Avery Dennison Corp

Fiscal Year

The three months ended March 31, 2026 and March 29, 2025 consisted of 90 and 91 days, respectively.

Our 2026 fiscal year is coincident with the calendar year, beginning on January 1 and ending on December 31; our 2025 fiscal year began on December 29, 2024 and ended on December 31, 2025.

In the three months ended March 31, 2026, 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 and unfavorable mix.

Net Income

Net income increased from approximately $166 million in the first three months of 2025 to approximately $168 million in the first three months of 2026. The primary factors affecting this increase were:

•Higher volume

•Favorable foreign currency translation

•Benefits from productivity initiatives, including savings from restructuring actions, net of transition costs

•Prior-year losses on venture and other investments

•Net benefit of pricing and raw material costs, including material re-engineering

These items were partially offset by the following factors:

•Unfavorable mix

•Higher employee-related costs

•Higher provision for income taxes

•Higher restructuring charges, net of reversals

•Growth investments

Cost Reduction Actions

2026 Actions

We recorded $15.9 million in restructuring charges during the three months ended March 31, 2026. These charges consisted of severance and related costs for the reduction of approximately 370 positions, as well as asset impairment charges, at various locations across our company as a result of actions taken to optimize our operational footprint and workforce headcount.

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 three months of 2026, net cash provided by (used in) operating activities increased compared to the same period last year primarily due to lower incentive compensation payments and changes in operational working capital, partially offset by higher tax payments, net of refunds. During the first three months of 2026, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities.

Outlook

Certain factors that we anticipate will contribute to our 2026 results are described below.

•Based on recent rates, favorable impact from foreign currency translation to our full-year net sales and operating income

•Unfavorable impact from higher interest expense to our operating income

•Our full-year effective tax rate to be in the high-twenty percent range

•Incremental savings from restructuring actions, net of transition costs

•Unfavorable impact to our operating income from the normalization of the majority of our prior-year temporary cost savings, which was largely related to lower incentive compensation