Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited third quarter 2012 results. All non-GAAP financial measures referenced in this document are reconciled to GAAP in the attached tables. Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations.
“In the third quarter, we delivered the strongest organic sales growth since first quarter 2011,” said Dean Scarborough, Avery Dennison chairman, president and CEO. “Continued top-line momentum in Pressure-sensitive Materials and a rebound in Retail Branding and Information Solutions’ core business, as well as accelerating adoption of RFID, drove better than expected earnings for the quarter. As a result, we raised our guidance for full-year earnings per share.
“Our restructuring initiative is well under way, and we are on track to achieve more than $100 million in annualized savings by mid-2013,” Scarborough said. “The leaner cost structure that will result will enhance our competitive position and strengthen our ability to increase returns.
“We continued to repurchase shares, meeting our commitment to return more cash to shareholders while maintaining a strong balance sheet,” Scarborough said.
For more details on the company’s results, see the summary table accompanying this news release, as well as the supplemental presentation materials, “Third Quarter 2012 Financial Review and Analysis,” posted on the company’s website at
, and furnished on Form 8-K with the SEC.
Third Quarter 2012 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, acquisitions and divestitures. Adjusted operating margin refers to earnings before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
Retail Branding and Information Solutions (RBIS)
- Pressure-sensitive Materials segment sales increased approximately 7 percent. Within the segment and compared to prior year, Label and Packaging Materials sales increased high single digits, and Graphics and Reflective Solutions sales increased mid-single digits.
- Operating margin declined 30 basis points to 7.4 percent due to higher employee-related expenses, the impact of changes in product mix, and higher restructuring costs, partially offset by the benefit of higher volume and productivity initiatives. Adjusted operating margin improved 40 basis points.
Other specialty converting businesses
- Sales increased approximately 7 percent compared to prior year driven by increased demand from U.S. and European retailers and brands, including accelerating RFID adoption.
- Operating margin improved 210 basis points to 2.8 percent as the benefit of productivity initiatives, higher volume, and lower restructuring costs more than offset higher employee-related expenses and the impact of changes in product mix. Adjusted operating margin improved 90 basis points.
- Sales decreased approximately 1 percent due to lower volume.
- Operating margin improved 310 basis points to 1.9 percent driven by increased RFID profitability, partially offset by higher restructuring costs. Adjusted operating margin improved 500 basis points.
The company repurchased 2.9 million shares during the third quarter at an aggregate cost of $86 million. In the first nine months of 2012, the company repurchased 7.7 million shares at an aggregate cost of $228 million.