Slide 1: Fourth Quarter and Full Year 2023 Financial Review and Analysis
Fourth Quarter and Full Year 2023 Financial Review and Analysis (preliminary, unaudited) January 31, 2024 Supplemental Presentation Materials Unless otherwise indicated, comparisons are to the same period in the prior year. January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial review and a
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: Q4 2023 adj. EPS up sequentially and in line with expectations
Q4 2023 adj. EPS up sequentially and in line with expectations; expect strong earnings growth in ‘24 as volumes normalize and IL accelerates Materials volume increased sequentially throughout the year; Q4 up compared to PY ● Downstream inventory destocking largely complete at YE 2023; consumer deman
Slide 5: Full year 2023 review
Full year 2023 review Net sales of $8.4 bil. ● Sales change ex. currency (non-GAAP) down 7%; organic sales change (non-GAAP) down 8% Reported operating income of $783 mil. ● Adj. EBITDA (non-GAAP) of $1,262 mil. ● Adj. EBITDA margin (non-GAAP) of 15.1% Reported EPS of $6.20; adj. EPS (non-GAAP) of $
Slide 6: U.S. Consumer and Business Sentiment, 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 ● Economic indicators remain Apparel Imports % vs. 2019 U.S. Apparel Inventory to Sales Ratio uncertain ● Business and consumer sentim
Slide 7: Intelligent Labels
Intelligent Labels Organic Sales Change % vs. PY 18% Organic Sales CAGR ● Q4 2023 organic sales up more than 30% ○ Non-apparel categories, particularly Logistics and Food, up ~110% ○ Apparel comparable to PY; retailer and brand sentiment remains muted ● FY 2023 organic sales up low-double digits dri
Slide 8: Full year 2023 sales growth and operating margin comparisons
Full year 2023 sales growth and operating margin comparisons Full Year Sales Change Reported Ex. Currency Organic Materials Group (11%) (10%) (10%) Solutions Group 0% 2% (1%) Total Company (8%) (7%) (8%) Reported Adj. EBITDA Margin Operating Margin (non-GAAP) 2023 2022 2023 2022 Materials Group 12.1
Slide 9: Expect progress toward long-term targets in 2024
Following challenging 2023, expect progress toward long-term targets in 2024 as label and apparel markets rebound and IL growth accelerates 2020-2025 2020-2023 2020-2024 TARGETS RESULTS GUIDANCE MIDPOINT Sales Growth Ex. Currency(1) 5%+ 8% 3-YR CAGR ~7% 4-YR CAGR Adjusted EBITDA Growth(1)(2) 6.5% 6%
Slide 10: Balanced scorecard measuring progress for key stakeholders
Balanced scorecard measuring progress for key stakeholders Employees Customers Communities Shareholders Employee Engagement Vitality Index Cum. GHG% Reduction Cumulative TSR (as of 12.31.23) 145% AVY *as of * Q3 2023 S&P 500 107% Women Manager+ Service Flexibility % Certified Paper Leading in an envi
Slide 11: Strong balance sheet and ample liquidity
Strong balance sheet and ample liquidity Q4 2023 Leverage Debt / Liquidity Considerations Total Debt Outstanding $3.2B ● Strong adj. free cash flow; delivering ~100% long-term Cash and cash equivalents $0.2B adj. FCF conversion Net Debt(1) $3.0B ● Ample liquidity: $1.2 bil. revolving credit facility,
Slide 12: Fourth quarter 2023 review
Fourth quarter 2023 review Net sales of $2.1 bil. ● Sales change ex. currency up 3% ● Organic sales change up 1% ○ Volume up mid-single digits, partially offset by deflation-related price reductions Reported operating income of $220 mil. ● Adj. EBITDA of $338 mil., up 29% vs. PY and up sequentially ●
Slide 13: Materials Group Fourth Quarter 2023 Results
