Avery Dennison Corporation · NYSE:AVY
Avery Dennison — FY2020 Earnings Presentation
36 slides from Avery Dennison's earnings presentation, Feb 3, 2021
Slide 1: Fourth Quarter and Full Year 2020 Financial Review and Analysis
Fourth Quarter and Full Year 2020 Financial Review and Analysis (preliminary, unaudited) February 3, 2021 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: Once again proved our resiliency in 2020, well-positioned for growth
Once again proved our resiliency in 2020, well-positioned for growth Safety and well-being of employees remains our top priority during continuing global health crisis Delivered another year of strong earnings growth, despite challenging macro environment Sales down due to pandemic-related market de
Slide 5: Full Year 2020 Overview
Full Year 2020 Overview Reported sales down 1.4% Sales change ex. currency (non-GAAP) down 1.7%; acquisitions contributed ~2 points of growth Organic sales change (non-GAAP) down 3.4% Q4 sales change ex. currency up 5.2%, up 3.2% organically Reported operating margin of 11.6%, up 70 bps Adj. EBITDA
Slide 6: COVID-19 Update
COVID-19 Update Safety and well-being of employees remains our top priority during continuing global health crisis Implemented world-class safety protocols and continue to adapt as pandemic evolves Provided income continuation to employees during initial stages of pandemic Provided gratitude payment
Slide 7: Label and Graphic Materials
Label and Graphic Materials Reported sales decreased 0.6% to $4.72 bil. Sales were down 0.5% on an organic basis Label and Packaging Materials up low-single digit organically Underlying label demand remained strong throughout the downturn given increased consumption of packaged goods, including e-co
Slide 8: Retail Branding and Information Solutions
Retail Branding and Information Solutions Reported sales decreased 1.2% to $1.63 bil. Sales were down 2.3% ex. currency, and 9.5% on an organic basis Strong organic growth in high value categories was more than offset by decline in the base Enterprise-wide sales of RFID products up approximately 40%
Slide 9: Industrial and Healthcare Materials
Industrial and Healthcare Materials Reported sales decreased 7.2% to $626 mil. Sales were down 8.7% on an organic basis High-single digit decline in industrial categories, reflecting lower global industrial production (e.g. automotive), particularly in Q2. Demand improved sequentially in Q3 and Q4 (
Slide 10: Full Year 2020 Sales Change and Operating Margin Comparison
Full Year 2020 Sales Change and Operating Margin Comparison Operating Margin Reported Operating Margin Adj. (Non-GAAP) EBITDA Margin Adj. (Non-GAAP) FY20 FY19 FY20 FY19 FY20 FY19 Label and Graphic Materials 14.6% 12.7% 15.1% 13.3% 17.3% 15.4% Retail Branding and Information Solutions 8.9% 11.9% 10.3
Slide 11: Delivering on objectives to drive GDP+ growth and top-quartile returns
Delivering on objectives to drive GDP+ growth and top-quartile returns (1) Reflects five-year compound annual growth rate, with 2016 as the base period (2) Impact of closed acquisitions as of 3/8/2017 is approximately 1 point of growth (3) Reflects four-year compound annual growth rate, with 2016 as
Slide 12: Strong Balance Sheet and Ample Liquidity
Ample liquidity: $800 mil. available under revolving credit facility (through 2025), plus ~$252 mil. in cash and cash equivalents at quarter-end Laddered long-term debt: next maturity in 2023 No foreseeable covenant constraints Ringfencing investments in high value categories Strong Balance Sheet an
Slide 13: Fourth Quarter 2020 Overview
Fourth Quarter 2020 Overview Reported EPS of $2.28, up ~19%; adj. EPS (non-GAAP) of $2.27, up ~31% Reported sales increased 12.3% to $1.99 bil. (4.9% due to the extra week) Sales change ex. currency (non-GAAP) up 5.2% Organic sales growth (non-GAAP) of 3.2% Reported operating margin of 13.7%, up 350
Slide 14: Sales Trend Analysis
Sales Trend Analysis 4Q19 1Q20 2Q20 3Q20 4Q20 2020 Reported Sales Change 0.2% (1.0%) (14.9%) (1.8%) 12.3% (1.4%) Organic Sales Change 2.1% 0.3% (13.7%) (3.6%) 3.2% (3.4%) Acquisitions - 0.7% 1.7% 2.3% 2.0% 1.7% Sales Change Ex. Currency* 2.1% 1.0% (12.0%) (1.3%) 5.2% (1.7%) Extra Week Impact - - - -
Slide 15: Fourth Quarter 2020 Sales Change and Operating Margin Comparison
Fourth Quarter 2020 Sales Change and Operating Margin Comparison Reported Adjusted (Non-GAAP) Operating Margin 4Q20 4Q19 4Q20 4Q19 Label and Graphic Materials 15.9% 12.0% 15.4% 13.3% Retail Branding and Information Solutions 15.3% 11.5% 15.7% 13.6% Industrial and Healthcare Materials 12.4% 7.2% 12.3
Slide 16: Fourth Quarter 2020 Segment Review
Fourth Quarter 2020 Segment Review Label and Graphic Materials Reported sales increased 10.1% to $1.29 bil. Sales were up 3.6% on an organic basis Label and Packaging Materials up mid-single digit from prior year Combined Graphics and Reflective Solutions down mid-single digit North America & emergi
Slide 17: Fourth Quarter 2020 Segment Review (cont.)
