Q2 2026 Avery Dennison Corp Earnings Call Transcript
Key Points
- Strong second-quarter organic sales growth of 8% year-over-year, driven by high single-digit volume mix growth.
- Adjusted EBITDA margins expanded across both segments, with Materials Group up 20 basis points and Solutions Group up 150 basis points.
- Adjusted EPS grew 19% year-over-year to $2.89, supported by higher volume and productivity.
- Robust free cash flow generation of $365 million in the quarter, enabling increased share repurchases and dividend growth.
- Intelligent Labels platform showed strong performance in apparel and general retail with sales up approximately 10%, and food segment expected to accelerate in the second half.
- Customer inventory pre-buying in Materials Group persisted longer than anticipated, creating uncertainty about the timing and magnitude of destocking in the second half.
- Logistics segment within Intelligent Labels experienced a double-digit sales decline due to lapping outsized share gains from 2025 and softer customer demand.
- Raw material costs saw high single-digit sequential inflation in Q2, with expectations of continued high single-digit year-over-year inflation in the second half.
- Employee-related costs, including wage inflation and higher incentive compensation, created headwinds partially offset by productivity actions.
- Vestcom sales were down slightly year-over-year as the company lapped a major customer rollout from 2025.
Ladies and gentlemen, welcome to Avery Dennison's earnings conference call for the second quarter ended on June 30, 2026. (Operator Instructions) As a reminder, this webcast is being recorded and will be available in the Avery Dennison Investors Relations website.
I would now like to be in this over to William Gilchrist, Avery Dennison's Vice President of Investor Relations. Please go ahead, sir.
Thank you, Ellen, and welcome to Avery Dennison's second-quarter 2026 earnings conference call. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified and reconciled from GAAP on schedules A4 to A8 of the financial statements accompanying today's earnings release.
Remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to
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