Avery Dennison Corp

Previous wording

In the three months and six months ended June 29, 2024, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by the impact of raw material deflation-related price reductions.

Current wording

In the three months and nine months ended September 28, 2024, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by the impact of raw material deflation-related price reductions.

Previous wording

Net income increased from approximately $222 million in the first six months of 2023 to approximately $349 million in the first six months of 2024. The major factors impacting this increase were:

Current wording

Net income increased from approximately $360 million in the first nine months of 2023 to approximately $531 million in the first nine months of 2024. The major factors impacting this increase were:

Previous wording

We recorded $13.2 million in restructuring charges, net of reversals, during the six months ended June 29, 2024. These charges consisted of severance and related costs for the reduction of approximately 380 positions, as well as asset impairment and lease cancellation charges, at various locations across our company.

Current wording

We recorded $25.6 million in restructuring charges, net of reversals, during the nine months ended September 28, 2024. These charges consisted of severance and related costs for the reduction of approximately 1,100 positions, as well as asset impairment and lease cancellation charges, at various locations across our company.

Previous wording

During the first six months of 2024, net cash provided by operating activities increased compared to the same period last year primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by the settlement payment for the Adasa legal matter and changes in operational working capital. During the first six months of 2024, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities and a decrease in purchases of property, plant and equipment.

Current wording

During the first nine months of 2024, net cash provided by operating activities increased compared to the same period last year primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by changes in operational working capital and the settlement payment for the Adasa legal matter. During the first nine months of 2024, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities and lower purchases of property, plant and equipment, partially offset by lower proceeds from company-owned life insurance policies.

Previous wording

•We anticipate net sales to increase due to higher volume as our markets improve following significant inventory destocking downstream from our company in 2023, as well as growth in Intelligent Labels. This increase may be partially offset by raw material deflation-related price reductions.

Current wording

•We expect net sales to increase due to higher volume as our markets improve following significant inventory destocking downstream from our company in 2023, as well as growth in Intelligent Labels. We expect this increase to be partially offset by raw material deflation-related price reductions.

Previous wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE SECOND QUARTER

Current wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE THIRD QUARTER

Previous wording

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

Current wording

Gross profit margin for the third 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, and higher volume, partially offset by higher employee-related costs.

Previous wording

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

Current wording

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

Previous wording

Interest expense decreased in the second quarter of 2024 compared to the same period last year primarily due to a decrease in commercial paper borrowings.

Current wording

Interest expense decreased in the third quarter of 2024 compared to the same period last year primarily due to lower commercial paper borrowings.

Previous wording

Our effective tax rate for the three months ended June 29, 2024 decreased compared to the same period last year primarily due to higher tax incentives in certain foreign jurisdictions and 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.

Current wording

Our effective tax rate for the three months ended September 28, 2024 decreased compared to the same period last year primarily due to lower tax charges from the recognition of uncertain tax positions and lower non-deductible expenses resulting from foreign currency fluctuations, partially offset by a lower return-to-provision discrete benefit upon completion of our U.S. federal income tax returns. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

Previous wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SECOND QUARTER

Current wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE THIRD QUARTER

Previous wording

In the second quarter of 2024, net sales increased on an organic basis compared to the same period in the prior year mainly due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low-to-mid single-digit rate in North America, a mid-single-digit rate in Western Europe and a high single-digit rate in emerging markets.

Current wording

In the third quarter of 2024, net sales increased on an organic basis compared to the same period in the prior year mainly due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low-to-mid single-digit rate in North America, decreased by a low single-digit rate in Western Europe and increased by a mid-to-high single-digit rate in emerging markets.

Previous wording

In the second quarter of 2024, net sales increased on an organic basis compared to the same period in the prior year by a mid-to-high single-digit rate in high-value categories and a mid-to-high teens rate in the base business. Company-wide, on an organic basis, net sales of Intelligent Label solutions increased by a mid-to-high teens rate compared to the same period in the prior year.

Current wording

In the third quarter of 2024, net sales increased on an organic basis compared to the same period in the prior year by a low single-digit rate in high-value categories and a mid-teens rate in the base business. For the first nine months of 2024, company-wide, on an organic basis, net sales of Intelligent Label solutions increased by a mid-teens rate compared to the same period in the prior year.

Previous wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE SIX MONTHS YEAR-TO-DATE

Current wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE NINE MONTHS YEAR-TO-DATE

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Our effective tax rate for the six months ended June 29, 2024 decreased compared to the same period last year primarily due to higher tax incentives in certain foreign jurisdictions and 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.

Current wording

Our effective tax rate for the nine months ended September 28, 2024 decreased compared to the same period last year primarily due to lower tax charges from the recognition of uncertain tax positions and lower non-deductible expenses resulting from foreign currency fluctuations, partially offset by a lower return-to-provision discrete benefit upon completion of our U.S. federal income tax returns. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

Previous wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SIX MONTHS YEAR-TO-DATE

Current wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE NINE MONTHS YEAR-TO-DATE

Previous wording

In the first six months of 2024, net sales increased on an organic basis compared to the same period in the prior year mainly due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low single-digit rate in North America, a mid-single-digit rate in Western Europe and a mid-to-high single-digit rate in emerging markets.

