Avery Dennison Corp

Fiscal Year

The three and six months ended June 30, 2026 consisted of 91 and 181 days, respectively, and the three and six months ended June 28, 2025 consisted of 91 and 182 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 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.

Net Income

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:

•Higher volume

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

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

•Favorable foreign currency translation

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

Cost Reduction Actions

2026 Actions

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.

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 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.

Outlook

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

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

•Higher interest expense

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

•Incremental savings from restructuring actions, net of transition costs

•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