Slide 1: Second Quarter 2010 Financial Review and Analysis
Supplemental Presentation Materials Second Quarter 2010 Financial Review and Analysis (preliminary, unaudited) July 28, 2010
Slide 2: Forward-looking statements
2 July 28, 2010 Second Quarter 2010 Financial Review and Analysis 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. Such forward-looking statements
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation contains certain non-GAAP measures as defined by SEC rules. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included with the financial schedules accompanying the earnings news release for the quarter, along
Slide 4: Overview
Overview Second Quarter 2010 Results Strong top line growth across all major regions of operation; particular strength in emerging markets and Retail Information Services Increased operating margin as higher volume and the benefits from restructuring and productivity initiatives more than offset the
Slide 5: Second Quarter Summary
July 28, 2010 Second Quarter 2010 Financial Review and Analysis Second Quarter Summary Net sales grew 15% from prior year, or approx. 14% on an organic basis(1) Operating margin improved 280 basis points to 9% before restructuring charges and other items Interest expense essentially unchanged vs. pr
Slide 6: Sales Trend Analysis
Sales Trend Analysis July 28, 2010 Second Quarter 2010 Financial Review and Analysis 6 Reported Sales Change (20.4%) (10.2%) 0.7% 9.0% 15.4% 2Q09 3Q09 4Q09 Organic Sales Change (13.5%) (5.9%) (0.6%) 7.3% 14.1% Currency (6.9%) (4.3%) 4.5% 4.9% 1.3% Extra Week -- -- (3.2%) (3.2%) -- 1Q10 2Q10
Slide 7: Margin Analysis
7 Gross Profit Margin (total Company) 29.2% 26.8% 28.4% Operating Margin (non-GAAP(1)): Pressure-sensitive Materials 9.6% 8.1% 10.0% Retail Information Services 8.8% 0.0% 0.8% Office and Consumer Products 15.9% 17.3% 11.2% Other specialty converting businesses 3.1% (3.1%) 2.3% Total Company 9.0% 6.2
Slide 8: Key Factors Impacting Margin
Key Factors Impacting Margin Gross profit margin improved 240 basis points vs. prior year to 29.2% due to increased volume and the benefits of restructuring and productivity initiatives, partially offset by raw material inflation Marketing, general and administrative (MG&A) expense ratio was down 40
Slide 9: Second Quarter Segment Overview: Pressure-Sensitive Materials
9 Second Quarter Segment Overview PRESSURE-SENSITIVE MATERIALS Reported sales of $924 mil., up 16% compared with prior year Organic sales growth of approx. 15% Roll Materials' sales grew at mid-teens rate (organic basis), reflecting strength in all regions Graphics & Reflective sales grew at low-tee
Slide 10: Second Quarter Segment Overview: Retail Information Services
10 Second Quarter Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $412 mil., up 24% compared with prior year Organic sales growth of approx. 23% Q2 comparison benefited from significant inventory destocking in the prior year, as well as improved retail apparel sales and ne
Slide 11: Second Quarter Segment Overview (continued)
11 OFFICE AND CONSUMER PRODUCTS Reported sales of $209 mil., down 4% compared with prior year Sales down approx. 5% on an organic basis Excluding restructuring charges and other items, operating margin declined to 15.9% due to increased investment in consumer promotions and marketing, as well as low
Slide 12: Free Cash Flow
July 28, 2010 Second Quarter 2010 Financial Review and Analysis 12 ($ Millions) 2010 2009 Net cash provided by operating activities $ 143.1 $ 132.8 Purchases of property, plant and equipment, net $ (27.4) $ (29.7) Purchases of software and other deferred charges $ (10.4) $ (14.9) Proceeds from sale
Slide 13: Update to Contributing Factors to 2010 Financial Results
July 28, 2010 Second Quarter 2010 Financial Review and Analysis 13 Update to Contributing Factors to 2010 Financial Results Reported revenue growth of 5% to 7% One less week in fiscal year At current rates, currency translation represents less than 1% benefit to reported sales growth, and neutral im
Slide 14: 2010 Earnings and Free Cash Flow Guidance
2010 Earnings and Free Cash Flow Guidance 2010 Guidance Reported (GAAP) Earnings Per Share $2.48 - $2.68 Add Back: Estimated Restructuring, Asset Impairment, and Other Items ~ $0.12 Adjusted (non-GAAP) Earnings Per Share $2.60 to $2.80 Capital Expenditures & Investments in Software $125 to $150 mil.
Slide 15: AS vee
AS vee DENNISON