Avery Dennison Corp

Income Before Taxes

Gross Profit Margin

Gross profit margin for the first quarter of 2024 increased from the same period last year due to benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, the net impact of pricing and raw material input costs, and higher volume, partially offset by higher employee-related costs.

Marketing, General and Administrative Expense

Marketing, general and administrative expense increased in the first quarter of 2024 compared to the same period last year primarily due to higher employee-related costs and growth investments, partially offset by the benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

Other Expense (Income), Net

Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges. Refer to Note 10, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements for more information regarding the outcomes of legal matters and settlements, net.

Interest Expense

Interest expense increased in the first quarter of 2024 compared to the same period last year as a result of higher interest rates on borrowings and higher debt levels.

Net Income and Earnings per Share

Provision for Income Taxes

Our effective tax rate for the three months ended March 30, 2024 decreased compared to the same period last year primarily due to the tax impacts resulting from Blue Chip Swap transactions in Argentina. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

The global minimum tax under the Pillar Two framework became effective for us in 2024. While the impact on our unaudited Condensed Consolidated Financial Statements is currently not material, our analysis is ongoing as the Organization for Economic Cooperation and Development continues to release additional guidance and countries enact related legislation.

Our effective tax rate can vary from period to period due to a variety of factors, such as changes in our mix of earnings in countries with differing statutory tax rates, changes in our tax reserves, settlements of income tax audits, changes in tax laws and regulations, return-to-provision adjustments, tax impacts related to stock-based payments, and our execution of tax planning strategies.