Slide 1: Safe Harbor Statement
Safe Harbor Statement 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,
Slide 2: Use of Non-GAAP Financial Measures
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 conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using c
Slide 3: Sixth consecutive year of strong top-line growth, margin expansion, and double-digit adjusted EPS growth
Sixth consecutive year of strong top-line growth, margin expansion, and double-digit adjusted EPS growth Strong top-line performance through balance of organic growth and acquisitions Reported sales of $6.6 bil., up 9% (4% organic, 4% from acquisitions) Increased exposure to high value categories th
Slide 4: Full Year 2017 Segment Overview and 2018 Outlook
Full Year 2017 Segment Overview and 2018 Outlook Label and Graphic Materials delivered another year of strong top-line growth and continued margin expansion Continued above-average growth from emerging markets and high value categories Retail Branding and Information Solutions posted strong top-line
Slide 5: Full Year Segment Sales and Margin Analysis
Full Year Segment Sales and Margin Analysis FY17 Reported Ex. Currency Organic Sales Change: Label and Graphic Materials 7.7% 6.9% 4.2% Retail Branding and Information Solutions 4.6% 5.0% 5.0% Industrial and Healthcare Materials 30.2% 29.9% 2.0% Total Company 8.7% 8.2% 4.2% Reported Adjusted (Non-GA
Slide 6: Expect to meet or exceed five year targets through 2018
Expect to meet or exceed five year targets through 2018 4%–5% CAGR(1) Organic Sales Growth 9%–10% in 2018 (up ~2 pts vs. 2013) Operating Margin 16%+ in 2018 Return on Total Capital (ROTC) 12%–15%+ CAGR(1) Adjusted EPS Growth 1.7x to 2.0x Net Debt to Adjusted EBITDA 4% 4 Yr CAGR 2014 – 2018 TARGETS 9
Slide 7: On track to achieve new long-term targets through 2021
On track to achieve new long-term targets through 2021 Sales Growth Adjusted EPS Growth Return on Total Capital (ROTC) 4% Organic 8% Ex. Currency 2017 RESULTS (1) Reflects five-year compound annual growth rates, with 2016 as the base period (2) Impact of closed acquisitions as of 3/8/2017 is approxi
Slide 8: Fourth Quarter Overview
Fourth Quarter Overview Fourth quarter reported EPS declined due to U.S. tax reform; Adj. EPS above expectations driven by strong sales growth and margin expansion Reported EPS of ($0.66), including $172 mil. charge related to U.S. tax reform Adjusted EPS of $1.33, up 34% Reported sales of $1.74 bil
Slide 9: Sales Trend Analysis
Sales Trend Analysis * Totals may not sum due to rounding. 4Q16 1Q17 2Q17 3Q17 4Q17 FY17 Reported Sales Change 6.6% 5.8% 5.5% 11.3% 11.9% 8.7% Organic Sales Change 5.3% 3.9% 2.9% 5.3% 4.7% 4.2% Acquisitions 2.5% 3.0% 3.7% 4.7% 4.4% 3.9% Sales Change Ex. Currency* 7.8% 6.9% 6.7% 10.0% 9.1% 8.2% Curre
Slide 10: Fourth Quarter Segment Sales and Margin Analysis
Fourth Quarter Segment Sales and Margin Analysis 4Q17 Reported Ex. Currency Organic Sales Change: Label and Graphic Materials 9.2% 5.6% 4.6% Retail Branding and Information Solutions 5.2% 4.7% 4.7% Industrial and Healthcare Materials 60.3% 56.9% 5.7% Total Company 11.9% 9.1% 4.7% Reported Adjusted (
Slide 11: Fourth Quarter Segment Overview
LABEL AND GRAPHIC MATERIALS Reported sales of $1.2 bil., up 9% Sales change ex. currency up 6%; on organic basis, up 5% Label and Packaging Materials sales up mid-single digits on organic basis Combined Graphics and Reflective Solutions up mid-single digits on organic basis Reported operating margin
Slide 12: Fourth Quarter Segment Overview (cont.)
