Avery Dennison Corp

Previous wording

Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing.

Current wording

Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture investments and other, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing.

Previous wording

•Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, an extra week in our fiscal year, the calendar shift resulting from an extra week in the prior fiscal year, currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales between segments. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations.

Current wording

•Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, the currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales between segments. Additionally, where applicable, sales change ex. currency is also adjusted for an extra week in our fiscal year and the calendar shift resulting from an extra week in the prior fiscal year. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations.

Previous wording

•Adjusted free cash flow refers to cash flow provided by operating activities, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments, less net cash used for Argentine Blue Chip Swap securities. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases and acquisitions.

Current wording

•Adjusted free cash flow refers to cash flow (used in) provided by operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments, less net cash used for Argentine Blue Chip Swap securities. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases and acquisitions.

Previous wording

•Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities, as well as net current assets or liabilities held-for-sale divided by annualized current quarter net sales. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations.

Current wording

•Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities divided by annualized current quarter net sales. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations.

Previous 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.

Current wording

In the three months ended March 29, 2025, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions.

Previous wording

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

Current wording

•The net impact of raw material deflation-related price reductions

Previous 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.

Current wording

We recorded $4.8 million in restructuring charges, net of reversals, during the three months ended March 29, 2025. These charges consisted of severance and related costs for the reduction of approximately 130 positions, as well as asset impairment charges, at various locations across our company. Our 2025 actions are primarily intended to optimize the operational footprint in our Solutions Group reportable segment.

Previous 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.

Current wording

During the first three months of 2025, net cash (used in) provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments and trade rebates and changes in operational working capital, partially offset by lower tax payments, net of refunds. During the first three months of 2025, adjusted free cash flow decreased compared to the same period last year primarily due to a decrease in net cash provided by operating activities, partially offset by lower purchases of property, plant and equipment.

Previous wording

Certain factors that we believe may contribute to our 2024 results are described below.

Current wording

Certain factors that we believe may contribute to or impact our 2025 results are described below.

Previous wording

•Based on recent rates, we expect foreign currency translation to have an unfavorable impact on our full-year operating income.

Current wording

◦We expect an unfavorable impact to our net sales and operating income from foreign currency translation, based on recent rates.

Previous wording

•We expect our full-year effective tax rate to be in the mid-twenty percent range.

Current wording

◦We expect our effective tax rate to be in the mid-twenty percent range.

Previous wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE THIRD QUARTER

Current wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE FIRST QUARTER

Previous 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.

Current wording

Gross profit for the first quarter of 2025 decreased from the same period last year due to the net impact of raw material deflation-related price reductions and unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and favorable volume/mix.

Previous 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.

Current wording

Our effective tax rate for the three months ended March 29, 2025 was comparable to the same period last year. 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 THIRD QUARTER

Current wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE FIRST QUARTER

Previous 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.

Current wording

In the first quarter of 2025, net sales increased on an organic basis compared to the same period in the prior year mainly due to favorable 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, decreased by a low single digit rate in Europe, the Middle East and North Africa, increased by a low single digit rate in Asia Pacific and increased by a high single digit rate in Latin America.

Previous 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.

Current wording

In the first quarter of 2025, 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 high single digit rate in the base business. Company-wide, on an organic basis, net sales of intelligent labels increased by a mid-single digit rate compared to the same period in the prior year.

Previous 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.

Current wording

Segment adjusted operating income increased in the first quarter of 2025 compared to the same period last year primarily due to benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and higher volume, partially offset by growth investments.

Previous 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.

Current wording

During the first three months of 2025, net cash (used in) provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments and trade rebates and changes in operational working capital, partially offset by lower tax payments, net of refunds.

Previous 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.

Current wording

During the first three months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S. and certain countries in Europe, primarily Belgium; in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, and in the U.S. During the first three months of 2024, 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; in our Solutions Group reportable segment, we primarily invested in buildings and equipment in certain countries in Asia Pacific, including Vietnam and China, in the U.S. and in certain countries in Latin America, primarily Mexico.

Previous wording

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

Current wording

During the first three months of 2025 and 2024, we primarily invested in information technology upgrades in the U.S.

Previous 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.

