On July 23, 2024, Avery Dennison Corp (AVY, Financial) released its 8-K filing announcing preliminary, unaudited results for its second quarter ended June 29, 2024. Avery Dennison, a global leader in pressure-sensitive materials, merchandise tags, and labels, also operates a specialty converting business producing RFID inlays and labels. The company generates a significant portion of its revenue from international operations.
Performance Overview
Avery Dennison Corp (AVY, Financial) reported net sales of $2,235.3 million for Q2 2024, a 6.9% increase from $2,090.5 million in Q2 2023. This growth was driven by higher volumes and productivity gains across both the Materials and Solutions Groups. The company’s net income for the quarter was $176.8 million, up 76% from $100.4 million in the same period last year. Earnings per share (EPS) came in at $2.18, slightly below the analyst estimate of $2.25.
Segment Performance
The Materials Group reported net sales of $1,546.8 million, a 4.8% increase from the previous year, while the Solutions Group saw a 12.0% increase in net sales to $688.5 million. The operating income for the Materials Group was $223.4 million, with an operating margin of 14.4%. The Solutions Group reported an operating income of $64.1 million, with an operating margin of 9.3%.
Financial Achievements
During the first half of 2024, Avery Dennison returned $177 million in cash to shareholders through dividends and share repurchases. The company repurchased 0.2 million shares at an aggregate cost of $41 million. Additionally, the quarterly dividend was increased to $0.88 per share, representing a 9% increase over the previous rate. The company’s balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.2x at the end of the second quarter.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Sales | $2,235.3 million | $2,090.5 million | 6.9% |
| Net Income | $176.8 million | $100.4 million | 76% |
| EPS | $2.18 | $1.24 | 76% |
| Adjusted EBITDA | $367.4 million | $307.8 million | 16.4% |
Income Statement Highlights
The company’s gross profit for Q2 2024 was $662.7 million, up from $553.4 million in Q2 2023. Marketing, general, and administrative expenses increased to $373.9 million from $319.6 million. The provision for income taxes was $61.6 million, resulting in a net income of $176.8 million.
Balance Sheet and Cash Flow
As of June 29, 2024, Avery Dennison reported total assets of $8,298.2 million, with cash and cash equivalents of $208.8 million. The company’s total liabilities were $6,011.1 million, and shareholders' equity stood at $2,287.1 million. Net cash provided by operating activities for the first half of 2024 was $317.5 million, while net cash used in investing activities was $118.8 million.
Commentary and Outlook
“We delivered a strong second quarter, with significant earnings growth, driven by higher volume and productivity gains,” said Deon Stander, president and CEO. “Both our Materials and Solutions Groups delivered strong top- and bottom-line growth.”
“We have raised our full-year outlook for adjusted earnings per share. We continue to remain confident that the consistent execution of our strategies will enable us to meet our long-term goals for superior value creation for all our stakeholders,” added Stander.
Analysis
Avery Dennison Corp (AVY, Financial) has demonstrated robust performance in Q2 2024, exceeding analyst estimates and showing significant growth in both revenue and net income. The company’s strategic focus on productivity gains and volume growth has paid off, leading to improved financial metrics across the board. The increase in dividends and share repurchases reflects the company’s strong cash flow and commitment to returning value to shareholders. However, the company must continue to navigate challenges such as raw material costs and foreign currency fluctuations to sustain its growth trajectory.
For more detailed information on Avery Dennison Corp (AVY, Financial)'s financial performance, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Avery Dennison Corp for further details.
