.10 bil. ● Sales were down 5% on an organic basis, driven largely by volume/mix ○ Label and Packaging Materials unchanged from prior year as modest growth in the base and
Slide 19: Retail Branding and Information Solutions
19 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Retail Branding and Information Solutions ● Reported sales declined 30% to $295 mil. ● Sales were down 28% ex. currency, and down 36% on an organic basis ○ Base business down ~40% organically, driven by site closures and lower appare
Slide 20: Industrial and Healthcare Materials
20 July 27, 2020 Second Quarter 2020 Financial Review and Analysis Industrial and Healthcare Materials ● Reported sales declined 23% to $132 mil. ● Sales declined 21% on an organic basis ○ ~30% decline in industrial categories driven by automotive ○ Healthcare categories relatively unchanged from pr
Slide 21: Thank you
21 July 27, 2020 Second Quarter 2020 Financial Review and Analysis © 2020 Avery Dennison Corporation. All rights reserved. Avery Dennison and all other Avery Dennison brands, product names and co des are trademarks of Avery Dennison Corporation. All other brands or product names are trademarks of th