Slide 1: Second Quarter 2023 Financial Review and Analysis
Second Quarter 2023 Financial Review and Analysis (preliminary, unaudited) July 25, 2023 Supplemental Presentation Materials Unless otherwise indicated, comparisons are to the same period in the prior year. July 25, 2023 Preliminary & unaudited, Q2 2023 financial review and analysis 1
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, a
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: Q2 adj. EPS up sequentially, modestly below expectations; expect further improvement in Q3
Q2 adj. EPS up sequentially, modestly below expectations; expect further improvement in Q3 Label Materials continues to ramp sequentially ● Pace of volume improvement less steep than anticipated, particularly in June ● Margins remained strong; continues to improve sequentially Apparel Solutions volu
Slide 5: Second quarter 2023 review
Second quarter 2023 review Reported EPS of $1.24 ● Increased accrual for legacy legal matter; preparing for appeal Adj. EPS (non-GAAP) of $1.92, up 13% sequentially Net sales of $2.1 bil. ● Sales change ex. currency (non-GAAP) down 9.6% ● Organic sales change (non-GAAP) down 10.4% Reported operating
Slide 6: Economic indicators: consumer sentiment, label volume, apparel imports
U.S. Consumer Sentiment U.S. Business Sentiment (Mfg. PMI) Avg. AVY Label Volume (NA + Europe) Source: University of Michigan Source: Institute for Supply Management Apparel Imports (US + Europe) U.S. Apparel Inventory to Sales Ratio ● Economic indicators conflicting ● Business and consumer sentiment
Slide 7: Intelligent Labels
Intelligent Labels ~20% Non-Apparel Categories $0.8B ~20% Org. Sales $0.25B ● Expect IL growth of ~20% in 2023 ● Q2 2023 organic sales roughly flat; non-apparel up ~50%, offset by decline in apparel ● Non-apparel programs to further accelerate in H2, particularly in logistics and food ● As apparel re
Slide 8: Quarterly sales trend analysis
Quarterly sales trend analysis 2Q22 3Q22 4Q22 1Q23 2Q23 Reported Sales Change 11.7% 11.8% (7.2%) (12.1%) (10.9%) Organic Sales Change(1) 11.3% 15.5% (0.9%) (9.2%) (10.4%) Acquisitions/Divestitures 5.4% 3.5% 0.1% 0.2% 0.8% Sales Change Ex. Currency(1),(2) 16.7% 19.0% (0.8%) (9.1%) (9.6%) Currency Tra
Slide 9: Quarterly sales trend analysis (cont.)
Quarterly sales trend analysis (cont.) Organic Sales Change 2Q22 3Q22 4Q22 1Q23 2Q23 Materials Group 14% 19% 2% (9%) (12%) Solutions Group 5% 7% (8%) (9%) (7%) Total Company 11% 16% (1%) (9%) (10%) Total Company 17% 19% (1%) (9%) (10%) Sales Change Ex. Currency July 25, 2023 Preliminary & unaudited,
Slide 10: Sales change and operating margin comparison
Sales change and operating margin comparison Q2 Sales Change Reported Ex. Currency Organic Materials Group (12.6%) (11.6%) (11.6%) Solutions Group (6.5%) (4.4%) (7.2%) Total Company (10.9%) (9.6%) (10.4%) Reported Adj. EBITDA Margin Operating Margin (non-GAAP) 2Q23 2Q22 2Q23 2Q22 Materials Group 13.
Slide 11: Materials Group second quarter 2023 results
Second Quarter 2023 Results AVY ‘22 Sales by Segment Materials Group Materials Group Reported sales decreased 12.6% to $1.5 bil. 72% Solutions Group Sales down 11.6% ex. currency and organically ● Label materials down mid-teens on organic basis ○ Lower volume driven primarily by inventory destocking
Slide 12: Solutions Group second quarter 2023 results
Second Quarter 2023 Results AVY ‘22 Sales by Segment Solutions Group Materials Group Reported sales decreased 6.5% to $615 mil. 28% Solutions Group Sales down 4.4% ex. currency and 7.2% organically ● High-value categories up low-single digits organically ● Base solutions down high-teens organically;
Slide 13: EPS Guidance Q3 2023
EPS Guidance Q3 2023 Reported EPS $1.70 – $1.90 Add Back: Est. restructuring costs and other items ~$0.30 Adjusted EPS (non-GAAP) $2.00 – $2.20 ● Q3 2023 EPS to increase sequentially ○ Volumes ramping in labels and non-apparel IL ○ Year-over-year organic sales change comparable to H1 ○ Implementing
Slide 14: Appendix
Appendix July 25, 2023 Preliminary & unaudited, Q2 2023 financial review and analysis 14
Slide 15: Broad exposure to diverse end markets
Broad exposure to diverse end markets Sales by End Market Category(1) Sales by Geographic End Market(1) Staples Other(2) Other(2) ~60% Food Industrial/ LATAM U.S. Durable 27% S. Asia HPC U.S. Total China ~40% Staples Beverage ~80% Apparel E. Europe & MENA Western Pharma Discretionary Europe Western
Slide 16: July Preliminary & unaudited,
©July 2023 25, 2023 Avery Preliminary Dennison Corporation. & unaudited, All rights reserved. Q2 2023 Avery Dennison financial and all review other Avery and Dennison analysis brands, product names and codes are trademarks of Avery Dennison Corporation. All other brands or product names are trademark