Avery Dennison Corp

Fiscal Year

The three and nine months ended September 30, 2026 consisted of 92 and 273 days, respectively, and the three and nine months ended September 27, 2025 consisted of 91 and 273 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 September 30, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to our pricing actions and higher volume. In the nine months ended September 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.

Net Income

Net income increased from approximately $522 million in the first nine months of 2025 to approximately $542 million in the first nine 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:

•Higher employee-related costs

•Unfavorable mix

•Higher provision for income taxes

•Higher restructuring charges, net of reversals

Cost Reduction Actions

2026 Actions

We recorded $40.4 million in restructuring charges, net of reversals, during the nine months ended September 30, 2026 related to our 2026 cost reduction actions. These charges consisted of severance and related costs for the reduction of approximately 690 positions, as well as asset impairment and lease cancellation charges, at certain 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 nine 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, lower incentive compensation payments and higher net income, partially offset by higher tax payments, net of refunds. During the first nine months of 2026, adjusted free cash flow increased compared to the same period last year primarily due to the increase in net cash provided by operating activities, partially offset by higher purchases of property, plant and equipment and lower proceeds from sales of property, plant and equipment.

Outlook

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

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

•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