Current wording

In the first nine months of 2024, net sales increased on an organic basis compared to the same period in the prior year mainly due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low single-digit rate in North America, a low-to-mid single digit rate in Western Europe and a mid-to-high single digit rate in emerging markets.

Previous wording

Operating income increased in the first six months of 2024 compared to the same period last year primarily due to higher volume/mix, benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and lower restructuring charges, partially offset by higher employee-related costs, losses from Argentine peso remeasurement and Blue Chip Swap transactions, and loss on venture investment.

Current wording

Operating income increased in the first nine months of 2024 compared to the same period last year primarily due to higher volume/mix, benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and lower restructuring charges, partially offset by higher employee-related costs, loss on venture investment and the net impact of pricing and raw material input costs.

Previous wording

In the first six months of 2024, net sales increased on an organic basis compared to the same period in the prior year by a high single-digit rate in both high-value categories and the base business, Company-wide, on an organic basis, net sales of Intelligent Label solutions increased by a mid-to-high-teens rate compared to the same period in the prior year.

Current wording

In the first nine months of 2024, net sales increased on an organic basis compared to the same period in the prior year by a mid-single-digit rate in high-value categories and a low double-digit rate in the base business. Company-wide, on an organic basis, net sales of Intelligent Label solutions increased by a mid-teens rate compared to the same period in the prior year.

Previous wording

Operating income increased in the second quarter of 2024 compared to the same period last year primarily due to the impact of the accrual for the Adasa legal matter in the prior year, higher volume and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments.

Current wording

Operating income increased in the first nine months of 2024 compared to the same period last year primarily due to higher volume, the impact of the accrual for a legacy legal matter in the prior year and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments.

Previous wording

During the first six months of 2024, net cash provided by operating activities increased compared to the same period last year primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by the settlement payment for the Adasa legal matter and changes in operational working capital.

Current wording

During the first nine months of 2024, net cash provided by operating activities increased compared to the same period last year primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by changes in operational working capital and the settlement payment for the Adasa legal matter.

Previous wording

During the first six months of 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment in certain countries in Asia Pacific, including China and Vietnam, in the U.S. and in certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S. and in certain countries in Europe, primarily France. During the first six months of 2023, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S., in certain countries in Latin America, primarily Mexico, and in certain counties in Asia, primarily Malaysia; in our Materials Group reportable segment, we primarily invested in buildings and equipment in the U.S. and in certain countries in Europe, primarily France.

Current wording

During the first nine months of 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment in certain countries in Asia Pacific, including China and Vietnam, in the U.S. and in certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S. and certain countries in Europe, primarily France. During the first nine months of 2023, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S., in certain countries in Latin America, primarily Mexico, and in certain countries in Asia, primarily Malaysia; in our Materials Group reportable segment, we primarily invested in buildings and equipment in the U.S. and certain countries in Europe, primarily France.

Previous wording

During the first six months of 2024 and 2023, we primarily invested in information technology upgrades in the U.S.

Current wording

During the first nine months of 2024 and 2023, we primarily invested in information technology upgrades in the U.S.

Previous wording

During the first six months of 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $10 million. Refer to Note 12, “Supplemental Financial Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Current wording

During the first nine months of 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $10 million. Refer to Note 12, “Supplemental Financial Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Previous wording

During the first six months of 2023, we paid consideration, net of cash acquired, of approximately $194 million for the acquisitions of Thermopatch, Inc. ("Thermopatch") and LG Group, Inc. ("Lion Brothers"). We funded the Thermopatch and Lion Brothers acquisitions using cash and commercial paper borrowings.

Current wording

During the first nine months of 2023, we paid consideration, net of cash acquired, of approximately $203 million for the acquisitions of Thermopatch, Inc. ("Thermopatch") and LG Group, Inc. ("Lion Brothers"). We funded the Thermopatch and Lion Brothers acquisitions using cash and commercial paper borrowings.

Previous wording

During the first six months of 2024 and 2023, our commercial paper borrowings were used to fund acquisitions, dividend payments, share repurchases, capital expenditures and other general corporate purposes.

Current wording

During the first nine months of 2024 and 2023, our commercial paper borrowings were used to fund the repayment of long-term debt, acquisitions, dividend payments, share repurchases, capital expenditures and other general corporate purposes.

Previous wording

In March 2023, we issued $400 million of senior notes, due March 15, 2033, which bear an interest rate of 5.750% per year, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were $394.9 million, which we used to repay both indebtedness under our commercial paper programs and the $250 million aggregate principal amount of senior notes that matured on April 15, 2023.

Current wording

In March 2023, we issued $400 million of senior notes, due March 15, 2033, which bear an interest rate of 5.750% per year, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were $394.9 million, which we used to repay both indebtedness under our commercial paper programs and our $250 million aggregate principal amount of senior notes that matured on April 15, 2023.

