Investor Presentation February 2026 February 2026 Investor Presentation 1 Classification: Avery Dennison - Public Forward-Looking Statements Certain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties. We believe that the most significant risk fac ...

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][15] - Adjusted EBITDA margin was 16.4% for the full year, reflecting resilience despite headwinds from trade policy changes and softer consumer sentiment [3][15] - Fourth quarter adjusted EPS was $2.45, up 3% compared to the prior year, driven by higher volume and productivity [15][25] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, although organic sales were slightly down due to deflation-related price reductions [4][17] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories now representing 60% of the portfolio, which helped offset declines in base solutions [6][19] - Intelligent Labels within the enterprise-wide platform grew mid-single digits, driven by strong performance in food, logistics, and other categories [7][20] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [17] - Emerging markets in Asia Pacific and Latin America were up low single digits, indicating some resilience in these regions [17] - The apparel business was down roughly 7%, impacted by tariff-related uncertainties, while other categories like food and logistics showed high teens growth in Q4 [6][8] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent approximately 45% of total sales, and aims to expand this further [9][10] - There is a strong emphasis on innovation and digital capabilities to enhance operational productivity and customer solutions [10][11] - The company plans to maintain a disciplined capital allocation strategy while continuing to invest in productivity and innovation to strengthen market positions [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth despite ongoing macroeconomic challenges, with expectations for adjusted EPS growth of approximately 6% in Q1 2026 [13][25] - The company anticipates that growth in high-value categories will continue to be a key driver, with a focus on expanding customer adoption and market penetration [9][39] - Management acknowledged the need to improve organic revenue growth and is taking decisive actions to address this trajectory [9][13] Other Important Information - The company achieved its 2025 sustainability objectives, including reducing energy intensity and enabling more sustainable products [11][12] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.4, and the company returned approximately $860 million to shareholders in 2025 [16][25] Q&A Session Questions and Answers Question: Can you provide more detail on the 40 basis point drop in margin? - The drop was attributed to soft base volumes, wage inflation, and some one-time benefits in the prior year, along with the impact of extra calendar days in Q4 [28][30] Question: What are the growth expectations for Intelligent Labels in 2026? - Growth is anticipated to be above the low single digits seen in 2025, driven by increased adoption in apparel and logistics sectors [37][39] Question: How do high-value categories compare in margin to core categories? - High-value categories typically have higher variable margins than the rest of the portfolio, contributing to overall margin expansion [44][46] Question: Has the Walmart partnership increased inquiries from other grocery sellers? - Yes, the partnership has catalyzed interest from other grocery sellers, leading to a growing pipeline of inquiries [52][53] Question: What is the expected impact of temporary savings on 2026? - Temporary savings from incentive compensation in 2025 will be a headwind in 2026, similar in magnitude to the $50 million restructuring actions [55][56] Question: What is the outlook for the apparel market in 2026? - There is uncertainty due to tariff policies, but growth is expected as retailers adjust their supply chain strategies [61][63]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and generated $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][14] - Adjusted EBITDA margin was maintained at 16.4% for the full year, despite headwinds from trade policy changes and softer consumer sentiment [3][14] - In Q4, adjusted EPS was $2.45, up 3% compared to the prior year, with reported sales increasing by 3.9% [13][14] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, with low single-digit volume and mix growth offset by deflation-related price reductions [4][15] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories representing 60% of the portfolio [5][19] - Intelligent Labels within the Solutions Group grew mid-single digits, driven by food, logistics, and industrial categories [6][18] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [15] - Emerging markets in Asia Pacific and Latin America were up low single digits [15] - The apparel business was down approximately 7%, impacted by tariff-related uncertainties [5][56] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent 45% of sales, and aims to expand this further [8][10] - There is a commitment to accelerating innovation and enhancing digital capabilities to improve operational productivity and customer solutions [9][10] - The company achieved its 2025 sustainability objectives and is making progress towards its 2030 goals [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth in 2026, anticipating adjusted earnings per share growth of approximately 6% at the midpoint [11][21] - The company does not expect macroeconomic tailwinds in the near term, focusing instead on internal levers to drive performance [11][38] - There is a recognition of the need to improve organic revenue growth, with decisive actions being taken to address this [8][12] Other Important Information - The company returned approximately $860 million to shareholders in 2025, including $572 million in buybacks and $288 million in dividends [14] - The balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.4 [14] Q&A Session Summary Question: Can you provide more details on the 40 basis point drop in margin? - The drop was attributed to soft base volumes, wage inflation, and some one-time benefits in the prior year [26][28] Question: What are the growth expectations for Intelligent Labels in 2026? - Growth is anticipated to be above the low single digits achieved in 2025, driven by increased adoption in apparel and logistics [32][34] Question: How do high-value categories compare in margin to core categories? - High-value categories typically have higher variable margins than the rest of the portfolio, contributing to overall margin expansion [40][42] Question: What impact has the Walmart partnership had on inquiries from other grocery sellers? - The partnership has increased interest and inquiries from other grocery sellers, leading to potential pilots and trials [47][48] Question: What is the expected timing for restructuring benefits throughout 2026? - Restructuring benefits are expected to be balanced across the year, with a more significant impact in the middle quarters [68][70] Question: What actions are being taken to drive organic growth in high-value categories? - The company is focusing on new customer acquisition, accelerating innovation outcomes, and leveraging digital capabilities [75][78]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $9.53 and generated $707 million of adjusted free cash flow for the full year 2025, demonstrating the durability of its franchise [3][16] - Adjusted EBITDA margin was maintained at 16.4% for the year, despite headwinds from trade policy changes and softer consumer sentiment [3] - In Q4, adjusted EPS was $2.45, up 3% year-over-year, with reported sales increasing by 3.9% [15][16] Business Line Data and Key Metrics Changes - In the Materials Group, reported sales increased by 5%, although organic sales were slightly down due to deflation-related price reductions [4] - The Solutions Group saw sales increase by approximately 1.5%, with high-value categories now representing 60% of the portfolio [5] - Intelligent Labels within the Solutions Group grew mid-single digits, driven by strong performance in food and logistics categories [6][19] Market Data and Key Metrics Changes - In developed markets, North America experienced low single-digit volume mix declines, while Europe delivered mid-single-digit growth [17] - Emerging markets in Asia Pacific and Latin America saw low single-digit growth [17] - The apparel business was down approximately 7%, impacted by tariff-related uncertainties [5][19] Company Strategy and Development Direction - The company is focused on driving growth in high-value categories, which now represent 45% of total sales, and aims to expand this further [9] - There is a strategic shift towards innovation and digital capabilities to enhance operational productivity and customer solutions [10][11] - The company achieved its 2025 sustainability objectives and is making progress towards its 2030 goals [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to stronger growth in 2026, anticipating organic sales growth of 0%-2% in Q1 2026 [12][23] - The company does not expect macroeconomic tailwinds in the near term, focusing instead on internal levers to drive performance [12][23] - Management acknowledged the need to improve organic revenue growth and is taking decisive actions to address this [9][12] Other Important Information - The company returned approximately $860 million to shareholders in 2025, including $572 million in buybacks and $288 million in dividends [16] - The net debt to adjusted EBITDA ratio at the end of the quarter was 2.4, indicating a strong balance sheet [16] Q&A Session Summary Question: Can you provide more details on the 40 basis point drop in margin? - Management explained that the drop was due to soft base volumes, wage inflation, and some one-time benefits in the prior year [28][30] Question: What are the growth expectations for Intelligent Labels in 2026? - Management anticipates growth above 2025 levels, driven by increased adoption in apparel and logistics sectors [36][38] Question: How has the Walmart partnership impacted inquiries from other grocery sellers? - The Walmart partnership has increased interest from other grocery sellers, leading to more inquiries and potential pilots [52][53] Question: What is the expected impact of temporary savings on 2026? - Temporary savings from incentive compensation will be a headwind in 2026, similar in magnitude to the $50 million restructuring actions [54] Question: What is the outlook for the apparel market in 2026? - Management noted ongoing tariff uncertainty but expects some growth in the apparel market as retailers adjust their strategies [60][62]

Financial Performance - The company reported net sales of $2.2 billion[16] - Adjusted EPS (non-GAAP) was $2.37, a 2% increase year-over-year[13, 16] - Strong adjusted free cash flow (FCF) of $269 million was generated[15, 16] - The adjusted EBITDA margin was 16.5%, up 10 bps[17] - The company returned $167 million to shareholders through share repurchases and dividends[16] Segment Performance - Materials Group reported sales increased 1.2% to $1.5 billion[27] but sales down 1.9% organically[27] - Solutions Group reported sales increased 2.0% to $700 million[30] and sales up 3.6% organically[30] - High-value categories delivered sales of approximately $1.0 billion, with low single-digit (LSD) organic growth[18] - Base categories delivered sales of approximately $1.2 billion, with low single-digit (LSD) organic decline[18] Outlook and Strategy - The company expects Q4 adjusted EPS to be between $2.35 and $2.45[14] - Full-year reported sales growth is projected at 5-7%, including a ~2% tailwind from currency translation and ~2% impact from extra days[45] - The company completed the acquisition of Taylor Adhesives for $390 million[15]