Fourth Quarter 2020 Segment Review (cont.) Retail Branding and Information Solutions Reported sales increased 19.0% to $508 mil. Sales were up 11.6% ex. currency, and 3.1% on an organic basis Enterprise-wide sales of RFID products up ~55% ex. currency with benefit of Smartrac acquisition; up ~21% or
Slide 18: 2021 EPS Guidance
2021 EPS Guidance Add Back: Est. restructuring costs and other items Adjusted EPS (non-GAAP) Reported EPS $7.50 – $7.90 $7.65 – $8.05 Contributing Factors to 2021 Results Reported sales growth of 5% to 9%, including a ~2% tailwind from currency translation at recent rates, ~1% benefit from M&A, and
Slide 19: Appendix A: Supplemental Sales Information
Appendix A: Supplemental Sales Information
Slide 20: Organic Growth: Monthly Sales Trends
Organic Growth Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q4 LGM 5% (4%) (2%) (8%) (6%) (1%) (1%) 2% 3% 6% 4% LPM 7% 7% 2% (6%) (5%) 0% 0% 2% 5% 8% 5% Graphics & Reflective (8%) (55%) (26%) (16%) (10%) (8%) (6%) 2% (8%) (9%) (5%) RBIS* 2% (54%) (38%) (17%) (5%) (5%) (5%) 6% 2% 2% 3% IHM (6%) (17%) (25%
Slide 21: Broad exposure to diverse end markets
Broad exposure to diverse end markets, with ~60% tied to non-durable consumer goods, logistics & shipping, and medical products 2020 Sales by Product Category Non-durable consumer goods Retail Apparel Industrial / Durable Logistics, Shipping, & Other Variable Information Medical / Healthcare Non-dur
Slide 22: Diversified geographic exposure
Diversified geographic exposure 2020 Sales by Manufacturing Location 2020 Sales by End Market, estimated (1) Other includes Australia, Canada, Japan, New Zealand, and South Africa. U.S. Western Europe China Other Asia (ex-China) E. Europe & MENA Latin America Other(1)
Slide 23: Appendix B: Reconciliation of Financial Measures from GAAP to Non-GAAP
Appendix B: Reconciliation of Financial Measures from GAAP to Non-GAAP
Slide 24: Organic Sales Change – Avery Dennison
Organic Sales Change – Avery Dennison Totals may not sum due to rounding.
Slide 25: Organic Sales Change by Segment
Organic Sales Change by Segment Totals may not sum due to rounding.
Slide 26: Organic Sales Change by Segment - Continued
Organic Sales Change by Segment - Continued Totals may not sum due to rounding.
Slide 27: Adjusted Operating Margin – Avery Dennison
Adjusted Operating Margin – Avery Dennison
Slide 28: Adjusted Operating Margin – LGM
Adjusted Operating Margin – LGM
Slide 29: Adjusted Operating Margin – RBIS
Adjusted Operating Margin – RBIS
Slide 30: Adjusted Operating Margin – IHM
Adjusted Operating Margin – IHM
Slide 31: Adjusted Net Income
Adjusted Net Income The adjusted tax rate was 24.1%, 24.6%, 25%, and 28% for 2020, 2019, 2018, and 2017, respectively. (1) Includes restructuring and related charges, Argentine peso remeasurement transition loss, transaction and related costs, reversal of acquisition-related contingent consideration
Slide 32: Adjusted EPS
Adjusted EPS The adjusted tax rate was 24.1%, 24.6%, 25%, and 28% for 2020, 2019, 2018, and 2017, respectively. (1) Includes restructuring and related charges, Argentine peso remeasurement transition loss, transaction and related costs, reversal of acquisition-related contingent consideration, net g
Slide 33: Free Cash Flow
Free Cash Flow ($ in millions) 2016 2017 2018 Net cash provided by operating activities Purchases of property, plant and equipment Purchases of software and other deferred charges Proceeds from sales of property, plant and equipment Proceeds from insurance and sales (purchases) of investments, net f
Slide 34: 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. In the fourth quarter of 2018, we finalized our provisional amounts as defined under SEC Staff Accounting Bulletin No. 118 re
Slide 35: Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDA Total Company Netsales Operating income before interest expense. as report Operating margins. as reported Restucturng char nice andre 26cEtinpoimment and sace cancellation chesges Otheritems Adjusted operating income (nom ‘Adjusted EBITDA margins (non-GAAP) Total Debt Les
Slide 36: Thank you
Thank you IN AVERY DENNISON