Avery Dennison Corporation (NYSE:AVY) Q2 2020 Earnings Conference Call July 27, 2020 1:00 PM ET Company Participants Cindy Guenther - Vice President of Investor Relations and Finance Mitch Butier - Chairman, President and Chief Executive Officer Greg Lovins - Senior Vice President and Chief Financial Officer Conference Call Participants George Staphos - BofA Securities Anthony Pettinari - Citigroup Global Markets Ghansham Panjabi - Robert W. Baird and Company Adam Josephson - KeyBank Capital Markets Neel Ku ...

Start Time: 13:00 January 1, 0000 2:01 PM ET Avery Dennison Corporation (NYSE:AVY) Q1 2020 Earnings Conference Call April 29, 2020, 13:00 PM ET Company Participants Mitch Butier - Chairman, President and CEO Greg Lovins - SVP and CFO Cindy Guenther - VP of Finance and IR Conference Call Participants Ghansham Panjabi - Robert W. Baird George Staphos - Bank of America Merrill Lynch Anthony Pettinari - Citigroup Adam Josephson - KeyBank Capital Markets Joshua Spector - UBS Securities Neel Kumar - Morgan Stanl ...

PART I [Business Overview](index=3&type=section&id=Item%201.%20Business) Avery Dennison Corporation, established in 1977, produces pressure-sensitive materials, labels, and tags, with its LGM segment contributing approximately 67% of total sales and 77% of business being international - Avery Dennison Corporation was founded in 1977 and renamed in 1990 after merging with Dennison Manufacturing Company[5](index=5&type=chunk) - The company's business includes manufacturing pressure-sensitive materials, various tickets, labels, hangtags, and other converted products, serving label printers, converters, and end markets like apparel[6](index=6&type=chunk) 2019 Fiscal Year Reportable Segment Sales Contribution | Segment Name | Sales Contribution | | :---------------------------------- | :----------------- | | Label and Graphic Materials (LGM) | ~67% | | Retail Branding and Information Solutions (RBIS) | ~23% | | Industrial and Healthcare Materials (IHM) | ~10% | - In 2019, international operations accounted for approximately **77% of total company sales**, with operations in over **50 countries**, approximately **180 manufacturing and distribution facilities**, and over **30,000 employees** globally[6](index=6&type=chunk) - The company invests in R&D to develop new products, improve productivity, sustainability, and product performance, particularly in printing and coating technologies, adhesive chemistry for LGM and IHM, RFID and external embellishments for RBIS, and medical technologies for IHM[12](index=12&type=chunk) - Key trademarks include Avery Dennison, the company logo, and Fasson, which are considered strong competitive assets in the market[13](index=13&type=chunk) - The company uses paper, plastic films, resins, and specialty chemicals as raw materials, primarily employing water-based emulsion and hot-melt adhesive technologies for pressure-sensitive materials, and believes environmental compliance costs will not materially impact capital expenditures, financial position, or operating results[14](index=14&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from global economic, political, and market volatility, foreign exchange fluctuations, intense competition, emerging market expansion, and raw material/energy cost changes, alongside acquisition integration, product quality, IT security, talent, and legal compliance challenges - Changes in global economic, political, and market conditions, including trade policies, tariffs, and geopolitical instability, coupled with **77% of 2019 sales from international operations**, could significantly impact product demand[17](index=17&type=chunk) - A majority of 2019 sales were denominated in non-U.S. dollar currencies, making the company vulnerable to foreign exchange rate fluctuations (e.g., Euro, Renminbi) that could lead to transaction and translation losses, negatively affecting sales and profitability[19](index=19&type=chunk) - Increased market competition, technological advancements, regulatory changes, and evolving customer preferences (e.g., focus on sustainability and single-use plastics) may lead to reduced market demand, market share loss, or forced price reductions[20](index=20&type=chunk) - The company's growth strategy in emerging markets, including China, increases exposure to political instability, economic volatility, and epidemics like the novel coronavirus outbreak in December 2019; **China (including Hong Kong) accounted for approximately 20% of net sales in 2019**, with the coronavirus expected to adversely impact Q1 2020 and full-year results[24](index=24&type=chunk) - Growth through acquisitions, such as the announced acquisition of Smartrac's RFID Inlay division in November 2019 (expected to close in Q1 2020), carries uncertainties like integration difficulties, technology and personnel risks, increased debt, dilution, and liabilities[26](index=26&type=chunk) - Fluctuations in raw material and energy costs, and the company's ability to offset these increases, are critical factors affecting sales and profitability, with supply chain disruptions also posing significant adverse impacts[27](index=27&type=chunk) - Significant customer base consolidation could lead to increased business concentration and pricing pressure, negatively affecting the company's