Adjustments for Non-Cash Items

Stock-Based Compensation [USD, Millions]

Changes in Working Capital

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Per Share]

Net Change in Cash [USD, Millions]

7a1fbc380a83dbac4c58dd3595077f5701df33927e9e9cd615845d0467e96c65

| Segment / Quarter | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Materials Group (USD Million) | **1,441.3**  **[0001193125-23-022084_d243122dex992.htm:7]**  | **1,460.5**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **1,476.0**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **1,456.0**  **[0001193125-23-262236_d510959dex991.htm:0]** **[0000008818-23-000018_avy-20230930.htm:19]**  | **1,418.0**  **[0001193125-24-020186_d643658dex991.htm:5]**  | **1,496.5**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **1,546.8**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **1,497.7**  **[0000008818-24-000017_avy-20240928.htm:18]**  |
| Solutions Group (USD Million) | **584.6**  **[0001193125-23-022084_d243122dex992.htm:7]**  | **604.5**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **614.5**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **642.3**  **[0001193125-23-262236_d510959dex991.htm:0]** **[0000008818-23-000018_avy-20230930.htm:19]**  | **691.7**  **[0001193125-24-020186_d643658dex991.htm:5]**  | **654.8**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **688.5**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **685.7**  **[0000008818-24-000017_avy-20240928.htm:18]**  |

63a7b711100b175921f87aa6c7a2598d72011f96fa273d41cc4fde481a40eca0

| Metric / Quarter                     | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Operational Working Capital          | **12.9%** **[0000008818-23-000002_avy-20221231.htm:51]** | **14.3%** **[0000008818-23-000009_avy-20230401.htm:25]** | **14.0%** **[0000008818-23-000015_avy-20230701.htm:28]** | **13.1%** **[0000008818-23-000018_avy-20230930.htm:30]** | **12.5%** **[0000008818-24-000003_avy-20231230.htm:53]** | **13.4%** **[0000008818-24-000009_avy-20240330.htm:24]** | **13.4%** **[0000008818-24-000015_avy-20240629.htm:28]** | **14.3%** **[0000008818-24-000017_avy-20240928.htm:30]** |
| Average Days Sales Outstanding       | **62** **[0000008818-23-000002_avy-20221231.htm:51]** | **60** **[0000008818-23-000009_avy-20230401.htm:26]** | **62** **[0000008818-23-000015_avy-20230701.htm:29]** | **62** **[0000008818-23-000018_avy-20230930.htm:30]** | **61** **[0000008818-24-000003_avy-20231230.htm:53]** | **63** **[0000008818-24-000009_avy-20240330.htm:24]** | **62** **[0000008818-24-000015_avy-20240629.htm:28]** | **66** **[0000008818-24-000017_avy-20240928.htm:30]** |
| Average Inventory Turnover           | **6.0** **[0000008818-23-000002_avy-20221231.htm:51]** | **5.8** **[0000008818-23-000009_avy-20230401.htm:26]** | **6.2** **[0000008818-23-000015_avy-20230701.htm:29]** | **6.5** **[0000008818-23-000018_avy-20230930.htm:30]** | **6.6** **[0000008818-24-000003_avy-20231230.htm:53]** | **6.2** **[0000008818-24-000009_avy-20240330.htm:24]** | **6.4** **[0000008818-24-000015_avy-20240629.htm:28]** | **6.1** **[0000008818-24-000017_avy-20240928.htm:30]** |
| Average Days Payable Outstanding     | **80** **[0000008818-23-000002_avy-20221231.htm:52]** | **74** **[0000008818-23-000009_avy-20230401.htm:26]** | **73** **[0000008818-23-000015_avy-20230701.htm:29]** | **76** **[0000008818-23-000018_avy-20230930.htm:30]** | **77** **[0000008818-24-000003_avy-20231230.htm:53]** | **78** **[0000008818-24-000009_avy-20240330.htm:24]** | **76** **[0000008818-24-000015_avy-20240629.htm:28]** | **79** **[0000008818-24-000017_avy-20240928.htm:30]** |

4817ad2ecbb2537491996770536c6e5f6a7a96b6b1286ffeee2734a375ea8bce

Operational Working Capital

Average Days Sales Outstanding

Average Inventory Turnover

Average Days Payable Outstanding

61323513f7dd64065742ee301f53d2c9b412e79d6c9eed966c34c7ee28ab1262

dbb8468700a674d350d9b6787c3cd9ed550207cdf8f096fb61c8b378b304b88d

| Geographical Segment | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2023 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2022 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **U.S. (Million $)** | **437.4**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **441.6**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **436.4**  **[0000008818-24-000017_avy-20240928.htm:18]**  | N/A | **446.4**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **430.7**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **425.4**  **[0000008818-23-000018_avy-20230930.htm:19]**  | N/A |
| **Europe, the Middle East, and North Africa (Million $)** | **534.7**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **549.9**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **498.5**  **[0000008818-24-000017_avy-20240928.htm:18]**  | N/A | **498.9**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **510.3**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **494.6**  **[0000008818-23-000018_avy-20230930.htm:19]**  | N/A |
| **Asia (Million $)** | **326.2**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **344.0**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **354.9**  **[0000008818-24-000017_avy-20240928.htm:18]**  | N/A | **315.6**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **338.1**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **327.9**  **[0000008818-23-000018_avy-20230930.htm:19]**  | N/A |
| **Latin America (Million $)** | **120.6**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **127.0**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **124.4**  **[0000008818-24-000017_avy-20240928.htm:18]**  | N/A | **113.7**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **117.2**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **126.2**  **[0000008818-23-000018_avy-20230930.htm:19]**  | N/A |
| **Other (Million $)** | **77.6**  **[0000008818-24-000009_avy-20240330.htm:15]**  | **84.3**  **[0000008818-24-000015_avy-20240629.htm:17]**  | **83.5**  **[0000008818-24-000017_avy-20240928.htm:18]**  | N/A | **85.9**  **[0000008818-23-000009_avy-20230401.htm:17]**  | **79.7**  **[0000008818-23-000015_avy-20230701.htm:18]**  | **81.9**  **[0000008818-23-000018_avy-20230930.htm:19]**  | N/A |

1a74b9524206215d0869863aa4cafc4deb912541a5f5a5a56952fdc2ab2b69ac

3e572052442ff25cf2e89d6889b8e32376d1b107f1f97a9905a9984479ffc264

Avery Dennison Corporation is a global materials science and digital identification solutions company that provides a wide range of branding and information solutions. The company operates through two primary business segments: the Materials Group and the Solutions Group. Avery Dennison sells pressure-sensitive label materials, films, performance tapes, fasteners, RFID inlays and tags, software applications, and branded packaging solutions, focusing on optimizing labor and supply chain efficiency, reducing waste, advancing sustainability, and better connecting brands and consumers through innovative solutions that integrate physical and digital elements **[0000008818-24-000003_avy-20231230.htm:5]** **[AVY_3401821_6]** **[0001193125-24-082151_d816528ddefa14a.htm:4]** **[0000008818-24-000003_avy-20231230.htm:75]**.

1. **Materials Group** - Focuses on pressure-sensitive label materials, films, performance tapes, and fasteners, and includes high-value categories such as graphic solutions and reflective solutions. This segment is a leader in the industry, being 2.5 times larger than its nearest competitor in label materials **[0000008818-24-000003_avy-20231230.htm:5]** **[AVY_3401821_6]** **[0001193125-24-082151_d816528ddefa14a.htm:4]**.

