Avery Dennison Corp

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 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, divided by annualized current quarter net sales, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities. 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 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.

Current wording

In the three months ended June 30, 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 unfavorable mix. In the six months ended June 30, 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 unfavorable mix and the impact of raw material deflation-related price reductions.

Previous wording

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:

Current wording

Net income increased from approximately $355 million in the first six months of 2025 to approximately $372 million in the first six months of 2026. The primary factors affecting this increase were:

Previous wording

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.

Current wording

We recorded $34.7 million in restructuring charges during the six months ended June 30, 2026 related to our 2026 actions. These charges consisted of severance and related costs for the reduction of approximately 600 positions, as well as asset impairment charges, at various locations across our company related to actions taken to optimize our operational footprint and workforce headcount.

Previous wording

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.

Current wording

During the first six months of 2026, net cash provided by operating activities increased compared to the same period last year primarily due to changes in operational working capital and lower incentive compensation payments, partially offset by higher tax payments, net of refunds. During the first six 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•A full-year effective tax rate in the high-twenty percent range

Previous wording

•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

Current wording

•An unfavorable impact to our operating income resulting from the normalization of the majority of our prior-year temporary cost-saving actions, which largely relate to lower incentive compensation

Previous wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE FIRST QUARTER

Current wording

ANALYSIS OF RESULTS OF OPERATIONS FOR THE SECOND QUARTER

Previous wording

Gross profit for the first quarter of 2026 increased from the same period last year due to higher volume, favorable foreign currency translation and the net benefit of pricing and raw material costs, including material re-engineering and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs.

Current wording

Gross profit for the second quarter of 2026 increased from the same period last year due to higher volume, the net benefit of pricing and raw material costs, including material re-engineering, benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and favorable foreign currency translation, partially offset by unfavorable mix and higher employee-related costs.

Previous wording

Marketing, general and administrative expense increased in the first quarter of 2026 compared to the same period last year primarily due to unfavorable foreign currency translation, higher employee-related costs and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs.

Current wording

Marketing, general and administrative expense increased in the second quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable foreign currency translation and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs.

Previous wording

Interest expense increased in the first quarter of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025.

Current wording

Interest expense increased in the second quarter of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025, partially offset by a decrease in commercial paper borrowings.

Previous wording

Our effective tax rate for the three months ended March 31, 2026 increased compared to the same period last year primarily due to a higher net discrete charge from increases in tax reserves related to a court ruling impacting tax group requirements in a foreign jurisdiction. 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 June 30, 2026 increased compared to the same period last year primarily due to lower discrete benefits from decreases in certain tax reserves. 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 FIRST QUARTER

Current wording

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SECOND QUARTER

Previous wording

(1)Segment adjusted operating income excluded other expense (income), net, of $9.9 million and $10.1 million in the first quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions and (gain) loss on venture and other investments.

Current wording

(1)Segment adjusted operating income excluded other expense (income), net, of $3.9 million and $(7.0) million in the second quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments and (gain) loss on sales of assets.

Previous wording

Segment adjusted operating income decreased in the first quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable volume and growth investments, partially offset by the net benefit of pricing and raw material costs and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

Current wording

Marketing, general and administrative expense increased in the first six months of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable foreign currency translation, and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs.

Previous wording

(1)Segment adjusted operating income excluded other expense (income), net, of $7.7 million and $4.4 million in the first quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments, outcomes of legal matters and settlements, transaction and related costs and (gain) loss on sales of assets.

Current wording

(1)Segment adjusted operating income excluded other expense (income), net, of $11.6 million and $(2.6) million in the first six months of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments, (gain) loss on sales of assets, outcomes of legal matters and settlements, and transaction and related costs.

Previous wording

In the first quarter of 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. On an organic basis, net sales increased by a low single digit rate in North America and by a high single digit rate in Asia Pacific, decreased by a mid-single digit rate in Latin America and were comparable in Europe, the Middle East and North Africa.

