Executive Summary

Q4 2024 delivered solid top-line growth with net sales of $2.19B (+3.6% YoY) and adjusted EPS of $2.38 (+10% YoY), supported by volume and productivity; reported EPS was $2.16 (+22% YoY) .
Materials Group posted 4% organic growth and strong margins (adj. EBITDA margin 17.0%, +80 bps YoY); Solutions Group grew 3% organically though mix and higher employee costs weighed modestly on margins (adj. EBITDA margin 17.8%, −40 bps YoY) .
FY25 guidance introduced: adjusted EPS $9.80–$10.20 with 3–4% organic sales growth; management expects currency headwinds (~$30M OI) and ~$40M restructuring savings, with ~100% adjusted FCF conversion and ~26% adjusted tax rate .
Capital allocation catalysts: €500M 3.75% notes issued to refinance 1.25% notes due March 2025; accelerated Q4 buybacks (0.7M shares, $140M); net debt/adj. EBITDA improved to 2.0x .

What Went Well and What Went Wrong

What Went Well

“We delivered strong results in 2024, achieving nineteen percent earnings growth” with adjusted EPS of $9.43 and adjusted operating/EBITDA margins up 130 bps, underscoring execution across Materials and Solutions .
Materials Group: high-value categories up high single digits; adj. EBITDA margin rose to 17.0% in Q4 (+80 bps YoY) on volume/mix and productivity .
Intelligent Labels: 2024 organic sales up ~9% to ~$0.9B; apparel +~20%, general retail +40%+, with first U.S. grocer adopting item-level RFID in bakery—a strategic milestone positioning for food category growth .

What Went Wrong

Solutions high-value categories declined mid-single digits ex-currency in Q4, as logistics softness and mix effects offset strength in apparel/general retail; adj. EBITDA margin dipped 40 bps YoY to 17.8% .
Management noted logistics volumes were lower and choppy versus initial program build; 2025 plans assume slight logistics decline, limiting IL upside to 10–15% growth absent new conversions until 2H25 .
Raw materials: modest sequential deflation; lingering year-over-year price reductions continue to pressure pricing, with planned pass-throughs creating near-term price headwinds into Q1–Q2 2025 .

Financial Results

Consolidated Performance vs Prior Periods

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Billions)	$2.235	$2.183	$2.186
Reported EPS ($)	$2.18	$2.25	$2.16
Adjusted EPS ($)	$2.42	$2.33	$2.38
Adjusted EBITDA Margin (%)	16.4%	16.4%	16.4%
Reported Operating Margin (%)	11.7%	12.1%	12.0%
Net Income Margin (%)	7.9%	6.6%	8.0%

Notes: Adjusted EPS excludes restructuring and other items; Q4 per-share adjustments totaled ~$0.22 (net) yielding $2.38 adjusted EPS vs $2.16 reported .

Segment Breakdown

Segment Metric	Q2 2024	Q3 2024	Q4 2024
Materials Net Sales ($MM)	$1,546.8	$1,497.7	$1,472.0
Materials Adj. EBITDA Margin (%)	17.9%	17.0%	17.0%
Solutions Net Sales ($MM)	$688.5	$685.7	$713.7
Solutions Adj. EBITDA Margin (%)	16.8%	17.9%	17.8%

KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Adjusted Free Cash Flow ($MM)	$142.5	$219.4	$279.5
Net Debt / Adj. EBITDA (LTM)	2.2x	2.1x	2.0x
Adjusted Tax Rate (%)	26.0%	26.0%	25.7%
Share Repurchases	0.2M shrs, $41M in 1H	0.3M shrs in Q3	0.7M shrs, $140M in Q4
Quarterly Dividend/Declared	$0.88 (rate raised Apr)	—	$0.88 declared for Mar 19, 2025

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Reported EPS	FY24 (as of Q3)	$8.75–$8.95	$8.75–$8.90	Lowered top-end
Adjusted EPS	FY24 (as of Q2)	$9.00–$9.50	$9.30–$9.50	Raised
Adjusted EPS	FY24 (as of Q3)	$9.30–$9.50	$9.35–$9.50	Raised (midpoint)
Reported EPS	FY25	N/A	$9.55–$9.95	New
Adjusted EPS	FY25	N/A	$9.80–$10.20	New
Organic Sales Growth	FY25	N/A	3.0%–4.0%	New
Currency Translation Impact (OI)	FY25	N/A	~($30MM) headwind	New
Restructuring Savings (net)	FY25	N/A	~$40MM	New
Adjusted FCF Conversion	FY25	N/A	~100%	New
Adjusted Tax Rate	FY25	N/A	~26%	New
Net Interest Expense	FY25	N/A	~$105MM	New
Avg Diluted Shares	FY25	N/A	~79.5MM	New
Calendar/Fiscal Change	FY25	52/53 wk year	Switch to calendar year (adds ~2 working days)	Changed

