Avery Dennison's CEO Discusses Q1 2012 Results - Earnings Call Transcript

First quarter results for Retail Branding and Information Solutions reflect the trends we saw in the back half of last year. We expect to see improvement in the RBIS growth rate over the balance of the year, with both easier comparisons and the success of our growth strategies. Recall that we have now passed the anniversary of retailer decisions to reduce unit volumes to beat the anticipated higher impact -- or impact of higher prices. Given the seasonality in this business, the second quarter will be an important benchmark for assessing how this market is progressing, as well as testing the traction of our key growth initiatives. As discussed in previous calls, the major challenge for RBIS has been achieving margin improvement objective in a lower growth environment. Over the past few years, we've been steadily restructuring this business to reduce fixed costs. We ramped up this activity in the second half of last year and expect to continue these efforts over the next few years.

The next wave of actions is focused on factory efficiency and the further consolidation of production. We'll shrink square footage in manufacturing and invest at less than the rate of D&A to deliver solid free cash flow in this more volatile market environment. As with LPM, you'll hear much more about the strategies and outlook for this business from RBIS President, Sean Neville, during the May Investor Meeting.

Moving on, in light of the previously announced agreement to sell Office and Consumer Products, this business is reported as a discontinued operation. OCP increased sales on a year-over-year basis due to the new products we launched last year, including a healthy lift from the pipelines associated with Martha Stewart. The sale of OCP is in regulatory review, and we expect the transaction to close in the second half of the year.

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