INDUSTRIAL AND HEALTHCARE MATERIALS Reported sales of $178 mil., up 60% Sales change ex. currency up 57%; on organic basis, up 6% Industrial categories sales up high-single digits on organic basis Healthcare categories sales up low-single digits on organic basis Reported operating margin declined 16
Slide 13: 2018 EPS Guidance
2018 EPS Guidance Add Back: Est. restructuring costs and other items ~$0.20 Adjusted EPS (non-GAAP) Reported EPS $5.50 – $5.75 $5.70 – $5.95 Reported sales growth of ~8% Sales change ex. currency of ~5.5%; organic sales change of ~4.0% Currency translation tailwind to operating income of ~$20 mil.,
Slide 14: Appendix: Reconciliation of GAAP to Non-GAAP Financial Measures
Appendix: Reconciliation of GAAP to Non-GAAP Financial Measures
Slide 15: Organic Sales Change – Avery Dennison
Organic Sales Change – Avery Dennison (1) Totals may not sum due to rounding and other factors. ($ in millions) 2012 2013 2014 2015 2016 2017 Net sales 5,863.5 $ 6,140.0 $ 6,330.3 $ 5,966.9 $ 6,086.5 $ 6,613.8 $ Reported sales change 4.7% 3.1% (5.7%) 2.0% 8.7% Foreign currency translation 0.1% 1.1%
Slide 16: Organic Sales Change by Segment
Organic Sales Change by Segment (1) Totals may not sum due to rounding and other factors. ($ in millions) Label and Graphic Materials 2012 2013 2014 2015 2016 2017 Net sales 3,959.8 $ 4,137.3 $ 4,298.7 $ 4,032.1 $ 4,187.3 $ 4,511.7 $ Reported sales change 4.5% 3.9% (6.2%) 3.8% 7.7% Foreign currency
Slide 17: Adjusted Operating Margin – Avery Dennison
Adjusted Operating Margin – Avery Dennison (1) GAAP adjustments for 2013-2015 reflect the previously disclosed impact of the third quarter of 2015 revision to certain benefit plan balances, which had an immaterial impact on the non-GAAP amounts. (2) “Other items” for fiscal year 2016 includes a loss
Slide 18: Adjusted Operating Margin – LGM
Adjusted Operating Margin – LGM ($ in millions) 2013 2014 2015 2016 2017 Net sales 4,137.3 $ 4,298.7 $ 4,032.1 $ 4,187.3 $ 4,511.7 $ Operating income from continuing operations before interest expense and taxes, as reported 411.0 $ 396.9 $ 453.4 $ 516.2 $ 567.3 $ Operating margin, as reported 9.9% 9
Slide 19: Adjusted Operating Margin – RBIS
Adjusted Operating Margin – RBIS ($ in millions) 2013 2014 2015 2016 2017 Net sales 1,534.9 $ 1,516.0 $ 1,443.4 $ 1,445.4 $ 1,511.2 $ Operating income from continuing operations before interest expense and taxes, as reported 64.8 $ 68.5 $ 51.6 $ 102.6 $ 122.9 $ Operating margin, as reported 4.2% 4.5
Slide 20: Adjusted Operating Margin – IHM
Adjusted Operating Margin – IHM ($ in millions) 2013 2014 2015 2016 2017 Net sales 467.8 $ 515.6 $ 491.4 $ 453.8 $ 590.9 $ Operating income from continuing operations before interest expense and taxes, as reported 40.4 $ 45.2 $ 57.1 $ 54.6 $ 50.5 $ Operating margin, as reported 8.6% 8.8% 11.6% 12.0%
Slide 21: Adjusted Net Income and Adjusted EPS
Adjusted Net Income and Adjusted EPS (1) GAAP adjustments for 2013-2015 reflect the previously disclosed impact of the third quarter of 2015 revision to certain benefit plan balances, which had an immaterial impact on the non-GAAP amounts. (2) "Provision for income taxes" for the fourth quarter of 2
Slide 22: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA 4-pt ($ in millions) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Avg. Net sales 1,485.5 $ 1,541.5 $ 1,508.7 $ 1,550.8 $ 1,572.1 $ 1,626.9 $ 1,679.5 $ 1,735.3 $ As reported net income 89.6 $ 80.0 $ 89.1 $ 62.0 $ 112.2 $ 120.9 $ 108.3 $ (59.6) $ Interest expense 15.3 $ 15.4 $ 1
Slide 23: Return on Total Capital (ROTC)
Return on Total Capital (ROTC) (1) "Provision for income taxes" for the fourth quarter of 2017 includes the estimated impact of TCJA enacted in the U.S. on December 22, 2017. The TCJA significantly revises U.S. corporate income tax law by, among other changes, lowering corporate income tax rates, im
Slide 24: Return on Total Capital (ROTC)
Return on Total Capital (ROTC) ‘Adjusted ROTC (excludes net Impact of CAA) (Sinmitons) 2012 20132012018 201s 2017 2017 ‘As reported netincome fom continuing operations S 17 § 2473 § BAA § 3207 8 2818 3 2818 Estimated tax provision impact resulting tom the TCAA\” $ 1720 ‘mpactof previously planed rep
Slide 25: Avery Dennison
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