Previous wording

We paid dividends of $1.69 per share in the first six months of 2024 compared to $1.56 per share in the same period last year. In April 2024, we increased our quarterly dividend rate to $0.88 per share, representing an increase of approximately 9% from our previous quarterly dividend rate of $0.81 per share.

Current wording

We paid dividends of $2.57 per share in the first nine months of 2024 compared to $2.37 per share in the same period last year. In April 2024, we increased our quarterly dividend rate to $0.88 per share, representing an increase of approximately 9% from our previous quarterly dividend rate of $0.81 per share.

Previous wording

During the first six months of 2024 and 2023, we repurchased approximately 0.2 million and 0.5 million shares of our common stock, respectively.

Current wording

During the first nine months of 2024 and 2023, we repurchased approximately 0.5 million and 0.7 million shares of our common stock, respectively.

Previous wording

In the six months ended June 29, 2024, other intangibles resulting from business acquisitions, net, decreased by approximately $48 million to $800.9 million, reflecting current year amortization expense and the impact of foreign currency translation.

Current wording

In the nine months ended September 28, 2024, other intangibles resulting from business acquisitions, net, decreased by approximately $66 million to $783.2 million, primarily reflecting current year amortization expense.

Previous wording

As of June 29, 2024, the balance of our shareholders’ equity was $2.29 billion. Refer to Note 8, “Supplemental Equity and Comprehensive Income Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Current wording

As of September 28, 2024, the balance of our shareholders’ equity was $2.39 billion. Refer to Note 8, “Supplemental Equity and Comprehensive Income Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Previous wording

International operations generated approximately 70% of our net sales during the six months ended June 29, 2024. Our future results are subject to changes in political, social and economic conditions globally and in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.

Current wording

International operations generated approximately 70% of our net sales during the nine months ended September 28, 2024. Our future results are subject to changes in political, social and economic conditions globally and in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.

Previous wording

The unfavorable impact of foreign currency translation on net sales in the first six months of 2024 compared to the same period last year was primarily related to sales in China.

Current wording

The unfavorable impact of foreign currency translation on net sales in the first nine months of 2024 compared to the same period last year was primarily related to sales in China.

Previous wording

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital (deficit) below. Working capital (deficit) (current assets minus current liabilities) as of the second quarter of 2024 decreased by approximately $575 million compared to the second quarter of 2023 primarily due to the reclassification of our $300 million of senior notes due in the third quarter of 2024, €500 million of senior notes due in the first quarter of 2025 and $25 million of medium-term notes due in the second quarter of 2025, partially offset by lower commercial paper borrowings of approximately $321 million. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. As shown below, operational working capital, as a percentage of annualized current-quarter net sales, in the second quarter of 2024 decreased compared to the second quarter of 2023.

Current wording

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital (deficit) below. Working capital (deficit) (current assets minus current liabilities) as of the third quarter of 2024 decreased by approximately $334 million compared to the third quarter of 2023 primarily due to the reclassification of our €500 million of senior notes due in the first quarter of 2025 and $25 million of medium-term notes due in the second quarter of 2025, partially offset by the repayment of our $300 million of senior notes in August 2024. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. As shown below, operational working capital, as a percentage of annualized current-quarter net sales, in the third quarter of 2024 increased compared to the third quarter of 2023.

Previous wording

The average number of days sales outstanding was 62 days in the second quarters of 2024 and 2023, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter.

Current wording

The average number of days sales outstanding was 66 days in the third quarter of 2024 compared to 62 days in the third quarter of 2023, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter. The increase in average number of days sales outstanding was primarily due to the timing of collections and the impact of foreign currency translation.

Previous wording

Average inventory turnover was 6.4 in the second quarter of 2024 compared to 6.2 in the second quarter of 2023, calculated using the annualized second-quarter cost of products sold in 2024 and 2023, respectively, and divided by the inventory balance at quarter-end.

Current wording

Average inventory turnover was 6.1 in the third quarter of 2024 compared to 6.5 in the third quarter of 2023, calculated using the annualized third-quarter cost of products sold in 2024 and 2023, respectively, and divided by the inventory balance at quarter-end. The decrease in average inventory turnover was primarily due to the impact of foreign currency translation.

Previous wording

The average number of days payable outstanding was 76 days in the second quarter of 2024 compared to 73 days in the second quarter of 2023, calculated using the accounts payable balance at quarter-end divided by the respective annualized second-quarter cost of products sold. The increase in average number of days payable outstanding primarily reflected the timing of vendor payments.

Current wording

The average number of days payable outstanding was 79 days in the third quarter of 2024 compared to 76 days in the third quarter of 2023, calculated using the accounts payable balance at quarter-end divided by the respective annualized third-quarter cost of products sold. The increase in average number of days payable outstanding primarily reflected the impact of foreign currency translation.

Previous wording

As of June 29, 2024, we had cash and cash equivalents of $208.8 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of June 29, 2024, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific.

Current wording

As of September 28, 2024, we had cash and cash equivalents of $212.7 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of September 28, 2024, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific.