Slide 1: Fourth Quarter and Full Year 2021 Financial Review and Analysis
Fourth Quarter and Full Year 2021 Financial Review and Analysis (preliminary, unaudited) February 2, 2022 Supplemental Presentation Materials Unless otherwise indicated, comparisons are to the same period in the prior year. Exhibit 99.2
Slide 2: 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 3: 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 4: Again delivered strong results in 2021; ramping up investments
Again delivered strong results in 2021; ramping up investments Delivered significant sales growth and continued margin expansion in 2021 vs. prior year and 2019 Intelligent Labels achieved revenue of $0.7 bil.; remain confident in delivering 15%-20% growth longer-term Grew EPS more than 25% and gene
Slide 5: Full Year 2021 Review
Full Year 2021 Review Reported EPS of $8.83, up 34% Adj. EPS (non-GAAP) of $8.91, up 25% vs. 2020 (up 35% vs. 2019) Reported sales of $8.4 bil., up 21% Sales growth ex. currency (non-GAAP) of 19%; organic sales growth (non-GAAP) of 16% Compared to 2019, sales growth ex. currency of 17%; organic sale
Slide 6: Full Year 2021 Sales Growth and Operating Margin Comparison
Full Year 2021 Sales Growth and Operating Margin Comparison Operating Margin Reported Adj. Operating Margin (Non-GAAP) Adj. EBITDA Margin (Non-GAAP) FY21 FY20 FY19 FY21 FY20 FY19 FY21 FY20 FY19 Label and Graphic Materials 14.8% 14.6% 12.7% 14.2% 15.1% 13.3% 16.4% 17.3% 15.4% Retail Branding and Info
Slide 7: 2017–2021 Targets vs. Results
2017–2021 TARGETS 2017–2021 RESULTS Sales Growth 5%+ Ex. Currency(1) 4%+ Organic(1) 6.6% Ex. Currency(1) 4.6% Organic(1,4) Operating Margin 11%+ in 2021 12.6% in 2021 Adj(2): 12.7% in 2021 Adjusted EPS Growth 10%+(1) 17.3%(1) ROTC incl. Acquisition Amortization (Non-GAAP) 17%+ in 2021 18.4% in 2021
Slide 8: Segment results vs. five-year financial targets established in 2017
Segment results vs. five-year financial targets established in 2017 LGM RBIS IHM 2017–2021 2017–2021 2017–2021 TARGETS RESULTS TARGETS RESULTS TARGETS RESULTS Organic Sales Growth(1) 4-5% 4.4% 3-4% 6.0% 4-5%+ 2.2% Adj. Operating Margin(2) 12.5-13.5% in 2021 14.2% in 2021 10-12% in 2021 13.3% in 2021
Slide 9: Intelligent Labels
Intelligent Labels $0.2B Solutions enabling omnichannel retail, more efficient supply chains, enhanced consumer experience and less waste Industry leading UHF RFID share 50%+ Targeting 15–20% top-line organic growth Clear innovation leader Investing in capacity and market development $0.7B ~20% Org.
Slide 10: 2021–2025 Targets
2021–2025 TARGETS 2021 RESULTS Sales Growth 5%+ Ex. Currency(1) On track Adjusted EBITDA Margin 16%+ in 2025 On track Adjusted EPS Growth 10%(1) On track ROTC excl. Acquisition Amortization (Non-GAAP) 18%+ On track On track to achieve 2025 targets (1) Reflects five-year compound annual growth rates,
Slide 11: ESG: Balanced scorecard measuring progress for all stakeholders
ESG: Balanced scorecard measuring progress for all stakeholders Leading in an environmentally and socially responsible manner, with clear 2030 goals Deliver innovations that advance the circular economy Reduce the environmental impact in our operations and supply chain Make a positive social impact
Slide 12: Fourth Quarter 2021 Review
Fourth Quarter 2021 Review Reported EPS of $2.19, down 4% driven by impact of extra week in prior year Adj. EPS of $2.13, down 6%; up 23% vs. 2019 Reported sales increased 10%, up 18% excluding impact of extra week Sales growth ex. currency of 19%; organic sales growth of 13% Intelligent Labels up 2
Slide 13: Operational/Market Update
Operational/Market Update As pandemic evolves, continue to adapt world-class safety protocols Safety and well-being of employees remains our top priority All manufacturing locations currently operational Continue to actively manage dynamic supply and demand environment Demand across majority of busi
Slide 14: Quarterly Sales Trend Analysis
Quarterly Sales Trend Analysis 4Q20 1Q21 2Q21 3Q21 4Q21 Reported Sales Change 12.3% 19.1% 37.5% 19.8% 9.7% Organic Sales Change 3.2% 8.8% 28.1% 13.9% 12.8% Acquisitions/Divestitures 2.0% 2.1% 1.1% 3.0% 5.7% Sales Change Ex. Currency* 5.2% 10.9% 29.2% 17.0% 18.5% Extra Week Impact 4.9% 3.8% - - (8.5%