operations[29](index=29&type=chunk) - Reliance on third-party distributors and outsourced manufacturers means their financial condition, business performance, or quality control issues could negatively impact the company's business[30](index=30&type=chunk)[31](index=31&type=chunk) - Product quality issues and liability claims could result in shipping delays, order cancellations, additional costs, reputational damage, and potentially substantial fines and litigation[32](index=32&type=chunk)[33](index=33&type=chunk) - Business strategy adjustments, new product development failures, misjudgments in infrastructure investments, and failure to achieve expected productivity improvements could increase costs, impair assets, or reduce return on investment[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) - Difficulties in accounts receivable collection, changes in tax rates, international tax policy reforms, failure to retain or renew tax incentives, tax audits, and inability to realize deferred tax assets could materially and adversely affect profitability and financial condition[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Disruptions to IT infrastructure and security breaches, including cyberattacks and data breaches, could lead to significant losses, remediation costs, legal actions, reputational damage, and business interruptions[47](index=47&type=chunk)[50](index=50&type=chunk) - Difficulties in recruiting and retaining key management and highly skilled employees, labor disputes, and changes in stock price volatility and dividend/share repurchase policies could adversely affect operations and stock price[51](index=51&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk) - The company's **$1.94 billion debt**, potential credit rating downgrades, rising interest rates, and the adjustment or cessation of LIBOR could increase borrowing costs and limit financial flexibility[59](index=59&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk) - Market, interest rate, and credit risks of pension assets, along with changes in actuarial assumptions, could impact earnings and cash flow; in 2019, the settlement of the U.S. pension plan (ADPP) resulted in a pre-tax charge of approximately **$444 million**[64](index=64&type=chunk)[65](index=65&type=chunk) - Goodwill impairment (book value of **$930.8 million** as of December 28, 2019), legal proceedings, anti-corruption laws, environmental health and safety regulations, and import/export control compliance risks could materially and adversely affect financial performance and reputation[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[74](index=74&type=chunk) - Failure to adequately protect or infringement of third-party intellectual property, along with risks related to insurance availability and coverage, could harm the company's competitive ability and financial position[75](index=75&type=chunk)[76](index=76&type=chunk) [Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company received no unresolved comments from the SEC staff during this reporting period - No unresolved staff comments[77](index=77&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) As of December 28, 2019, the company operates numerous large manufacturing facilities globally across its LGM, RBIS, and IHM segments, primarily owned, with all properties deemed adequate for current and future needs - As of December 28, 2019, the company operates multiple manufacturing facilities exceeding **100,000 square feet** across its LGM, RBIS, and IHM segments, located in the U.S., Belgium, Brazil, China, France, Germany, India, Israel, Luxembourg, Malaysia, Thailand, the UK, Honduras, and Italy[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - Key facilities include the corporate headquarters in Glendale, California, and divisional offices in Mentor, Ohio, Hong Kong and Kunshan, China, and Oegstgeest, Netherlands[80](index=80&type=chunk) - Most major properties are owned, while some facilities (e.g., Glendale, California; Hong Kong, China; Bufalo, Honduras; Kibbutz Hanita, Israel; Mentor, Ohio; and Oegstgeest, Netherlands) are leased[80](index=80&type=chunk) - All properties are considered suitable and sufficient for current needs, with capacity expandable as required; owned buildings and equipment are insured, and titles are free of significant defects or encumbrances, except for certain mortgage liens[80](index=80&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) As of December 28, 2019, the company is a Potential Responsible Party at 11 waste sites, with a **$21.4 million** environmental remediation liability, and is involved in other routine litigation, none of which are expected to materially impact financial results - As of December 28, 2019, the company is designated as a Potential Responsible Party (PRP) by the EPA and/or other state agencies at **11 waste disposal or recycling sites** involving soil and/or groundwater contamination investigations or litigation[81](index=81&type=chunk) - A liability of **$21.4 million** has been accrued for environmental remediation activities, though actual future costs may exceed this due to uncertainties in assessment and remediation[81](index=81&type=chunk)[82](index=82&type=chunk) - The company is also involved in other routine litigation, claims, investigations, and regulatory