Current wording

In the first six months of 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 unfavorable mix and raw material deflation-related price reductions. On an organic basis, net sales increased by a mid-single digit rate in North America, and high single digit rates in Europe, the Middle East and North Africa and Asia Pacific and decreased by a low single digit rate in Latin America.

Previous wording

Segment adjusted operating income increased in the first quarter of 2026 compared to the same period last year primarily due to higher volume, favorable foreign currency translation and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs.

Current wording

Segment adjusted operating income increased in the first six months of 2026 compared to the same period last year primarily due to higher volume, favorable foreign currency translation, the net benefit of pricing and raw material costs, including material re-engineering, and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs. These increases were partially offset by unfavorable mix and higher employee-related costs.

Previous wording

In the first quarter of 2026, net sales decreased on an organic basis compared to the same period in the prior year due to a mid-single digit rate decrease in the base business, partially offset by a low single digit rate increase in high-value categories. Company-wide, on an organic basis, net sales of intelligent labels decreased by a low single digit rate compared to the same period in the prior year.

Current wording

In the first six months of 2026, net sales increased on an organic basis compared to the same period in the prior year due to a low single digit rate increase in high-value categories, partially offset by a low single digit rate decrease in the base business.

Previous wording

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.

Current wording

During the first six months of 2026, net cash provided by operating activities increased compared to the same period last year primarily due to changes in operational working capital and lower incentive compensation payments, partially offset by higher tax payments, net of refunds.

Previous wording

During the first three months of 2026, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe, including Belgium and Luxembourg, and certain countries in Asia Pacific, including China and Malaysia; in our Solutions Group reportable segment, we primarily invested in equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, the U.S. and certain countries in Latin America, primarily Mexico.

Current wording

During the first six months of 2026, in our Materials Group reportable segment, we primarily invested in equipment to support growth and improve productivity in the U.S., certain countries in Europe, including Ireland and Luxembourg, and certain countries in Asia Pacific, including China and Malaysia; in our Solutions Group reportable segment, we primarily invested in equipment to support growth and improve productivity in certain countries in Asia Pacific, including Vietnam and China, the U.S. and certain countries in Latin America, primarily Mexico.

Previous 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 the U.S.

Current wording

During the first six months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe and certain countries in Asia Pacific, primarily China; 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 the U.S.

Previous wording

During the first three months of 2026 and 2025, we primarily invested in information technology upgrades in the U.S.

Current wording

During the first six months of 2026 and 2025, we primarily invested in information technology upgrades in the U.S.

Previous wording

During the first three months of 2026, we received lower proceeds from sales of investments.

Current wording

During the first six months of 2026, we received lower proceeds from sales of investments.

Previous wording

During the first three months of 2025, we settled €420 million notional amount of net investment hedges.

Current wording

During the first six months of 2025, we settled €420 million notional amount of net investment hedges.

Previous wording

During the first three months of 2026, we paid $0.5 million for purchase price adjustments related to our acquisition of W.F. Taylor Holdings, Inc. and for a venture investment. During the first three months of 2025, we paid $2.6 million for venture investments.

Current wording

During the first six months of 2026, we made an approximately $75 million minority investment in Wiliot Ltd. We funded this investment using a combination of cash and commercial paper borrowings. In addition, we paid for purchase price adjustments related to our acquisition of W.F. Taylor Holdings, Inc. and for another venture investment. During the first six months of 2025, we paid $10.7 million for venture investments.

Previous wording

During the first three months of 2026 and 2025, our commercial paper borrowings were used to fund dividend payments, share repurchases, capital expenditures and other general corporate purposes. During the first three months of 2025, commercial paper borrowings were also used to fund the repayment of long-term debt.

Current wording

During the first six months of 2026 and 2025, our commercial paper borrowings were used to fund dividend payments, share repurchases, venture investments, capital expenditures and other general corporate purposes. During the first six months of 2025, commercial paper borrowings were also used to repay long-term debt.

Previous wording

We paid dividends of $0.94 per share in the first three months of 2026 compared to $0.88 per share in the same period last year. In April 2026, subsequent to the end of the first quarter of 2026, we increased our quarterly dividend rate to $1.00 per share, representing an increase of approximately 6% from our previous quarterly dividend rate of $0.94 per share.