Current wording

During the first three months of 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $6 million. Refer to Note 12, “Supplemental Financial Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Previous 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.

Current wording

During the first three months of 2025 and 2024, our commercial paper borrowings were used to fund the repayment of long-term debt, dividend payments, share repurchases, capital expenditures and other general corporate purposes.

Previous wording

In August 2024, we repaid our $300 million of senior notes at maturity using cash flows from operations and commercial paper borrowings.

Current wording

In the first quarter of 2025, we repaid our €500 million of senior notes at maturity using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings.

Previous 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.

Current wording

We paid dividends of $0.88 per share in the first three months of 2025 compared to $0.81 per share in the same period last year. In April 2025, subsequent to the end of the first quarter of 2025, we increased our quarterly dividend rate to $0.94 per share, representing an increase of approximately 7% from our previous quarterly dividend rate of $0.88 per share.

Previous 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.

Current wording

During the first three months of 2025 and 2024, we repurchased approximately 1.4 million and 0.1 million shares of our common stock, respectively.

Previous wording

During the first nine months of 2024, the number of stock options exercised was approximately 0.1 million. Tax withholding for stock-based compensation was lower in the first nine months of 2024 compared to 2023 primarily due to a lower number of shares vesting.

Current wording

Tax withholding for stock-based compensation was lower in the first three months of 2025 compared to 2024 primarily due to a lower number of shares vesting for certain performance-based awards based on our performance against the objectives established for the awards.

Previous 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.

Current wording

In the three months ended March 29, 2025, other intangibles resulting from business acquisitions, net, decreased by approximately $21 million to $734.7 million, primarily reflecting current year amortization expense.

Previous 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.

Current wording

As of March 29, 2025, the balance of our shareholders’ equity was $2.17 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 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.

Current wording

International operations generated approximately 69% of our net sales during the three months ended March 29, 2025. Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions 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 nine 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 three months of 2025 compared to the same period last year was primarily related to euro-denominated sales and sales in Brazil.

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 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.

Current wording

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital (deficit) below. 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 first quarter of 2025 increased compared to the first quarter of 2024.

Previous 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.

Current wording

The average number of days sales outstanding was 64 days in the first quarter of 2025 compared to 63 days in the first quarter of 2024, 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 6.1 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.

Current wording

Average inventory turnover was 6.0 in the first quarter of 2025 compared to 6.2 in the first quarter of 2024, calculated using the annualized first-quarter cost of products sold in 2025 and 2024, 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 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.

Current wording

The average number of days payable outstanding was 76 days in the first quarter of 2025 compared to 78 days in the first quarter of 2024, calculated using the accounts payable balance at quarter-end divided by the respective annualized first-quarter cost of products sold. The decrease in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation.

Previous wording

The Revolver is used as a back-up facility for our commercial paper borrowings and can be used for other corporate purposes. No balance was outstanding under the Revolver as of September 28, 2024 or our prior revolving credit facility as of December 30, 2023.

Current wording

The Revolver is used as a back-up facility for our commercial paper borrowings and can be used for other corporate purposes. No balance was outstanding under the Revolver as of March 29, 2025 or December 28, 2024.

Previous 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.

Current wording

As of March 29, 2025, we had cash and cash equivalents of $195.9 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of March 29, 2025, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific.

Previous wording

We are currently considering various sources, including cash flows from operations, commercial paper borrowings and other debt financings, to repay approximately €500 million of senior notes, $25 million of medium-term notes and $5 million of medium-term notes maturing in the first quarter of 2025, second quarter of 2025 and third quarter of 2025, respectively.

Current wording

We are currently considering various sources, including cash flows from operations and commercial paper borrowings to repay our $25.0 million of medium-term notes and $5.0 million of medium-term notes maturing in the second and third quarters of 2025, respectively.

Previous wording

The carrying value of our total debt decreased by approximately $85 million in the first nine months of 2024 to $3.16 billion, primarily reflecting our repayment of $300 million of senior notes, partially offset by higher commercial paper borrowings.

Current wording

The carrying value of our total debt increased by approximately $307 million in the first three months of 2025 to $3.46 billion, primarily reflecting higher commercial paper borrowings and the revaluation of our euro-denominated debt, partially offset by the repayment of our €500 million of senior notes at their maturity in March 2025.