Avery Dennison(US:AVY)2025-10-22 13:07Financial Performance - Reported EPS for Q3 2025 was $2.13, with adjusted EPS (non-GAAP) of $2.37, reflecting a 2% increase year-over-year [6]. - Net sales for Q3 2025 reached $2.2 billion, up 1.5% compared to the same period last year, with organic sales remaining comparable to the prior year [6]. - Net income for the three months ended September 27, 2025, was $166.3 million, compared to $181.7 million for the same period in 2024, indicating a decline of 8.5% [29]. - The company’s net income per common share, assuming dilution, was $2.13 for the three months ended September 27, 2025, compared to $2.25 for the same period in 2024, a decrease of 5.3% [29]. - The company reported a net income of $174.0 million for the fourth quarter of 2024 [58]. Sales and Revenue - The Materials Group reported sales of $1.5 billion, a 1.2% increase, while organic sales decreased by 1.9% due to deflation-related price reductions [9]. - The Solutions Group saw reported sales increase by 2.0% to $700 million, with organic sales up 3.6%, driven by high-value categories like Intelligent Labels [9]. - Total net sales for the three months ended September 27, 2025, were $2,215.5 million, a slight increase from $2,183.4 million for the same period in 2024, representing a growth of 1.5% [49]. - The Materials Group reported net sales of $1,516.0 million for the three months ended September 27, 2025, an increase from $1,497.7 million in the same period of 2024 [55]. - The Solutions Group achieved net sales of $699.5 million for the three months ended September 27, 2025, compared to $685.7 million in the prior year, reflecting a growth of 2.6% [55]. Profitability Metrics - Adjusted EBITDA margin (non-GAAP) for Q3 2025 was 16.5%, up from 16.4% in the prior year, driven by productivity benefits [27]. - Adjusted operating income (non-GAAP) for the three months ended September 27, 2025, was $281.1 million, compared to $279.7 million in the prior year, reflecting a growth of 0.5% [51]. - Adjusted EBITDA (non-GAAP) for the nine months ended September 27, 2025, reached $1,085.0 million, up from $1,076.2 million in the same period of 2024, indicating a growth of 0.8% [51]. - The company reported an operating margin of 11.9% for the three months ended September 27, 2025, slightly down from 12.1% in the same period of 2024 [49]. - Adjusted operating margins (non-GAAP) for the Solutions Group were 10.0% for the three months ended September 27, 2025, compared to 11.3% in the prior year [56]. Cash Flow and Liquidity - Cash and cash equivalents increased to $536.3 million as of September 27, 2025, from $212.7 million a year earlier, showing a significant increase of 152.5% [31]. - The company reported a net cash provided by operating activities of $504.6 million for the nine months ended September 27, 2025, down from $587.6 million in the prior year, a decrease of 14.1% [34]. - Net cash provided by operating activities for the three months ended September 27, 2025, was $312.1 million, compared to $270.1 million in the prior year, representing an increase of 15.6% [52]. - The adjusted free cash flow (non-GAAP) for the three months ended September 27, 2025, was $268.7 million, up from $219.4 million in the same period of 2024, indicating a growth of 22.5% [52]. Shareholder Returns and Investments - The company returned $670 million to shareholders through share repurchases and dividends in the first three quarters of 2025, repurchasing 2.5 million shares at a cost of $454 million [10]. - The company completed the acquisition of Meridian Adhesives Group's U.S.-based flooring adhesives business for $390 million, projected to generate annual revenue of $110 million in 2025 [13]. Balance Sheet and Debt - Net debt to adjusted EBITDA (non-GAAP) was 2.2x at the end of Q3 2025, indicating a strong balance sheet [11]. - Total current assets rose to $3,523.7 million as of September 27, 2025, compared to $3,084.7 million in the previous year, marking an increase of 14.2% [31]. - Total liabilities decreased to $6,655.9 million as of September 27, 2025, from $6,991.0 million a year earlier, reflecting a reduction of 4.8% [32]. - Long-term debt and finance leases increased to $3,202.3 million as of September 27, 2025, from $2,042.1 million a year earlier, indicating a rise of 56.7% [32]. - Total debt stood at $3,781.1 million, with net debt at $3,244.8 million as of the latest reporting period [58]. Guidance and Expectations - The company expects Q4 2025 reported EPS guidance to be between $2.15 and $2.25, with adjusted EPS guidance of $2.35 to $2.45 [6][16]. - The effective tax rate for Q3 2025 was reported at 29.2%, with an adjusted tax rate (non-GAAP) of 26.5% [14].