2. **Solutions Group** - Offers RFID inlays and tags, software applications, and branded packaging solutions, with a strong emphasis on the Intelligent Labels business that uses RFID technology to enhance inventory accuracy and supply chain efficiency, particularly in the apparel, logistics, and food industries **[0000008818-24-000003_avy-20231230.htm:5]** **[0001193125-24-082151_d816528ddefa14a.htm:4]** **[0000008818-24-000003_avy-20231230.htm:75]**.

e46099cf24bebd8e3c577c2c353b4bf73e1ff397dabb0e53d0c348d76d00e852

1. Given the recent softness in logistics impacting your Intelligent Labels growth, what strategies are you implementing to mitigate this slowdown and ensure consistent growth within the segment?  **[AVY_3403381_8]** **[AVY_3403381_2]** 
2. With the drugstore channel softness and a major customer emerging from bankruptcy, how do you plan to address potential long-term structural changes in this channel and diversify Vestcom's client base?  **[AVY_3403381_8]** **[AVY_3403381_7]** 
3. As you embark on the significant rollout with Kroger in the food segment, how are you managing the operational and execution risks associated with scaling up RFID technology across 2,800 stores, and how confident are you in achieving your growth targets in this new market?  **[AVY_3403381_6]** **[AVY_3403381_7]** 
4. Given that Europe's materials volume was slightly below expectations and you experienced higher paper prices, how do you plan to navigate cost pressures and demand softness in Europe, and are any strategic adjustments needed for 2025?  **[AVY_3403381_13]** **[AVY_3403381_3]** 
5. While you've raised your earnings guidance for the year, you mention that the environment remains uncertain; what specific uncertainties are you most concerned about that could impact your ability to deliver on growth and earnings targets, particularly in the Solutions Group?  **[AVY_3403381_1]** **[AVY_3403381_4]** 

6367602483030c198a69e493debffa12fc10eb5a7320952643bb2405cff61180

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | April 2022  **[0000008818-24-000017_avy-20240928.htm:38]**   |
| End Date/Duration        | N/A  **[0000008818-24-000017_avy-20240928.htm:38]**          |
| Total additional amount  | **$750 million**  **[0000008818-24-000017_avy-20240928.htm:38]**  |
| Remaining authorization amount | **$485.6 million**  **[0000008818-24-000017_avy-20240928.htm:38]**  |
| Details                  | Enhance long-term stockholder value  **[0000008818-24-000003_avy-20231230.htm:94]** **[0000008818-24-000003_avy-20231230.htm:31]**  |

8b8e04112c79da36c2eb409764344a1425e79751601d82fc9619e80d438d789e

U.S.

Europe, Middle East, Africa

Asia

Latin America

Other

- Sales in China (including Hong Kong)

Total Revenue

4bab2da0cf5eaf051c8b6795538eff9b9829e63ce713d49d8124d4dba543dd54

- Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; and SML Group Limited - Competitors in the Solutions Group, particularly in RFID solutions  **[0000008818-24-000003_avy-20231230.htm:8]** .
- UPM Raflatac, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation, Inc. - Competitors in label materials  **[0000008818-24-000003_avy-20231230.htm:7]** .
- 3M Company and the Orafol Group - Competitors in graphics and reflective products  **[0000008818-24-000003_avy-20231230.htm:7]** .
- 3M; Tesa-SE, a subsidiary of Beiersdorf AG; Nitto Denko Corporation - Competitors in performance tapes products  **[0000008818-24-000003_avy-20231230.htm:7]** .

06777d9d0b5195e1b50b20a9e64477e9744198c0936c8acb02524c04797034a8

Materials Group

- Labels, graphics and reflectives

- Tapes and adhesives

- Other

Solutions Group

- Apparel

- Identification Solutions and Vestcom

Industrial and Healthcare Materials

Pressure-sensitive Materials

Retail Branding and Information Solutions

Vancive Medical Technologies

a18b728eff60c1b917439cbca38730b994642c73a0318f6762524706a01623ec

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Adjusted Earnings Per Share (EPS):** $9.35 to $9.50, nearly 20% growth at midpoint  **[AVY_3403381_4]** **[AVY_3403381_1]** .
  2. **Organic Sales Growth:** 4.5% to 5%, targeting high end of previous outlook  **[AVY_3403381_4]** .
  3. **Volume Growth:** High single-digit volume growth, offset by deflation-related price reductions  **[AVY_3403381_4]** .
  4. **Restructuring Savings:** More than $55 million, up $5 million from previous outlook  **[AVY_3403381_4]** .
  5. **Currency Translation Impact:** Headwind of roughly $5 million in operating income  **[AVY_3403381_4]** .
  6. **Adjusted Free Cash Flow Conversion:** Targeting roughly 100%  **[AVY_3403381_4]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Adjusted Earnings Per Share (EPS):** $9.30 to $9.50, 19% growth at midpoint  **[AVY_3393956_4]** .
  2. **Organic Sales Growth:** Roughly 4.5%  **[AVY_3393956_4]** .
  3. **Volume Growth:** High single-digit volume growth  **[AVY_3393956_4]** .
  4. **Incremental Savings from Restructuring Actions:** More than $50 million  **[AVY_3393956_4]** .
  5. **Currency Translation Impact:** Headwind of roughly $10 million in operating income  **[AVY_3393956_4]** .
  6. **Intelligent Labels Platform:** More than 20% volume growth, mid-teens sales growth  **[AVY_3393956_1]** .
  7. **Adjusted Free Cash Flow:** Targeting roughly 100% conversion  **[AVY_3393956_3]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Adjusted Earnings Per Share (EPS):** $9 to $9.50, 17% increase at midpoint  **[AVY_3380455_3]** .
  2. **Organic Sales Growth:** Roughly 4%  **[AVY_3380455_3]** .
  3. **Volume Growth:** High single digits  **[AVY_3380455_3]** .
  4. **Incremental Savings from Restructuring Actions:** More than $45 million  **[AVY_3380455_3]** .
  5. **Currency Translation Impact:** Headwind of roughly $5 million in operating income  **[AVY_3380455_3]** .
  6. **Intelligent Labels Growth:** Roughly 20% growth  **[AVY_3380455_1]** .
  7. **Earnings Timing:** Stronger earnings in the second half of the year  **[AVY_3380455_3]** .

### Q4 2023 Earnings Call
- **Issued Period:** Q4 2023
- **Guided Period:** FY 2024
- **Guidance:**
  1. **Organic Sales Growth:** Roughly 3.5%  **[AVY_3371370_6]** .
  2. **Adjusted Earnings Per Share (EPS):** $9 to $9.50, 17% increase at midpoint  **[AVY_3371370_5]** .
  3. **Adjusted EBITDA Margin:** 15% plus, targeting closer to 16%  **[AVY_3371370_10]** .
  4. **Return on Total Capital (ROTC):** Mid- to high teens  **[AVY_3371370_5]** .
  5. **Intelligent Labels Growth:** 20% or more growth  **[AVY_3371370_2]** .
  6. **Materials Group EBITDA Margin:** Progress towards 17% target  **[AVY_3371370_8]** .
  7. **Overall Productivity:** Offset higher employee costs  **[AVY_3371370_6]** .
  8. **Net Nonoperational Items:** Roughly neutral  **[AVY_3371370_6]** .
  9. **First Quarter Adjusted EPS:** Similar to Q4 2023, with improvement expected  **[AVY_3371370_5]** .

4d49ae1cdcb8858551b81bcbff94e155d6388c412709f0a3391ab507266dc82f

- **Avery Dennison expects its Intelligent Labels (IL) business to grow by 10% to 15% in 2025**, driven by strong growth in apparel and general retail segments, and potential new program rollouts, despite a slight expected decline in the logistics segment.  **[AVY_3413762_12]** **[AVY_3413762_9]**
- **High-value categories** such as Embelex and Vestcom are anticipated to deliver **strong growth** in 2025, with Embelex projected to grow **high single digits to low double digits**, and Vestcom expected to achieve **high single to low double-digit growth**, contributing positively to earnings.  **[AVY_3413762_15]**
- The company's **disciplined capital allocation strategy** and **strong balance sheet** enable it to pursue strategic acquisitions and share buybacks, positioning Avery Dennison to **optimize growth, margin, and capital efficiency** and **drive earnings expansion**.  **[AVY_3413762_13]**

fe31d94639cc2c60ec4fd77561d086358e3714c2248eb6967b0de3e1b7db0618

- **Avery Dennison's growth in the Intelligent Labels segment may be negatively impacted in 2025 due to a decline in volumes from a key logistics customer.** The company acknowledges that they are not assuming any further adoptions in logistics during 2025, with adoptions more likely in 2026. This could result in only slight growth or even a decline in this segment.  **[AVY_3413762_7]** **[AVY_3413762_10]**
- **Solutions Group margins have been impacted by unfavorable mix and increased costs**, including investments in the Mexico plant. In the fourth quarter, high-value solutions were down mid-single digits, affecting margins, and while the company expects margins to improve, there is uncertainty about the pace and extent of this recovery.  **[AVY_3413762_11]**
- **Potential delays in customer deployments and timing variances in adoption of Intelligent Labels technology could constrain overall growth.** Some customer programs have shifted from 2024 to 2025, and such delays could impact the timing of revenue recognition and growth in 2025.  **[AVY_3413762_12]** **[AVY_3413762_9]**

ee8e3ba6fe1434071e4fd59b2abec6d728f0fc9cd15505a41383631c49db2635

1. **IL Growth Amid Customer Pullback**  
   **Q:** How will customer volume declines affect IL growth in 2025?  
   **A:** We're assuming a **slight decline** in our logistics segment between 2024 and 2025 due to the customer's volume pullback.  **[AVY_3413762_7]**  This impact is included in our **10% to 15% IL growth** range for 2025.  **[AVY_3413762_7]**  We're not expecting further adoptions in 2025, with more likely continuation in 2026.  **[AVY_3413762_7]** 

2. **2025 Sales Growth Assumptions**  
   **Q:** What are your 2025 core sales growth assumptions and the breakdown between volume and price?  
   **A:** We're projecting **3% to 4%** sales growth, based on **GDP growth** in our base business, adjusted for apparel cannibalization in IL.  **[AVY_3413762_8]**  In the Materials business, we expect **mid-single-digit volume growth** with a little bit of price contribution.  **[AVY_3413762_8]** 

3. **Raw Material Cost Outlook**  
   **Q:** What are your expectations for raw material cost inflation or deflation in 2025?  
   **A:** We anticipate a **stable environment** with **slight deflation** in Q1.  **[AVY_3413762_8]**  There's typically a **1 to 2 quarter lag** between raw material price changes and our pricing.  **[AVY_3413762_8]**  We're modeling some negative raw material pricing into Q1 and Q2 of 2025 but expect stabilization afterward.  **[AVY_3413762_8]** 

4. **Solutions Margins and Mix Impact**  
   **Q:** Why did Solutions margins lag sales growth, and what are the incremental margin expectations for next year?  
   **A:** The **mix** was a significant factor, with some areas down mid-single digits impacting margins.  **[AVY_3413762_11]**  We also had **double costs** from starting our Mexico plant.  **[AVY_3413762_11]**  Looking ahead, we expect margins to **expand** as we accelerate growth in high-value segments like Vestcom and IL.  **[AVY_3413762_11]** 

5. **Growth in Embelex and Vestcom**  
   **Q:** Can you clarify growth expectations for Embelex and Vestcom in 2025?  
   **A:** We expect **double-digit growth** in Embelex, driven by personalized engagement and new customer rollouts.  **[AVY_3413762_15]**  Vestcom is projected to grow **high single to low double digits**, bolstered by a new customer and progress in Media Solutions.  **[AVY_3413762_15]**  These contribute to our target of **12% earnings growth** at the upper end of our range.  **[AVY_3413762_15]** 

6. **Confidence in Logistics Customer Volumes**  
   **Q:** Given past choppiness, what gives you confidence in logistics customer volumes for this year?  
   **A:** We've learned from our **first adoption**, improving our planning and service for this customer.  **[AVY_3413762_12]**  Volume issues from 2024 have been **resolved**.  **[AVY_3413762_12]**  We're involved across their supply chain and have **high confidence** in the volumes aligned for 2024.  **[AVY_3413762_12]** 

7. **Capital Allocation and Debt Refinancing**  
   **Q:** What are your capital allocation plans, and how will you handle debt coming due?  
   **A:** We'll continue our strategy of pursuing **strategic acquisitions** and share buybacks.  **[AVY_3413762_13]**  We have **€500 million** debt maturing in March, which we'll repay using proceeds from **€500 million** senior notes issued at **3.75%**.  **[AVY_3413762_13]**  We don't anticipate needing to raise more funds in the near term.  **[AVY_3413762_13]** 

8. **Tariff Exposure Impact**  
   **Q:** How could potential tariffs affect your operations in Mexico and China?  
   **A:** Our **direct exposure to tariffs is very limited**.  **[AVY_3413762_14]**  We largely produce and sell within the same region and can **flex production** globally as needed.  **[AVY_3413762_14]**  In Mexico, we have a new IL facility but can relocate production if necessary.  **[AVY_3413762_14]**  In China, any impact would be modest and indirect.  **[AVY_3413762_14]** 

9. **Apparel IL Growth Timing**  
   **Q:** How should we think about Apparel IL growth in 2025, between first and second half?  
   **A:** We expect **low double-digit growth** in Apparel IL for 2025.  **[AVY_3413762_9]**  Growth should **accelerate throughout the year** as new programs roll out.  **[AVY_3413762_9]**  Timing shifts are normal, but we remain confident in achieving our **long-term IL growth rate of 15% plus**.  **[AVY_3413762_9]** **[AVY_3413762_12]** 

4eb2bfb0bbdfdfcfcd2f9e48ceda873528e8b584c9ea78828c1bbd2926b15f2b

Despite a logistics slowdown, Avery Dennison targets 10-15% Intelligent Labels growth in 2025, driven by strong apparel/retail momentum. Embelex and Vestcom project high-single to low-double-digit gains, while stable raw material costs support 3-4% overall sales growth.

