Avery Dennison Corporation · NYSE:AVY
Avery Dennison — FY2022 Earnings Presentation
36 slides from Avery Dennison's earnings presentation, Feb 2, 2023
Slide 1: Fourth Quarter and Full Year 2022 Financial Review and Analysis
Exhibit 99.2 Fourth Quarter and Full Year 2022 Financial Review and Analysis (preliminary, unaudited) February 2, 2023 Supplemental Presentation Materials Unless otherwise indicated, comparisons are to the same period in the prior year. February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial
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, are
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 cert
Slide 4: Strong results in 2022; well-positioned for continued EPS growth in 2023
Strong results in 2022; well-positioned for continued EPS growth in 2023 Sales up 13% ex. currency (non-GAAP), driven by pricing, Intelligent Labels volume and acquisitions Adj. EPS (non-GAAP) up 3%, up ~40% vs. 2019 ● Adj. EPS ex. currency (non-GAAP) up 11% Intelligent Labels achieved sales of $0.8
Slide 5: Full Year 2022 Review
Full Year 2022 Review Reported EPS of $9.21, up 4% Adj. EPS of $9.15, up 3%, and 11% ex. currency Reported sales of $9.0 bil., up 8% ● Sales growth ex. currency (non-GAAP) of 13%; organic sales growth (non-GAAP) of 10% Reported operating income of $1.1 bil. ● Adj. EBITDA (non-GAAP) of $1.4 bil., up
Slide 6: Intelligent Labels $1B target
$1B Intelligent Labels $0.8B 2022 Sales by End Market ~20% Apparel Org. Sales $0.8B Other $0.25B Pipeline by End Market ● Industry-leading position; 50%+ UHF RFID share ● Targeting 20%+ organic growth in coming years Apparel Food ● Clear innovation leader Industrial ● Investing in capacity and marke
Slide 7: Combined LGM and IHM into Materials Group; renamed RBIS Solutions Group
Combined LGM and IHM into Materials Group; renamed RBIS Materials Group Solutions Group (1) (1) $6.5 bil. $2.5 bil. (f ormer LGM and IHM) (former RBIS) Pressure-sensitive materials ● RFID solutions ● Label materials (LPM)● Branded tag and embellishment solutions ● Graphic and reflective materials● Da
Slide 8: Full Year 2022 Sales Growth and Operating Margin Comparison
Full Year 2022 Sales Growth and Operating Margin Comparison Full Year Sales Growth Reported Ex. Currency Organic Materials Group4.6%11.0%11.2% Solutions Group15.6%19.1%5.0% Total Company7.5%13.1%9.5% Reported Adj. EBITDA Margin Operating Margin FY22 FY21 FY22 FY21 Materials Group13.2%14.2% 15.1%16.1
Slide 9: Delivering on objectives to drive GDP+ growth and top-quartile ROTC
Delivering on objectives to drive GDP+ growth and top-quartile ROTC 2021–2025 2021-2022 TARGETS RESULTS 15.8% (1) Sales Growth Ex. Currency 5%+ 2-YR CAGR 16%+ 15.1% Adjusted EBITDA Margin in 2025 in 2022 13.5% (1) Adjusted EPS Growth 10% 2-YR CAGR 17.4% ROTC (Non-GAAP) 18%+ in 2022 (1) Reflects five-y
Slide 10: ESG: Balanced scorecard measuring progress for key stakeholders
ESG: Balanced scorecard measuring progress for key stakeholders Employees Customers Communities Shareholders Employee Engagement Vitality Index Cum. GHG% Reduction Cumulative TSR (as of 1.25.23) AVY 193% *as of * Q3 2022 S&P 500 Women Manager+ Service Flexibility % Certified Paper 100% Leading in an
Slide 11: Fourth Quarter 2022 Review
Fourth Quarter 2022 Review Reported sales of $2.0 bil., down 7% ● Sales change ex. currency and organic sales change each down by 1% ● Significant inventory destocking drove volume declines, partially offset by higher prices ○ Volumes down double digits in Apparel, Materials Europe and Materials Nort
Slide 12: Strong Balance Sheet and Ample Liquidity
Strong Balance Sheet and Ample Liquidity YE 2022 Leverage Debt / Liquidity Considerations Total Debt Outstanding $3.1B ● Ample liquidity: increased revolver capacity to $1.2 bil. in January 2023 (through 2026) Cash and cash equivalents $0.2B ● Prioritizing near-term capex priorities while supporting
Slide 13: Quarterly Sales Trend Analysis
Quarterly Sales Trend Analysis 4Q21 1Q22 2Q22 3Q22 4Q22 Reported Sales Change 9.7% 14.5% 11.7% 11.8% (7.2%) (1) Organic Sales Change 12.8% 12.7% 11.3% 15.5% (0.9%) Acquisitions/Divestitures 5.7% 5.3% 5.4% 3.5% 0.1% (1),(2) Sales Change Ex. Currency 18.5% 18.0% 16.7% 19.0% (0.8%) Extra Week Impact (8
Slide 14: Fourth Quarter Sales Growth and Operating Margin Comparison
Fourth Quarter Sales Growth and Operating Margin Comparison Fourth Quarter Sales Growth Reported Ex. Currency Organic Materials Group(5.4%)2.2%2.2% Solutions Group(11.3%)(7.3%)(7.7%) Total Company(7.2%)(0.8%)(0.9%) Reported Adj. EBITDA Margin Operating Margin 4Q22 4Q21 4Q22 4Q21 Materials Group10.7%
Slide 15: Fourth Quarter 2022 Results: Materials Group
Fourth Quarter 2022 Results AVY ‘22 Sales by Segment Materials Group Materials Group 72% Solutions Group Reported sales decreased 5% to $1.4 bil. Sales up 2% ex. currency and 2% organically ● Label materials up low-single digits on organic basis, with growth in both high value and base categories ○
Slide 16: Fourth Quarter 2022 Results: Solutions Group
Fourth Quarter 2022 Results AVY ‘22 Sales by Segment Solutions Group Materials Group 28% Solutions Group Reported sales decreased 11% to $585 mil. Sales down 7% ex. currency and 8% organically ● High value categories up mid-single digits organically ● Base solutions down high-teens organically as cu
Slide 17: Quarterly Sales Trend Analysis (cont.)
Quarterly Sales Trend Analysis (cont.) Organic Sales Change 4Q21 1Q22 2Q22 3Q22 4Q22 Materials Group 11% 10% 14% 19% 2% Solutions Group 20% 20% 5% 7% (8%) Total Company 13% 13% 11% 16% (1%) Total Company 19% 18% 17% 19% (1%) Sales Change Ex. Currency February 2, 2023 Preliminary & unaudited, Q4 & FY
Slide 18: 2023 EPS Guidance
2023 EPS Guidance Adj. EPS Reported EPS $8.85 – $9.25 ~40% adj. EPS growth 2019-2022 Add back: est. restructuring costs and other items ~$0.30 Adjusted EPS (non-GAAP) $9.15 – $9.55 Contributing Factors ● Reported sales growth of 0% to 4%; ~1% currency headwind ○ Organic sales growth of 1% to 5% ○ De
Slide 19: Appendix A: End Market Exposure Supplemental Segment Results
Appendix A: End Market Exposure Supplemental Segment Results February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 19
Slide 20: Broad exposure to diverse end markets
Broad exposure to diverse end markets (1) (1) Sales by End Market Category Sales by Geographic End Market (2) (2) Staples Other Other Food Industrial/ ~60% LATAM Dur U.S abl . e S. Asia 27% U.S. HPC Total ~40% China Staples E. Europe Apparel ~80% Beverage & MENA Western Discretionary Pharma Europe W
Slide 21: Supplemental 2022 Segment Results
Supplemental 2022 Segment Results Rptd. Sales Ex. Curr. Org. Sales Operating Oper. Adj. Oper. Adj. EBITDA Q4 2022 Net Sales Change Change Change Income Margin Margin Margin Former LGM $1,251 (6.0%) 1.5% 1.5% $135 10.8% 10.5% 12.7% Former IHM $190 (1.3%) 6.7% 6.7% $19 9.8% 9.7% 13.1% Materials Group
Slide 22: Historical Trends - New Reporting Segments
Historical Trends - New Reporting Segments February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 22
Slide 23: Historical Trends - New Reporting Segments Continued
Historical Trends - New Reporting Segments Continued February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 23
Slide 24: Appendix B: Reconciliation of Financial Measures from GAAP to Non-GAAP
Appendix B: Reconciliation of Financial Measures from GAAP to Non-GAAP February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 24
Slide 25: Organic Sales Change – Avery Dennison
Organic Sales Change – Avery Dennison (1) Totals may not sum due to rounding February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 25
Slide 26: Organic Sales Change by Segment
Organic Sales Change by Segment (1) Totals may not sum due to rounding February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 26
Slide 27: Adjusted Operating Margin and EBITDA – Avery Dennison
Adjusted Operating Margin and EBITDA – Avery Dennison February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 27
Slide 28: Adjusted Operating Margin and EBITDA – Materials Group
Adjusted Operating Margin and EBITDA – Materials Group February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 28
Slide 29: Adjusted Operating Margin and EBITDA – Solutions Group
Adjusted Operating Margin and EBITDA – Solutions Group February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 29
Slide 30: Adjusted Net Income
Adjusted Net Income The adjusted tax rate was 24.7%, 25%, 24.1%, 24.6%, and 25% for 2022, 2021, 2020, 2019, and 2018, 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 li
Slide 31: Adjusted EPS
Adjusted EPS The adjusted tax rate was 24.7%, 25%, 24.1%, 24.6%, and 25% for 2022, 2021, 2020, 2019, and 2018, 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, out
Slide 32: Free Cash Flow
Free Cash Flow February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 32
Slide 33: Return on Total Capital (ROTC)
Return on Total Capital (ROTC) February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 33
Slide 34: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 34
Slide 35: Adjusted EBITDA and EPS ex. currency
Adjusted EBITDA and EPS ex. currency February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 35
Slide 36: February 2, and analysis oration. All rights reserved. Avery Dennison and all other Avery
February 2, 2023 Preliminary & unaudited, Q4 & FY 2022 financial review and analysis 36 © 2023 Avery Dennison Corporation. All rights reserved. Avery Dennison and all other Avery Dennison brands, product names and codes are trademarks of Avery Dennison Corporation. All other brands or product names