Avery Dennison Corp
For the period ended Dec 28, 2024. Filed Feb 26, 2025.
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FY2024 · Filed Feb 26, 2025
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Analysis of Results of Operations
Income before Taxes
| (In millions, except percentages) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Net sales | $8,755.7 | $8,364.3 | $9,039.3 |
| Cost of products sold | 6,225.0 | 6,086.8 | 6,635.1 |
| Gross profit | 2,530.7 | 2,277.5 | 2,404.2 |
| Marketing, general and administrative expense | 1,415.3 | 1,313.7 | 1,330.8 |
| Other expense (income), net | 71.6 | 180.9 | (.6) |
| Interest expense | 117.0 | 119.0 | 84.1 |
| Other non-operating expense (income), net | (26.7) | (30.8) | (9.4) |
| Income before taxes | $953.5 | $694.7 | $999.3 |
| Gross profit margin | 28.9% | 27.2% | 26.6% |
Gross Profit Margin
Gross profit margin in 2024 increased compared to 2023 primarily 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.
Gross profit margin in 2023 increased compared to 2022 primarily due to benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition costs, and the net impact of pricing and raw material inputs costs, partially offset by lower volume and higher employee-related costs.
Marketing, General and Administrative Expense
Marketing, general and administrative expense increased in 2024 compared to 2023 primarily due to higher employee-related costs, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.
Marketing, general and administrative expense decreased in 2023 compared to 2022 primarily due to benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments.
Other Expense (Income), Net
| (In millions) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Other expense (income), net by type | |||
| Restructuring charges, net of reversals: | |||
| Severance and related costs, net of reversals | $35.4 | $70.8 | $7.6 |
| Asset impairment and lease cancellation charges | 6.5 | 8.6 | .1 |
| Other items: | |||
| Losses from Argentine peso remeasurement and Blue Chip Swap transactions | 16.4 | 29.9 | — |
| (Gain) loss on venture investments | 19.2 | 1.5 | (13.5) |
| Outcomes of legal matters and settlements, net | (6.2) | 64.3 | 6.3 |
| Transaction and related costs | .3 | 5.3 | .3 |
| (Gain) loss on sales of assets | — | .5 | (1.4) |
| Other expense (income), net | $71.6 | $180.9 | $(.6) |
Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information regarding restructuring charges, net of reversals.
Refer to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information regarding (gain) loss on venture investments.
Refer to Note 8, "Contingencies," and Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information regarding outcomes of legal matters and settlements, net.
Interest Expense
Interest expense decreased in 2024 compared to 2023 primarily due to a decrease in commercial paper borrowings, partially offset by higher debt balances.
Interest expense increased in 2023 compared to 2022 primarily as a result of higher interest rates on borrowings and higher debt balances.
Other Non-Operating Expense (Income), Net
Other non-operating income decreased in 2024 compared to 2023 due to lower interest income, primarily in Argentina.
Other non-operating income increased in 2023 compared to 2022 due to higher interest income, primarily in Argentina.
Net Income and Earnings per Share
| (In millions, except percentages and per share amounts) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Income before taxes | $953.5 | $694.7 | $999.3 |
| Provision for income taxes | 248.6 | 191.7 | 242.2 |
| Net income | $704.9 | $503.0 | $757.1 |
| Net income per common share | $8.77 | $6.23 | $9.28 |
| Net income per common share, assuming dilution | 8.73 | 6.20 | 9.21 |
| Effective tax rate | 26.1% | 27.6% | 24.2% |
Provision for Income Taxes
Our effective tax rate in 2024 decreased compared to 2023 primarily due to lower non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss and lower tax charges from the recognition of uncertain tax positions in certain foreign jurisdictions, partially offset by higher tax charges from valuation allowances. Our effective tax rate in 2023 increased compared to 2022 primarily due to higher non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss, higher tax charges from the recognition of uncertain tax positions in certain foreign jurisdictions, and lower U.S. federal return-to-provision benefits.
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.
Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.