b7beca611fba95880a222b36f8524e5e2bcdaf705433a39832ba98df4b093a8c

**Annual guidance for FY 2025:**  
- **Adjusted Earnings Per Share (EPS)**: $9.80 to $10.20  **[AVY_3413762_6]**  (raised from $9.35 to $9.50  **[AVY_3403381_4]** **[AVY_3403381_1]** )  
- **Organic Sales Growth**: 3% to 4%  **[AVY_3413762_6]**  (lowered from 4.5% to 5%  **[AVY_3403381_4]** )  
- **Volume Growth**: Mid single-digit  **[AVY_3413762_6]**  (lowered from high single-digit  **[AVY_3403381_4]** )  
- **Restructuring Savings**: $40 million  **[AVY_3413762_6]**  (lowered from $55 million  **[AVY_3403381_4]** )  
- **Adjusted Free Cash Flow Conversion**: Roughly 100%  **[AVY_3413762_6]**  (no change from prior guidance  **[AVY_3403381_4]** )  
- **Intelligent Labels Growth**: 10% to 15%  **[AVY_3413762_3]**  (lowered from 15%+  **[AVY_3403381_2]** )  
- **Currency Translation Impact**: A headwind to operating income  **[AVY_3413762_6]**  (prior was $5 million  **[AVY_3403381_4]** ; not enough detail to determine raised or lowered)  

- **Incremental Working Days**: 2 extra working days at the end of Q4 2025  **[AVY_3413762_6]**  (no prior guidance)  
- **Segment-Specific Growth (Materials Group)**: Mid single-digit volume growth  **[AVY_3413762_8]**  (no prior guidance)  
- **Segment-Specific Growth (Solutions Group)**: High-value categories expected to drive margins  **[AVY_3413762_11]**  (no prior guidance)  
- **Quarterly EPS Growth (Q1 2025)**: Expected to be up slightly year-over-year  **[AVY_3413762_6]**  (no prior guidance)  

a7e4f07e2e7dcb25215ebfbed0f092477ecd776b85d9dca4d6738712d9868f41

| Name                  | Position                                           | Start Date       | Short Bio                                                                                                                                                                                                 |
|-----------------------|----------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Deon M. Stander       | President and Chief Executive Officer              | September 1, 2023| Deon M. Stander has been with Avery Dennison for over 20 years, holding various leadership roles. He was previously the President and Chief Operating Officer from March 2022 to August 2023  **[0001193125-24-064252_d568119ddef14a.htm:49]** **[0001193125-24-055980_d568119dpre14a.htm:9]** **[0001193125-24-082151_d816528ddefa14a.htm:5]** .   |
| Mitchell R. Butier    | Executive Chairman                                 | September 1, 2023| Mitchell R. Butier has been with Avery Dennison since March 2007, serving in roles such as President, Chief Operating Officer, and Chief Financial Officer. He was Chairman and CEO from 2019 to 2022  **[0000008818-24-000003_avy-20231230.htm:112]** **[0001193125-24-055980_d568119dpre14a.htm:8]** . |
| Gregory S. Lovins     | Senior Vice President and Chief Financial Officer  | March 2017       | Gregory S. Lovins has held various positions within Avery Dennison, including Vice President and Interim CFO in 2017, and Vice President and Treasurer from 2016 to 2017  **[0000008818-24-000003_avy-20231230.htm:112]** .                             |
| Deena Baker-Nel       | Senior Vice President and Chief Human Resources Officer | September 2020   | Deena Baker-Nel has served in various HR roles at Avery Dennison, including Vice President and Chief Human Resources Officer from 2020 to 2022  **[0000008818-24-000003_avy-20231230.htm:112]** **[0000008818-23-000002_avy-20221231.htm:110]** .                                                    |
| Nicholas R. Colisto   | Senior Vice President and Chief Information Officer| September 2020   | Nicholas R. Colisto was previously Vice President and CIO at Avery Dennison from 2018 to 2022, and before that, he was SVP and CIO at Xylem Inc. from 2012 to 2018  **[0000008818-24-000003_avy-20231230.htm:112]** .                                   |
| Francisco Melo        | President, Solutions Group                         | April 2023       | Francisco Melo transitioned to President of the Solutions Group in April 2023. He was previously SVP and General Manager of Avery Dennison Smartrac from 2022 to 2023  **[0000008818-24-000003_avy-20231230.htm:112]** .                                |
| Divina F. Santiago     | Vice President, Controller                         | September 2023   | Divina F. Santiago served as Vice President Finance from 2022 to 2023 and as Senior Director, Finance from 2008 to 2022 before becoming Vice President and Controller  **[0000008818-24-000003_avy-20231230.htm:112]** .                                |
| Ignacio J. Walker     | Senior Vice President and Chief Legal Officer      | September 2020   | Ignacio J. Walker has held various legal positions at Avery Dennison, including Vice President and Chief Legal Officer from 2020 to 2022  **[0000008818-24-000003_avy-20231230.htm:112]** **[0000008818-23-000002_avy-20221231.htm:110]** .                                                          |
| Maria Fernanda Mejia  | Director, Audit Committee Member                   | February 2024    | Maria Fernanda Mejia has over 35 years of consumer goods industry expertise. She was CEO, International, at Newell Brands Inc. from February 2022 to February 2023  **[0001193125-24-064252_d568119ddef14a.htm:50]** **[0001193125-24-055980_d568119dpre14a.htm:50]** **[0001193125-24-055980_d568119dpre14a.htm:129]** .                             |
| Ward Dickson          | Director, Chair of Audit Committee, Finance Committee Member | N/A              | Ward Dickson serves as the Chair of the Audit Committee and is a Finance Committee Member. Specific start date and additional biographical information are not provided.                                   |

060decba02ce644171c1218d4028d3c44d9a3aa3c84ff48d2cefdd5bcfd02aa9

e37f718ab1cb97d743c21eea85a1eac550c5d595dc7e6bac92725fc189177614

265d1f7a03a246818dada25667b674596483f077b22e981f97f0180333d3f476

834cc52d0ac01c59e5b9e41a99109e708a1d6acf006d5852e32e7dc8c29bbf0f

**Annual guidance for FY 2024:**
- **Adjusted Earnings Per Share (EPS)**: $9.35 to $9.50  **[AVY_3403381_4]** **[AVY_3403381_1]**  (raised from $9.30 to $9.50  **[AVY_3393956_4]** )  
- **Organic Sales Growth**: 4.5% to 5%  **[AVY_3403381_4]**  (raised from roughly 4.5%  **[AVY_3393956_4]** )  
- **Volume Growth**: High single-digit volume growth, offset by deflation-related price reductions  **[AVY_3403381_4]**  (no change from high single-digit volume growth  **[AVY_3393956_4]** )  
- **Restructuring Savings**: More than $55 million  **[AVY_3403381_4]**  (raised from more than $50 million  **[AVY_3393956_4]** )  
- **Currency Translation Impact**: Headwind of roughly $5 million  **[AVY_3403381_4]**  (lowered from headwind of roughly $10 million  **[AVY_3393956_4]** )  
- **Adjusted Free Cash Flow Conversion**: Targeting roughly 100%  **[AVY_3403381_4]**  (no change from targeting roughly 100%  **[AVY_3393956_3]** )  

f65b8efb57ff281ca924d862280e62ee1b6e6ea0481ba0320d004df5471573de

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | At least 1960  **[0000008818-24-000003_avy-20231230.htm:63]**  | Present  | Current auditor   |