Slide 15: Fourth Quarter Sales Growth and Operating Margin Comparison
Fourth Quarter Sales Growth and Operating Margin Comparison Operating Margin Reported Adj. Operating Margin (Non-GAAP) Adj. EBITDA Margin (Non-GAAP) 4Q21 4Q20 4Q19 4Q21 4Q20 4Q19 4Q21 4Q20 4Q19 Label and Graphic Materials 12.2% 15.9% 12.0% 12.4% 15.4% 13.3% 14.5% 17.6% 15.5% Retail Branding and Info
Slide 16: Label and Graphic Materials
Label and Graphic Materials Reported sales increased 3% to $1.3 bil. Sales up 12% ex. currency and 11% organically Label and Packaging Materials up low-double digits on organic basis, with strong growth in both high value and base categories Combined Graphics and Reflective Solutions up low-double d
Slide 17: Retail Branding and Information Solutions
Retail Branding and Information Solutions Reported sales increased 30% to $659 mil. Sales up 39% ex. currency and 20% organically Strong growth in both high value categories and base business Intelligent Labels up 20%+ organically Reported operating margin decreased 60 bps to 14.7% Adjusted EBITDA m
Slide 18: Industrial and Healthcare Materials
Industrial and Healthcare Materials Reported sales increased 2% to $193 mil. Sales up 12% ex. currency and 10% organically Industrial categories up mid-single digits Healthcare up mid-teens Reported operating margin decreased 360 bps to 8.8% Adjusted EBITDA margin decreased 300 bps to 12.9% as benef
Slide 19: 2022 EPS Guidance
2022 EPS Guidance Add Back: Est. restructuring costs and other items Adjusted EPS (non-GAAP) Reported EPS $9.25 – $9.65 $9.35 – $9.75 Contributing Factors to 2022 Reported sales growth of 8% to 11%; ~3% currency headwind Ex. currency growth of 11% to 14%; ~3% benefit from M&A Organic sales growth of
Slide 20: Appendix: Reconciliation of Financial Measures from GAAP to Non-GAAP
Appendix: Reconciliation of Financial Measures from GAAP to Non-GAAP
Slide 21: Organic Sales Change – Avery Dennison
Organic Sales Change – Avery Dennison (1) Totals may not sum due to rounding
Slide 22: Organic Sales Change by Segment
Organic Sales Change by Segment (1) Totals may not sum due to rounding
Slide 23: Organic Sales Change by Segment - Continued
Organic Sales Change by Segment - Continued (1) Totals may not sum due to rounding
Slide 24: Adjusted Operating Margin and EBITDA – Avery Dennison
Adjusted Operating Margin and EBITDA – Avery Dennison
Slide 25: Adjusted Operating Margin and EBITDA – LGM
Adjusted Operating Margin and EBITDA – LGM
Slide 26: Adjusted Operating Margin and EBITDA – RBIS
Adjusted Operating Margin and EBITDA – RBIS
Slide 27: Adjusted Operating Margin and EBITDA – IHM
Adjusted Operating Margin and EBITDA – IHM
Slide 28: Adjusted Net Income
Adjusted Net Income The adjusted tax rate was 25%, 24.1%, 24.6%, 25%, and 28% for 2021, 2020, 2019, 2018, and 2017, respectively. (1) Includes restructuring and related charges, transaction and related costs, gain/loss on venture investments, gain/loss on sale of assets, gain on sale of product line
Slide 29: Adjusted EPS
Adjusted EPS The adjusted tax rate was 25%, 24.1%, 24.6%, 25%, and 28% for 2021, 2020, 2019, 2018, and 2017, respectively. (1) Includes restructuring and related charges, transaction and related costs, gain/loss on venture investments, gain/loss on sale of assets, gain on sale of product line, outco
Slide 30: Free Cash Flow
Free Cash Flow (Sin millions) 2016 2017 2018 2019 2020 2021 Net cash provided by operating activities $ 5821 $ 6457 $ 4579 $ 7465 $ 7513 $1,0468 Purchases of property, plant and equipment (176.9) (190.5) (226.7) (219.4) 4) (255.0) Purchases of software and other deferred charges (29.7) (35.6) (29.9)
Slide 31: Return on Total Capital (ROTC)
Return on Total Capital (ROTC)
Slide 32: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA Total Company ($in sitions) Net sal operating income before interest expense, other norroperaing expense (noome). and taxes, as reported ig ted s. as reporte Restructuring charges: jeverance and related costs Other items Adjusted operating income (non-GAAP) Adjusted opera
Slide 33: Thank you
Thank you IN AVERY DENNISON