Current wording

We paid dividends of $1.94 per share in the first six months of 2026 compared to $1.82 per share in the same period last year. In April 2026, we increased our quarterly dividend rate from $0.94 per share to $1.00 per share, representing an increase of approximately 6%.

Previous wording

During the first three months of 2026 and 2025, we repurchased approximately 0.3 million and 1.4 million shares of our common stock, respectively.

Current wording

During the first six months of 2026 and 2025, we repurchased approximately 1.2 million and 2.0 million shares of our common stock, respectively.

Previous wording

During the first three months of 2025, we settled €420 million notional amount of fair value hedges.

Current wording

During the first six months of 2025, we settled €420 million notional amount of fair value hedges.

Previous wording

In the three months ended March 31, 2026, goodwill decreased by approximately $10 million to $2.26 billion, primarily reflecting the impact of foreign currency translation.

Current wording

In the six months ended June 30, 2026, goodwill decreased by approximately $11 million to $2.26 billion, primarily reflecting the impact of foreign currency translation.

Previous wording

In the three months ended March 31, 2026, other intangibles resulting from business acquisitions, net, decreased by approximately $26 million to $801.2 million, primarily reflecting current year amortization expense.

Current wording

In the six months ended June 30, 2026, other intangibles resulting from business acquisitions, net, decreased by approximately $51 million to $776.2 million, primarily reflecting current-year amortization expense.

Previous wording

As of March 31, 2026, the balance of our shareholders’ equity was $2.30 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 June 30, 2026, the balance of our shareholders’ equity was $2.32 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 69% of our net sales during the three months ended March 31, 2026. 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.

Current wording

International operations generated approximately 69% of our net sales during the six months ended June 30, 2026. Our future results are subject to changes in worldwide economic conditions, tariffs, and social, geopolitical and market conditions in the regions in which we operate, as well as the impact of fluctuations in foreign currency exchange and interest rates.

Previous wording

The favorable impact of foreign currency translation on net sales in the first three months of 2026 compared to the same period last year was primarily related to euro-denominated sales and sales in China.

Current wording

The favorable impact of foreign currency translation on net sales in the first six months of 2026 compared to the same period last year was primarily related to euro-denominated sales and sales in China.

Previous wording

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital 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 2026 decreased compared to the first quarter of 2025.

Current wording

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital 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 second quarter of 2026 decreased compared to the second quarter of 2025.

Previous wording

The average number of days sales outstanding was 65 days in the first quarter of 2026 compared to 64 days in the first quarter of 2025, 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 primarily reflected the timing of collections, partially offset by the impact of foreign currency translation.

Current wording

The average number of days sales outstanding was 66 days in the second quarter of 2026 compared to 67 days in the second quarter of 2025, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter. The decrease in average number of days sales outstanding primarily reflected the impact of foreign currency translation, partially offset by the timing of collections.

Previous wording

Average inventory turnover was 6.7 in the first quarter of 2026 compared to 6.0 in the first quarter of 2025, calculated using the annualized first-quarter cost of products sold in 2026 and 2025, respectively, and divided by the inventory balance at quarter-end. The increase in average inventory turnover primarily reflected lower inventory balances.

Current wording

Average inventory turnover was 6.7 in the second quarter of 2026 compared to 6.2 in the second quarter of 2025, calculated using the annualized second-quarter cost of products sold and divided by the inventory balance at the respective quarter-end. The increase in average inventory turnover primarily reflected higher volumes due to customer inventory stocking.

Previous wording

The average number of days payable outstanding was 73 days in the first quarter of 2026 compared to 76 days in the first quarter of 2025, 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 impact of foreign currency translation, the timing of vendor payments and the impact of acquisitions.

Current wording

The average number of days payable outstanding was 80 days in the second quarter of 2026 compared to 75 days in the second quarter of 2025, calculated using the respective accounts payable balance at quarter-end divided by the annualized second-quarter cost of products sold. The increase in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation and acquisitions.