8c50a269c951557cef23cb12fe91d1e285c1bad599e00293d1b0a43da4194a06

ab29497299ee84c1512ecd9df1974a2945227815bba225fde8ea27bc8f924d24

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $2,183 million (+4% YoY)  **[0000008818-23-000018_avy-20230930.htm:19]** **[0000008818-24-000017_avy-20240928.htm:18]**   
- Solutions Group: $686 million (+**7%** YoY)  **[0000008818-23-000018_avy-20230930.htm:19]** **[0000008818-24-000017_avy-20240928.htm:18]**   
- Asia Region Revenue: $355 million (+**8%** YoY)  **[0000008818-23-000018_avy-20230930.htm:19]** **[0000008818-24-000017_avy-20240928.htm:18]**   
- Operating Income (EBIT): $280 million (+**40%** YoY)  **[0000008818-23-000018_avy-20230930.htm:5]** **[0000008818-24-000017_avy-20240928.htm:5]** **[0000008818-24-000017_avy-20240928.htm:12]** **[0000008818-24-000017_avy-20240928.htm:9]**   
- Net Income: $182 million (+**31%** YoY)  **[0000008818-23-000018_avy-20230930.htm:6]** **[0000008818-23-000018_avy-20230930.htm:5]** **[0000008818-24-000017_avy-20240928.htm:5]** **[0000008818-24-000017_avy-20240928.htm:12]** **[0000008818-24-000017_avy-20240928.htm:9]**   
- Diluted EPS: $2.25 (+**32%** YoY)  **[0000008818-23-000018_avy-20230930.htm:13]** **[0000008818-24-000017_avy-20240928.htm:5]** **[0000008818-24-000017_avy-20240928.htm:12]** **[0000008818-24-000017_avy-20240928.htm:9]**   

ca4fd49a2991230e4131c2119a5edf7c23dbac7a2e8c97cca6d0aaa51ea6c2f2

- Total Revenue: $2,185.7 million (+4% YoY)  **[0000008818-24-000003_avy-20231230.htm:104]** **[0000008818-24-000003_avy-20231230.htm:48]** **[0000008818-24-000003_avy-20231230.htm:49]** **[0001193125-25-016229_d178536dex991.htm:6]** **[0001193125-25-016229_d178536dex991.htm:11]** **[0001193125-25-016229_d178536dex991.htm:5]**   
- Materials Group: $1,472 million (+4% YoY)  **[0000008818-24-000003_avy-20231230.htm:104]** **[0000008818-24-000003_avy-20231230.htm:48]** **[0000008818-24-000003_avy-20231230.htm:49]** **[0001193125-25-016229_d178536dex991.htm:6]** **[0001193125-25-016229_d178536dex991.htm:11]** **[0001193125-25-016229_d178536dex991.htm:5]**   
- Solutions Group: $713.7 million (+3% YoY)  **[0000008818-24-000003_avy-20231230.htm:104]** **[0000008818-24-000003_avy-20231230.htm:48]** **[0000008818-24-000003_avy-20231230.htm:49]** **[0001193125-25-016229_d178536dex991.htm:6]** **[0001193125-25-016229_d178536dex991.htm:11]** **[0001193125-25-016229_d178536dex991.htm:5]**   
- Operating Income (EBIT): $263.2 million (**-35%** YoY)  **[0000008818-24-000003_avy-20231230.htm:65]** **[0000008818-24-000003_avy-20231230.htm:66]** **[0001193125-25-016229_d178536dex991.htm:9]**   
- Net Income: $174.0 million (**+21%** YoY)  **[0000008818-24-000003_avy-20231230.htm:65]** **[0000008818-24-000003_avy-20231230.htm:66]** **[0001193125-25-016229_d178536dex991.htm:6]** **[0001193125-25-016229_d178536dex991.htm:9]** **[0001193125-25-016229_d178536dex991.htm:5]**   
- Diluted EPS: $2.16 (**+22%** YoY)  **[0000008818-24-000003_avy-20231230.htm:65]** **[0000008818-24-000003_avy-20231230.htm:66]** **[0001193125-25-016229_d178536dex991.htm:6]** **[0001193125-25-016229_d178536dex991.htm:5]** **[0001193125-25-016229_d178536dex991.htm:10]**   

1f34e6c521177888378288e3b9609dedcce4e0189c37ff1df1e6eb19742ac29d

5a6b0a024975e0beffa56a049abf22f4ee28931c1503287a2da1a13f529f6fae

Organic Sales Change (Total Company) (percentage)

Sales Change Ex. Currency (Total Company) (percentage)

Organic Sales Change (Materials Group) (percentage)

Sales Change Ex. Currency (Materials Group) (percentage)

Organic Sales Change (Solutions Group) (percentage)

Sales Change Ex. Currency (Solutions Group) (percentage)

Operational Working Capital as a Percentage of Annualized Current-Quarter Net Sales (percentage)

Average Number of Days Sales Outstanding (days)

Average Inventory Turnover (ratio (turns per year))

Average Number of Days Payable Outstanding (days)

061d669a946bdc16fa117650809934528e6ba6afd52dd602ca6572ba29ab4d69

- **Intelligent Labels (IL) growth is slowing**, with year-to-date performance moving from "mid- to high teens to mid-teens" after nine months, partly due to **softness in logistics** and customer transitions.  **[AVY_3403381_8]** **[AVY_3403381_9]**
- **Vestcom is experiencing volume softness**, especially in the **drugstore channel**, due to challenges faced by drugstore partners, which could impact future performance.  **[AVY_3403381_8]** **[AVY_3403381_9]**
- **Increasing input costs in Europe**, particularly **higher paper prices**, combined with **softer demand**, may pressure margins in the Materials Group if not fully offset by pricing actions.  **[AVY_3403381_13]**

ea11f8a735632d0fbe402e7ba5e22fe4944e6eb707c4dfc1fa18ae895b4d7392

1. **Intelligent Labels Growth**  
   **Q:** Will Intelligent Labels achieve 20%+ growth in 2024, and is this growth sustainable?  
   **A:** Management expects **20%+ growth** in Intelligent Labels for 2024, driven by annualization of new programs, normalization of apparel volumes, and new customer rollouts across all segments, including logistics and food. They anticipate sustained growth without a "cliff," as adoption by segment leaders often leads to broader industry uptake. New trials, such as a bakery program with a large U.S. grocery retailer, are expected to contribute to growth.  **[AVY_3371370_7]** **[AVY_3371370_12]** **[AVY_3371370_14]** 

2. **Margin Outlook and Targets**  
   **Q:** How should we think about margin expansion in 2024 across segments?  
   **A:** Management aims to progress towards a **17% EBITDA** target for the Materials segment by 2025, with margins improving in both Materials and Solutions in 2024. They expect overall margins to reach **15%+** in 2024, approaching **16%**, driven by productivity actions and volume recovery.  **[AVY_3371370_8]** **[AVY_3371370_10]** 

3. **Apparel Volume Normalization**  
   **Q:** When do you expect apparel volumes to normalize, and what's the impact?  
   **A:** Apparel volumes are anticipated to **normalize in the second half of 2024**, contributing to Intelligent Labels growth and the potential achievement of a **$10 EPS run rate** in the second half. This recovery is expected to reignite growth in apparel-related Intelligent Labels.  **[AVY_3371370_7]** **[AVY_3371370_13]** **[AVY_3371370_14]** 

4. **Impact of Destocking Ending**  
   **Q:** How is the end of destocking affecting volumes and outlook?  
   **A:** Destocking largely ended at the end of Q3 2023, with signs of volume recovery in Q4 and early January, particularly in Europe. This normalization is expected to benefit the labels business as inventory levels stabilize.  **[AVY_3371370_7]** 

5. **Pricing Dynamics and Deflation**  
   **Q:** As material prices come down, will price reductions match input costs?  
   **A:** The company expects to pass through most deflation in material costs to customers through pricing, maintaining healthy industry dynamics. While slight sequential deflation is seen in Q1, pricing adjustments will largely be carryover effects from prior year, with an emphasis on holding onto productivity gains.  **[AVY_3371370_9]** 