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Intelligent Labels (IL) adoption	Targeted mid-teens sales; uneven rollouts; pilots in food/logistics; apparel normalization faster than expected	2024 organic +~9% to ~$0.9B; apparel +~15% in Q4; general retail +40%; logistics down; 2025 IL growth expected 10–15% (known programs + pipeline conversion in 2H25)	Growth continuing; logistics softer; pipeline conversion targeted 2H25
Food (Kroger bakery rollout)	Strategic collaboration announced; grocery as largest TAM; phased rollouts anticipated	First U.S. grocer adopting item-level RFID in bakery in 2025; expansion to proteins/produce over time	Early rollout; multi-year adoption runway
Logistics customer dynamics	Lower IL logistics volumes in Q3 due to prior year builds and transition; completion noted	2025 plans assume slight decline in logistics; volumes aligned with customer; no major new adoptions assumed in 2025	Conservative near-term logistics outlook
Raw materials pricing	Low single-digit sequential inflation (paper in Europe); pricing actions taken	Slight deflation sequentially; some year-over-year price pass-through lag into Q1–Q2 2025	Stabilizing to slightly deflationary
Vestcom (shelf-edge)	Softness tied to drugstore channel; re-signed major retailer; digital shelf integration readiness	New agreement with leading U.S. health solutions company; expected strong 1H25 growth	Improving outlook; program wins
Embelex (embellishments)	Growth platform ~15% organic CAGR over six years; expected margin improvement with apparel normalization	Double-digit growth expected in 2025; tailwinds from team sports/events (e.g., World Cup), personalization	Positive trajectory
Tariffs/Macro	Monitoring; apparel import timing impacted by shipping routes; no visible tariff-driven pull-forward	Direct tariff exposure limited; produce/sell largely in-region; network can flex around Mexico/China scenarios	Limited direct exposure; scenario-ready
Capital allocation	Dividend raised to $0.88; net debt/adj. EBITDA ~2.2x; buybacks ongoing	€500M 3.75% notes issued; repay €500M 1.25% due Mar 2025; Q4 buybacks accelerated; net debt/adj. EBITDA 2.0x	Strengthened balance sheet; opportunistic buybacks
Fiscal year change	—	Shift to calendar year starting 2025 (adds ~2 working days in Q4 2025)	Calendar aligned

Management Commentary

CEO: “We delivered strong results in 2024, achieving nineteen percent earnings growth… We remain well-positioned to continue our long track record of strong earnings growth in 2025, including accelerating growth in our high-value categories” .
On IL strategy: “We provide labeling materials… and we are the market leaders in… UHF RFID… uniquely positions us to lead and win in multiple new categories with more than 250 billion units of opportunity” .
CFO: “In the fourth quarter, we delivered strong adjusted earnings per share of $2.38… up 10%… Adjusted EBITDA margins were strong at 16.4%… We generated strong adjusted free cash flow of $280 million” .
On currency and costs: “Overall… slight deflation… year-over-year negative raw material pricing modeled into Q1 and a little into Q2 of 2025” .

Q&A Highlights

Logistics IL outlook: Management embeds slight logistics decline for 2025 within IL’s 10–15% growth range; volumes aligned with a large customer, with no major 2025 adoptions assumed, targeting pipeline conversion in 2H25 .
Materials core growth: Assuming mid-single-digit volume growth in 2025 with modest price; raw materials broadly stable to slight deflation; pass-through lags into early 2025 .
Solutions margins and mix: Q4 margin delta primarily mix; expect margin expansion in 2025 as high-value segments accelerate (Vestcom, IL rollouts); potential higher-than-average flow-through with growth mix .
Tariffs exposure limited: Produce/sell mainly within regions; flexible capacity across global network; modest indirect exposure possible via apparel costs .
Capital allocation: €500M 2034 notes issued to repay €500M 2025 notes; net interest expense to tick up in 2025; ample capacity for M&A/share buybacks focused on EVA .

Estimates Context

S&P Global consensus estimates for Q4 2024 and the prior two quarters were unavailable due to data access limits during retrieval. Management characterized Q4 adjusted EPS as “in line with our expectations,” but this reflects internal expectations, not Wall Street consensus .
Without S&P consensus, we cannot assess beats/misses vs Street estimates; investors should assume model updates will focus on slightly higher adj. EPS trajectory for FY25 and mix-driven margin cadence in Solutions.

Key Takeaways for Investors

IL growth remains intact (10–15% in FY25) with a clear roadmap: known program expansions drive ~10%, and pipeline conversion targeted for 2H25 can add ~5%; watch logistics softness offset by apparel/general retail strength .
Materials margins now at or above long-term targets (adj. EBITDA ~17%); continued productivity and volume leverage should offset modest deflation-related price headwinds early in 2025 .
Solutions margin recovery hinges on mix (high-value segments ramp) and execution; program wins (Vestcom) and apparel rollouts support 2025 margin expansion .
FY25 guide is conservative on currency and logistics; adjusted EPS $9.80–$10.20 assumes 3–4% organic growth and productivity benefits; near-term EPS cadence: slight up in Q1, strengthening through the year .
Balance sheet optionality: €500M refinancing completed; net leverage improved to 2.0x—expect disciplined buybacks/M&A prioritizing EVA .
Calendar-year switch adds ~2 working days to Q4 2025, subtly aiding operational throughput; note ~26% adjusted tax rate and ~$105M net interest expense embedded in guidance .
Tactical positioning: favor exposure to high-value categories (IL, Embelex, Vestcom) and Materials emerging markets; monitor logistics customer developments and currency impacts for near-term estimate revisions .

References: Q4 2024 8-K and press release ; Q4 2024 earnings call transcript ; Q3 2024 8-K and call ; Q2 2024 8-K and call ; Dividend press release ; €500M notes press release .

Avery Dennison Corp (AVY)·Q4 2024 Earnings Summary