Avery Dennison Corp

Fiscal Year

In January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year. Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025; fiscal years 2026 and beyond will begin on January 1 and end on December 31.

In the three months and nine months ended September 27, 2025, net sales on an organic basis were comparable with the same periods in the prior year.

Net Income

Net income decreased from approximately $531 million in the first nine months of 2024 to approximately $522 million in the first nine months of 2025. The primary factors affecting this decrease were:

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

•Higher provision for income taxes

•Growth investments

These items were partially offset by the following factors:

•Benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs

•Higher volume/mix

Cost Reduction Actions

2025 Actions

We recorded $22.8 million in restructuring charges, net of reversals, during the nine months ended September 27, 2025. These charges consisted of severance and related costs for the reduction of approximately 770 positions, as well as asset impairment charges, at various locations across our company. Our 2025 actions are primarily intended to optimize our operational footprint.

Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information.

Cash Flow

During the first nine months of 2025, net cash provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments, changes in operational working capital, higher tax payments, net of refunds, and higher trade rebate payments, partially offset by the prior-year settlement payment for the Adasa legal matter. During the first nine 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 and higher proceeds from the sales of property, plant and equipment.

Outlook

Beginning in the first quarter of 2025, the U.S. announced tariffs on goods imported into the U.S. from numerous countries, many of which responded with reciprocal tariffs and other actions on goods imported from the U.S. The U.S. government continues to negotiate with other countries regarding the tariffs. As it relates to the direct impact of these tariffs, a relatively small portion of our global materials purchases is impacted. To mitigate this direct impact to our operations, we have implemented strategic sourcing adjustments and pricing surcharges. The indirect impact on demand for our products and solutions is more uncertain. While a majority of our products and solutions relates to less discretionary consumer staples, we also serve more discretionary and cyclical markets, such as industrials, durables and apparel. We estimate that the indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in our overall apparel categories over the second and third quarters of 2025.

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

•We anticipate continued uncertainty related to trade policy and the macroeconomic environment.

•In the fourth quarter of 2025, we anticipate an increase in net sales, both sequentially and compared to the same period last year, from the impacts of favorable foreign currency translation, the extra days resulting from our transition to a December 31, 2025 fiscal year-end, and our acquisition of W.F. Taylor Holdings, Inc.

•For the full year:

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

◦We anticipate incremental savings from restructuring actions, net of transition costs.

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