6. **Sustainability of Logistics Growth in IL**  
   **Q:** Is there a risk of a decline in logistics-related Intelligent Labels growth?  
   **A:** Management does not foresee a significant decline ("cliff") in logistics-related Intelligent Labels growth. The **110% growth** in logistics and food in Q4 2023 is expected to continue, as adoption by leading logistics providers leads to broader industry uptake. Seasonal factors may affect quarterly volumes, but overall growth is anticipated.  **[AVY_3371370_12]** 

7. **Vestcom Performance and Outlook**  
   **Q:** How did Vestcom perform relative to expectations, and what's ahead for 2024?  
   **A:** Vestcom met or slightly exceeded growth and margin expectations in 2023. In 2024, continued growth is expected, with pilots underway with a large national U.S. retailer to demonstrate productivity benefits, potentially driving further adoption of their shelf-edge labeling technology.  **[AVY_3371370_17]** 

8. **Supply Chain Disruptions Impact**  
   **Q:** Will Panama Canal disruptions drive higher volumes due to restocking?  
   **A:** Management does not anticipate additional volume increases as a result of Panama Canal disruptions. While retailers are adjusting logistics to ensure continuity of supply, any pull-forward of orders is expected to normalize within Q1 2024, resulting in no significant net change in volumes.  **[AVY_3371370_11]** 

9. **Materials Segment Margin Protection**  
   **Q:** How are you protecting margins in the Materials segment amidst deflation?  
   **A:** Margin protection efforts focus on offsetting volume impacts from destocking through productivity actions and cost management, rather than relying on price dynamics. They've maintained or grown market share across regions by emphasizing service excellence and competitiveness.  **[AVY_3371370_15]** 

10. **Solutions Segment Margin Expansion**  
    **Q:** Can margins in the Solutions segment improve despite increased revenues?  
    **A:** The Solutions segment is expected to see margin expansion in 2024 due to higher volumes, operational efficiencies, and a favorable mix of high-value segments. Temporary cost actions taken during periods of lower volume will be reversed as volumes recover.  **[AVY_3371370_16]** 

85ad0364a5013438b86ff4ee20e221bfdfb78be0211ad7d9f0babdf97a8b1d95

- **Management expects to achieve a $10 EPS run rate in the second half of 2024**, reflecting strong earnings growth confidence.  **[AVY_3371370_14]**
- **Intelligent Labels business is projected to grow by 20% in 2024**, driven by logistics and food sectors (contributing about half of the growth) and an apparel rebound in the second half.  **[AVY_3371370_14]**
- **Margin expansion is anticipated in both the Solutions and Materials segments** in 2024, due to improving volumes and operational efficiencies.  **[AVY_3371370_10]**

c0f8e7730446a7d7be8177e3dae1ff2a00d2e01166a49157c713f9bd28e947df

1. **Intelligent Labels Revenue Timing**  
   **Q:** Are delays in customer rollouts impacting Intelligent Labels revenue?  
   **A:** Yes, revenue growth in Intelligent Labels (IL) is expected to be lower in Q4 due to customer rollout timing changes. These delays are typical in new category adoptions, but the long-term growth opportunity remains significant.  **[AVY_3393956_5]** 

2. **Solutions Margins Returning to 18%+**  
   **Q:** Will Solutions margins return to 18%+ levels?  
   **A:** Yes, as the apparel segment normalizes, margins have improved by about **70 basis points** in Q2 vs. Q1. Management expects to return to **18%+** EBITDA margins in Solutions over the next 12 months.  **[AVY_3393956_5]** 

3. **Apparel Destocking and Recovery**  
   **Q:** Is the apparel business improving after destocking?  
   **A:** Yes, apparel inventory levels have normalized after a year of destocking. There's an uptick in import volumes, and Q2 performance was slightly ahead of expectations, indicating recovery in North America and Europe.  **[AVY_3393956_6]** 

4. **Q2 Outperformance Drivers**  
   **Q:** What drove the upside in Q2 results?  
   **A:** The better performance was due to stronger volumes in Materials Europe and sooner-than-expected normalization in the apparel business.  **[AVY_3393956_6]** 

5. **Competitive Dynamics in Intelligent Labels**  
   **Q:** Are competitive pressures affecting pricing in IL/RFID?  
   **A:** Competitive dynamics exist in the IL market, but the focus is on maintaining leadership through innovation at process, product, and solution levels. Historical pricing declines in the mid-single digits have helped accelerate adoption and unlock new opportunities.  **[AVY_3393956_7]** **[AVY_3393956_9]** 

6. **Long-term Growth in IL and New Segments**  
   **Q:** Is IL growth expected to exceed 20% in 2025?  
   **A:** The long-term growth potential is substantial, with IL penetrating only about **40%** of the **45 billion** unit apparel market. Initial adoption in the **200 billion** unit food market is underway, and more details will be provided at the **Investor Day in September**.  **[AVY_3393956_10]** 

7. **Materials Margins and Targets**  
   **Q:** How did Materials margins perform, and what are future expectations?  
   **A:** Materials margins were **50 to 100 basis points higher** than expected in Q2, aided by stronger top-line growth in Europe, cost reductions, and productivity. The company targets around **17% EBITDA** for the Materials segment and expects to deliver at or above this level going forward.  **[AVY_3393956_13]** 

8. **Vestcom and Digital Shelf Labels**  
   **Q:** How is Vestcom performing amid digital shelf trends?  
   **A:** Vestcom continues to perform well, contributing high-value business with above-average margins. While there's some softness related to drugstore challenges, Vestcom is well-positioned for the shift toward digital shelf labels due to its strong data composition engine, supporting both analog and electronic labels.  **[AVY_3393956_12]** 

9. **SG&A Expense Increase**  
   **Q:** Why did SG&A expenses increase by **$55 million** or **17%** year-over-year?  
   **A:** The increase is mainly due to higher incentive compensation accruals in 2024, as the company raises its outlook above initial expectations. In 2023, incentive accruals were low, down to **zero for corporate**.  **[AVY_3393956_11]** 

10. **$50 Million Cost Savings Allocation**  
    **Q:** How are the **$50 million** in cost savings allocated?  
    **A:** The savings are roughly evenly split between cost of goods sold and SG&A, with a slightly higher weighting towards cost of sales. Actions include productivity improvements in both Materials and Solutions segments.  **[AVY_3393956_14]** 