compliance matters, with liabilities accrued for probable losses, none of which are expected to materially impact the company's financial position, results of operations, or cash flows[84](index=84&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable as the company is not involved in mining operations - Mine safety disclosures are not applicable[85](index=85&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under "AVY," with 4,397 record holders as of December 28, 2019, and **$644.7 million** remaining under the board-authorized share repurchase program after Q4 2019 buybacks - The company's common stock is listed on the New York Stock Exchange under the symbol "AVY," with **4,397 record holders** as of December 28, 2019[87](index=87&type=chunk) Equity Security Repurchases in Q4 2019 | Period | Total Shares Repurchased (thousands) | Average Price Per Share (USD) | Total Shares Repurchased Under Publicly Announced Plans (thousands) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans (millions USD) | | :-------------------------------------- | :----------------------------------- | :---------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------------------------------------------ | | September 29, 2019 – October 26, 2019 | 96.9 | 113.51 | 96.9 | | | October 27, 2019 – November 23, 2019 | 80.0 | 130.58 | 80.0 | | | November 24, 2019 – December 28, 2019 | 92.0 | 130.44 | 92.0 | | | **Total** | **268.9** | **124.38** | **268.9** | **644.7** | - In April 2019, the Board authorized the repurchase of up to **$650 million** of common stock, with **$644.7 million** remaining authorized for repurchase as of December 28, 2019[88](index=88&type=chunk) [Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) The required five-year selected financial data is incorporated by reference into the "Five-Year Summary" section of the 2019 Annual Report - The five-year selected financial data is incorporated by reference into the "Five-Year Summary" section of the 2019 Annual Report[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The required Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated by reference into the 2019 Annual Report - Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated by reference into the 2019 Annual Report[90](index=90&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quantitative and qualitative disclosures about market risk are incorporated by reference into the "Market Sensitive Instruments and Risk Management" section of the 2019 Annual Report - Quantitative and qualitative disclosures about market risk are incorporated by reference into the "Market Sensitive Instruments and Risk Management" section of Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2019 Annual Report[91](index=91&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Financial statements and supplementary data, including consolidated financial statements, notes, management's responsibility statement, internal control report, and independent auditor's report, are incorporated by reference into the 2019 Annual Report - Financial statements and supplementary data are incorporated by reference into the 2019 Annual Report, including consolidated financial statements, notes, management's statement of responsibility for financial statements, management's report on internal control, and the independent registered public accounting firm's report[92](index=92&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=41&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure matters during this reporting period - No changes in or disagreements with accountants on accounting and financial disclosure matters[93](index=93&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management assessed disclosure controls and internal controls over financial reporting as effective as of December 28, 2019, with PwC's audit, and implemented a new ERP system in North American LGM operations during 2019, adjusting related internal controls - Company management, including the CEO and CFO, assessed and determined that disclosure controls and procedures were effective as of the end of the reporting period, providing reasonable assurance that information is timely recorded, processed, summarized, and reported[93](index=93&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 28, 2019, and was audited by PricewaterhouseCoopers LLP[93](index=93&type=chunk) - In 2019, the company implemented a new enterprise resource planning system in multiple locations within its North American Label and Graphic Materials business, impacting processes such as order management, pricing, shipping, and procurement, with corresponding adjustments to internal controls[93](index=93&type=chunk) [Other Information](index=41&type=section&id=Item%209B.