Fourth Quarter 2023 Results AVY ‘23 Sales by Segment Materials Group Materials Group Reported sales decreased 2% to $1.4 bil. 69% Solutions Group Sales down 4% ex. currency and organically ● Label Materials down mid-single digits on organic basis ○ Volume up low-single digits ○ Inventory destocking
Slide 14: Solutions Group Fourth Quarter 2023 Results
Fourth Quarter 2023 Results AVY ‘23 Sales by Segment Solutions Group Materials Group Reported sales increased 18% to $692 mil. 31% Solutions Group Sales up 19% ex. currency and 14% organically ● Apparel Solutions volume up sequentially ● Solutions high-value categories up 20%+ organically ● Solution
Slide 15: Q4 sales growth and operating margin comparisons
Q4 sales growth and operating margin comparisons Q4 Sales Change Reported Ex. Currency Organic Materials Group (2%) (4%) (4%) Solutions Group 18% 19% 14% Total Company 4% 3% 1% Reported Adj. EBITDA Margin Operating Margin (non-GAAP) 2023 2022 2023 2022 Materials Group 12.0% 10.7% 16.2% 12.8% Solutio
Slide 16: Quarterly sales trend analysis
Quarterly sales trend analysis 4Q22 1Q23 2Q23 3Q23 4Q23 Reported Sales Change (7%) (12%) (11%) (9%) 4% Organic Sales Change(1) (1%) (9%) (10%) (11%) 1% Acquisitions/Divestitures 0% 0% 1% 1% 1% Sales Change Ex. Currency(1),(2) (1%) (9%) (10%) (10%) 3% Currency Translation (6%) (3%) (1%) 1% 2% Reporte
Slide 17: Quarterly sales trend analysis (cont.)
Quarterly sales trend analysis (cont.) Organic Sales Change 4Q22 1Q23 2Q23 3Q23 4Q23 Materials Group 2% (9%) (12%) (16%) (4%) Solutions Group (8%) (9%) (7%) 1% 14% Total Company (1%) (9%) (10%) (11%) 1% Total Company (1%) (9%) (10%) (10%) 3% Sales Change Ex. Currency January 31, 2024 Preliminary & u
Slide 18: 2024 EPS Guidance
2024 EPS Guidance Reported EPS $8.65 - $9.15 Add Back: Est. restructuring costs and other items ~$0.35 Adjusted EPS $9.00 - $9.50 Full-year 2024 contributing factors ● Reported sales growth of 3% to 5%, including ~0.5% benefit from M&A ○ Organic sales growth of 2.5% to 4.5% on strong volume growth, p
Slide 19: Appendix A: Reconciliation of Non-GAAP Financial Measures from GAAP
Appendix A: Reconciliation of Non-GAAP Financial Measures from GAAP January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial review and analysis 19
Slide 20: Organic sales change – Avery Dennison
Organic sales change – Avery Dennison (1) Totals may not sum due to rounding January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial review and analysis 20
Slide 21: Adjusted operating margin and EBITDA – Avery Dennison
Adjusted operating margin and EBITDA – Avery Dennison January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial review and analysis 21
Slide 22: Adjusted EPS
Adjusted EPS The adjusted tax rate was 25.8%, 24.7%, 25.0%, 24.1%, and 24.6% for 2023, 2022, 2021, 2020, and 2019, 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 l
Slide 23: Return on total capital (ROTC)
Return on total capital (ROTC) (1) (2) (2)(3) (1) includes impact of U.S. pension plan termination (2) includes impact of contingent liability related to the Adasa legal matter (3) includes impact of remeasurement of Argentine peso January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial revi
Slide 24: Adj. EBITDA and adj. EPS change ex. currency – Avery Dennison
Adj. EBITDA and adj. EPS change ex. currency – Avery Dennison (1) Totals may not sum due to rounding January 31, 2024 Preliminary & unaudited, Q4 & FY 2023 financial review and analysis 24
Slide 25: January 31, Dennison 2024 Corporation.
©January 31,Dennison 2023 Avery 2024 Corporation. Preliminary & unaudited, All rights reserved. Q4 & FY Avery Dennison and 2023 all otherfinancial review Avery Dennison and brands, analysis product names and codes are trademarks of Avery Dennison Corporation. All other brands or product names are tra