0c800678b30d4ba5d08c8ef28624cad28b5b9e6aea89bab4dcb76dde4813c819

- **Uncertainty in Apparel Volume Recovery:** The company's guidance relies heavily on the normalization of apparel volumes in the second half of 2024, but there is uncertainty due to persistent macroeconomic and geopolitical risks, with retail volumes still down in Europe and North America  **[AVY_3371370_13]** , and the timing of the rebound remains uncertain.  **[AVY_3371370_14]**
- **Margin Expansion Challenges:** While the company expects to improve margins, achieving its long-term EBITDA margin target of 17% in the Materials segment may not occur until 2025, indicating slower-than-expected margin expansion.  **[AVY_3371370_8]**  Additionally, margins in the Solutions segment are impacted by ongoing investments and temporary cost measures returning in 2024.  **[AVY_3371370_16]**
- **Dependence on Large Customers and Potential Growth Slowdown:** The significant growth in Intelligent Labels, particularly a 110% increase in logistics and food categories, may not be sustainable at the same pace. There's a risk of a "cliff" after initial large customer rollouts, and future growth depends on successful adoption by other customers, which may take time.  **[AVY_3371370_12]**

e49ed79b7ec23774e7c912b9c154829fd05cabb53cc5c2d12438d7cc04cbb345

- **The company's Intelligent Labels (IL) revenue declined sequentially from Q4, with lower-than-expected volumes in logistics due to reduced domestic parcel shipments. Additionally, IL growth is reliant on a mid-year recovery in the apparel market, which remains uncertain.**  **[AVY_3380455_8]** **[AVY_3380455_4]** **[AVY_3380455_11]** **[AVY_3380455_5]**
- **Rising paper costs in Europe are expected to lead to margin headwinds in the Materials Group in the second quarter, with potential delays in passing these costs to customers due to implementation lags in pricing adjustments.**  **[AVY_3380455_9]** **[AVY_3380455_7]**
- **Second quarter earnings per share (EPS) are anticipated to be slightly down from the first quarter, contrary to typical seasonal patterns, due to factors such as customer order pull-forward, modest sequential inflation, and annual wage increases.**  **[AVY_3380455_9]**

7a3e8c1ff3851f31e8d4bae2b54497e1ed4c2e822644659306cdcb837ffe9e54

1. **Materials Group Margin Sustainability**  
   **Q:** Can you help us think about the sustainability of Materials Group margins going forward?  
   **A:** The Materials Group achieved **record margins** driven by significant volume increases and productivity initiatives, including large restructuring actions and ongoing ELS programs.  **[AVY_3380455_6]**  These efforts are largely offsetting wage inflation and incentive compensation headwinds.  **[AVY_3380455_6]**  Management expects to maintain margins around the **17% EBITDA** level, aligning with long-term targets set for 2025.  **[AVY_3380455_6]**  The focus remains on balancing top-line growth, margins, and capital efficiency to drive EVA growth over time.  **[AVY_3380455_6]** 

2. **Apparel Market Recovery Outlook**  
   **Q:** What supports your confidence in apparel market normalization by mid-2024?  
   **A:** Apparel imports remain significantly below **2019 levels**, but we saw slight improvements in North America during the last quarter.  **[AVY_3380455_5]**  Customers are now more comfortable with their inventory levels, which were previously elevated.  **[AVY_3380455_5]**  While uncertainty persists, the combination of recovering apparel imports and normalized inventories underpins our belief that apparel volumes will normalize by midyear.  **[AVY_3380455_5]** 

3. **Intelligent Labels Growth and Guidance Adjustment**  
   **Q:** Is there anything behind the modest adjustment in Intelligent Labels (IL) growth guidance?  
   **A:** We observed slightly lower volumes than anticipated in logistics due to reduced parcel shipments.  **[AVY_3380455_4]**  However, apparel IL growth remains strong, driven by new programs like Inditex's loss prevention initiative.  **[AVY_3380455_4]**  We anticipate the recovery of the apparel business in the second half to be a key driver for IL growth, and we remain committed to delivering **20% growth**.  **[AVY_3380455_4]** 

4. **Impact of Rising Paper Costs and Finnish Strikes**  
   **Q:** How does rising paper costs in Europe affect margins, and how do you handle such inflation?  
   **A:** Traditionally, it takes about a **quarter** to implement pricing to offset sequential inflation.  **[AVY_3380455_7]**  We're starting to see sequential inflation in Q2 due to the Finnish port strike, which has now ended.  **[AVY_3380455_7]**  We expect to adjust prices within a couple of months, mitigating the impact by mid to late Q2.  **[AVY_3380455_7]**  As the market leader, we respond to inflation with productivity measures and price increases, managing the health and balance of the industry.  **[AVY_3380455_7]** 

5. **Intelligent Labels Margins and Value Selling**  
   **Q:** How is value selling progressing in new Intelligent Labels applications, and could this improve margins?  
   **A:** We're confident in the growth potential of Intelligent Labels given the scale of opportunities in adjacent categories like food and logistics.  **[AVY_3380455_10]**  Our approach focuses on providing differentiated total solutions, including hardware, software, and material science, which allows us to capture more value.  **[AVY_3380455_10]**  As we expand into new segments, this value-based selling could enhance margins over time.  **[AVY_3380455_10]** 

6. **Sequential Earnings Cadence and Factors**  
   **Q:** What factors affect the lower sequential earnings into Q2 despite normal seasonality?  
   **A:** While we expect some seasonal benefit from Q1 to Q2, we face sequential inflation and annual wage increases effective April 1.  **[AVY_3380455_9]**  These are sequential headwinds from a cost perspective.  **[AVY_3380455_9]**  Additionally, a **$0.05** pull forward from Q2 into Q1 affects the comparison.  **[AVY_3380455_9]**  Excluding the pull forward, our underlying business would be up sequentially.  **[AVY_3380455_9]** 

7. **Supply Chain Resilience**  
   **Q:** How have you improved your supply chain to handle potential Finnish strikes resuming?  
   **A:** Since the last significant supply chain constraints, we've deepened and broadened our supply chain, moving from single regional sources to multi-regional and multi-supplier sources.  **[AVY_3380455_12]**  This resilience has prevented interruptions during recent events, and our service excellence has improved globally.  **[AVY_3380455_12]**  We've also enhanced our processes and data to better understand end consumption and manage inventories across the value chain.  **[AVY_3380455_12]** 

8. **Intelligent Labels Deployment Cadence**  
   **Q:** What's the expected cadence for Intelligent Labels deployment in 2024?  
   **A:** Programs currently in rollout or expansion are expected to continue as planned.  **[AVY_3380455_11]**  We're focusing on accelerating pilots and trials, particularly in food and logistics, to drive broader industry adoption.  **[AVY_3380455_11]**  Benefits in these new segments are compelling, and with proven technology, we're working to bring more customers to full rollout in time.  **[AVY_3380455_11]** 

9. **Lower Parcel Shipments Impact on IL Volumes**  
   **Q:** How have lower parcel shipments affected Intelligent Labels volumes?  
   **A:** We experienced slightly lower volumes in logistics due to reduced parcel shipments in Q1.  **[AVY_3380455_4]**  Parcel shipments are influenced by U.S. retail activity and GDP, which remain slightly uncertain.  **[AVY_3380455_12]**  However, apparel IL growth continues ahead of the base business, offsetting some of the impact.  **[AVY_3380455_4]** 

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- **Significant long-term growth potential in the Intelligent Labels (IL) platform**, particularly in logistics and food sectors, with **over 20% volume growth expected this year**. This is driven by ongoing customer rollouts, a strong pipeline, and increasing adoption in new categories.  **[AVY_3393956_10]** **[AVY_3393956_5]** **[AVY_3393956_9]**
- **Improving margins in both the Materials and Solutions segments**: The Materials segment has been **delivering EBITDA margins around 17% or better**, exceeding targets due to operational leverage and productivity initiatives. The Solutions segment's margins improved by **70 basis points sequentially** in Q2, with expectations to return to **18%+ margins** as apparel volumes normalize.  **[AVY_3393956_13]** **[AVY_3393956_5]**
- **Earlier-than-expected normalization of apparel volumes**, as inventory levels at retailers have stabilized after a year of destocking. This has led to an uptick in import volumes and contributed to **stronger-than-anticipated performance** in the Solutions Group.  **[AVY_3393956_6]** **[AVY_3393956_5]**