%20Other%20Information) There is no other information required to be disclosed during this reporting period - No other information[94](index=94&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=42&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information on directors and corporate governance is incorporated by reference into the 2020 proxy statement, with executive officer details provided on page 43 of this report and also incorporated by reference, and the company has adopted codes of ethics and conduct available online - Information regarding directors and corporate governance is incorporated by reference into the company's definitive proxy statement for the Annual Meeting of Stockholders to be held on April 23, 2020[96](index=96&type=chunk) - Executive officer information is presented on page 43 of this report and is also incorporated by reference into the 2020 proxy statement[96](index=96&type=chunk) Key Executive Officer Information | Name | Position | Start Date of Tenure | | :----------------- | :------------------------------------------------------ | :------------------- | | Mitchell R. Butier | Chairman, President and Chief Executive Officer | March 2007 | | Gregory S. Lovins | Senior Vice President and Chief Financial Officer | March 2017 | | Lori J. Bondar | Vice President, Controller, Treasurer and Chief Accounting Officer | June 2010 | | Georges Gravanis | President, Label and Graphic Materials (stepped down December 31, 2019) | May 2015 | | Anne Hill | Senior Vice President and Chief Human Resources Officer | May 2007 | | Susan C. Miller | Senior Vice President, General Counsel and Secretary | March 2008 | | Deon Stander | Vice President and General Manager, Retail Branding and Information Solutions | August 2016 | - The company has adopted a Code of Ethics applicable to the Chief Executive Officer and Senior Financial Officers, and a Code of Conduct for directors, officers, and employees, both accessible on the company's investor website[96](index=96&type=chunk) [Executive Compensation](index=45&type=section&id=Item%2011.%20Executive%20Compensation) The required executive compensation information is incorporated by reference into the company's 2020 proxy statement - Executive compensation information is incorporated by reference into the company's 2020 proxy statement[100](index=100&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=45&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The required information on security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference into the company's 2020 proxy statement - Information regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference into the company's 2020 proxy statement[101](index=101&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=45&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The required information on certain relationships and related transactions and director independence is incorporated by reference into the company's 2020 proxy statement - Information regarding certain relationships and related transactions and director independence is incorporated by reference into the company's 2020 proxy statement[102](index=102&type=chunk) [Principal Accounting Fees and Services](index=45&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The required information on principal accounting fees and services is incorporated by reference into the company's 2020 proxy statement - Information regarding principal accounting fees and services is incorporated by reference into the company's 2020 proxy statement[103](index=103&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=46&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits, including consolidated financial statements for 2019, 2018, and 2017, with all schedules omitted as information is in the notes, and an exhibit list detailing corporate documents, agreements, and SEC certifications - The financial statements for this report include consolidated balance sheets, statements of income, comprehensive income, shareholders' equity, and cash flows for 2019, 2018, and 2017, along with related notes, management's statement of responsibility, and the independent auditor's report[107](index=107&type=chunk) - All financial statement schedules have been omitted because the required information is included in the consolidated financial statements and their notes[105](index=105&type=chunk) - The exhibit list details corporate charters, credit agreements, executive compensation plans, offer letters, and various SEC-required certifications (e.g., 302 and 906 certifications)[110](index=110&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) [Form 10-K Summary](index=54&type=section&id=Item%2016.%20Form%2010-K%20Summary) This report does not contain a Form 10-K Summary - No Form 10-K Summary[115](index=115&type=chunk)

Avery Dennison Corporation (NYSE:AVY) Q4 2019 Earnings Conference Call January 29, 2020 1:00 PM ET Company Participants Cindy Guenther - Vice President of Finance & Investor Relations Mitch Butier - Chairman, President & Chief Executive Officer Greg Lovins - Senior Vice President & Chief Financial Officer Conference Call Participants Ghansham Panjabi - Robert W. Baird & Company George Staphos - BofA Securities Anthony Pettinari - Citigroup John McNulty - BMO Capital Markets Adam Josephson - KeyBank Capital ...

Avery Dennison Corporation (NYSE:AVY) Q3 2019 Earnings Conference Call October 23, 2019 1:00 PM ET Company Participants Cindy Guenther - VP, IR and Finance Mitch Butier - Chairman, President and CEO Greg Lovins - SVP and CFO Conference Call Participants Ghansham Panjabi - Robert W. Baird & Co. Adam Josephson - KeyBanc Capital Markets George Staphos - Bank of America Merrill Lynch Jeff Zekauskas - JP Morgan Securities Incorporated Joshua Spector - UBS Securities LLC John McNulty - BMO Anthony Pettinari - Cit ...