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- AVY expects **roughly 20% growth in Intelligent Labels (IL) in 2024**, fueled by recovery in apparel and adoption in new categories like logistics and food, demonstrating strong demand and significant growth opportunities in this segment  **[AVY_3380455_4]** ,.  **[AVY_3380455_11]**
- The Materials Group delivered a record **adjusted EBITDA margin of 18.3% in Q1**, driven by volume increases and productivity initiatives; management intends to sustain strong margins through ongoing productivity actions and balancing growth and capital efficiency.  **[AVY_3380455_6]**
- The company anticipates that **apparel industry volumes will normalize by mid-2024**, which will enhance their Solutions segment performance and contribute to stronger earnings in the second half of 2024  **[AVY_3380455_10]** ,.  **[AVY_3380455_5]**

f84169dd3cb3fc2399eca305fee32331f8b240f50fbbe295499fa1f426e611e4

- **Avery Dennison expects revenue growth in the fourth quarter to be lower than previously anticipated**, due to **delays in customer rollouts** in the Intelligent Labels segment, affecting volume changes related to timing.  **[AVY_3393956_5]** ,  **[AVY_3393956_8]**
- **Macro uncertainty and weak consumer sentiment are impacting the apparel segment**, with the environment remaining dynamic and **consumer sentiment not robust**, potentially affecting future performance.  **[AVY_3393956_5]** ,  **[AVY_3393956_6]**
- **Increased competition in the Intelligent Labels (IL) market and declines in average selling prices (ASPs)** may pressure margins and require **greater pricing actions**.  **[AVY_3393956_7]** ,  **[AVY_3393956_9]**

d8fc08ae32fbe30f38f91b3e6b10cc0bc020e94d9f9588965de98457a6de997f

1. **Kroger Partnership and Food Sector Expansion**  
   **Q:** Can you discuss the scale and rollout plans of the Kroger partnership and potential expansion into other food categories?  
   **A:** The partnership with Kroger initially focuses on rolling out Intelligent Labels in the bakery department across approximately **2,800 stores** over the next **six quarters**.  **[AVY_3403381_7]**  Bakery is an easier starting point due to its contained supply chain.  **[AVY_3403381_7]**  Over time, we expect to expand into other areas like proteins and fresh produce, tapping into a food segment market of **200 billion units**, significantly larger than apparel or logistics.  **[AVY_3403381_6]** **[AVY_3403381_11]**  This rollout will contribute to our **15%+ growth target** in Intelligent Labels.  **[AVY_3403381_6]** **[AVY_3403381_7]** **[AVY_3403381_11]** 

2. **Intelligent Labels Growth Outlook**  
   **Q:** How is the growth trajectory for Intelligent Labels, considering recent softness in logistics?  
   **A:** Despite some softness in logistics due to prior-year inventory builds and customer transitions  **[AVY_3403381_5]** **[AVY_3403381_8]** , we remain confident in delivering our **15%+ growth target** for Intelligent Labels.  **[AVY_3403381_5]** **[AVY_3403381_6]** **[AVY_3403381_8]**  The third-quarter performance was affected by specific comps and transitions  **[AVY_3403381_12]** , but we expect growth to normalize as these factors are now largely completed.  **[AVY_3403381_5]** **[AVY_3403381_8]** 

3. **Vestcom Performance and Prospects**  
   **Q:** Is the slowdown in Vestcom temporary or indicative of a permanent shift?  
   **A:** The third-quarter slowdown in Vestcom was due to temporary factors like drugstore channel softness and impacts from a hurricane causing price freezes.  **[AVY_3403381_7]** **[AVY_3403381_8]**  One customer emerging from bankruptcy is a positive sign, and we expect Vestcom to return to growth in the fourth quarter.  **[AVY_3403381_7]** **[AVY_3403381_8]**  We don't see this as a permanent shift and are engaging with new opportunities in the drugstore channel.  **[AVY_3403381_8]** 

4. **2025 Financial Guidance**  
   **Q:** Will 2025 align with your long-term growth framework of 5% top line and 10% EPS growth?  
   **A:** Our early view of **2025** is that we will follow the algorithm laid out in our long-term financial framework, aiming for **10% adjusted EPS growth** annually.  **[AVY_3403381_11]**  Key drivers include growth in Intelligent Labels, a more normalized first half in apparel, and better margins in Solutions.  **[AVY_3403381_11]** 

5. **Margins in Food RFID Segment**  
   **Q:** Are margins in the food RFID market consistent with your average RFID margins?  
   **A:** Yes, our Intelligent Labels platform generally achieves margins **above segment average**.  **[AVY_3403381_10]**  While ASPs may vary depending on product complexity, margins across apparel, logistics, and food categories are relatively consistent and above average.  **[AVY_3403381_10]** 

6. **Label Volumes and Market Share**  
   **Q:** Did your label volumes track in line with the industry, and how is your market share?  
   **A:** Our label volumes are largely in line with the industry, and we continue to **maintain or expand our market share** globally.  **[AVY_3403381_12]**  In Intelligent Labels, despite some volatility, we perform in line with the market and expect to expand our share over the long term due to our competitive advantages.  **[AVY_3403381_12]** 

7. **European Materials Segment and Pricing**  
   **Q:** How are pricing and input costs affecting your European Materials segment, and do you foresee changes going into 2025?  
   **A:** From Q2 to Q3, we saw **low single-digit inflation** in materials, mainly in European paper.  **[AVY_3403381_13]**  We implemented pricing actions, resulting in a negligible net impact for the quarter.  **[AVY_3403381_13]**  Looking ahead, we expect a relatively stable materials environment and don't anticipate significant shifts in the near term.  **[AVY_3403381_13]** 

8. **Intelligent Labels Margin Impact**  
   **Q:** How much did Intelligent Labels grow in 3Q, and what's the impact on margins?  
   **A:** Given the logistics softness, year-to-date Intelligent Labels growth moved from **mid-to-high teens** at mid-year to **mid-teens** after nine months.  **[AVY_3403381_8]**  Despite this, our Intelligent Labels platform continues to contribute **above segment margins**.  **[AVY_3403381_10]** 

9. **Intelligent Labels in QSR and Food Safety**  
   **Q:** What is the potential for Intelligent Labels in QSR markets and food safety initiatives?  
   **A:** We are already rolling out Intelligent Labels with a couple of QSRs, focusing on food safety by providing transparency of product origin and freshness.  **[AVY_3403381_6]**  Recent **FISMA regulations** are expected to accelerate the adoption of RFID technology in food safety, which will benefit us as a market leader.  **[AVY_3403381_6]** 

7354e5acda4190a389b1fb9c02158c83d233ed72d0e25616acd588a7287d7e41

- **AVY continues to hold, if not expand, market share in its label business globally and expects to be the majority share provider in Intelligent Labels over the long term, leveraging competitive advantages.**  **[AVY_3403381_12]**
- **The strategic collaboration with Kroger positions AVY to capitalize on a significant growth opportunity in the food segment, which is an order of magnitude larger than apparel, with expectations to expand beyond bakery into areas like proteins and fresh produce.**  **[AVY_3403381_6]** **[AVY_3403381_11]**
- **AVY is on track to deliver its long-term financial targets, including 10% adjusted EPS growth annually, supported by strong growth in Intelligent Labels and normalization in other business segments, presenting a multi-decade growth opportunity.**  **[AVY_3403381_11]**

152880da2848c10ba6af93d40b089f5bc1db30f607491548d4207a443d3cd874

Avery Dennison Corp (AVY)

Financials