Q2 2025 Avery Dennison Corp Earnings Call Transcript
Key Points
- Avery Dennison Corp (AVY) delivered a solid second quarter with earnings above the midpoint of expectations and strong free cash flow.
- The Materials Group achieved strong productivity and margins on modest volume growth, with high-value categories constituting over a third of sales.
- The Solutions Group delivered solid margins despite a decline in apparel and general retail categories, with low double-digit growth in other categories.
- Enterprise-wide Intelligent Labels saw sales comparable to the prior year and up mid-single digits sequentially, with strong growth in food and logistics categories.
- Avery Dennison Corp (AVY) maintained a strong balance sheet with a net debt to adjusted EBITDA ratio of 2.3 and returned roughly $500 million to shareholders through share repurchases and dividends.
- Trade policy uncertainty impacted results, particularly in apparel and general retail categories, with an estimated indirect effect of tariffs lowering earnings per share by more than $0.10 in the quarter.
- Sales were down 1% on an organic basis due to deflation-related price reductions, with softer growth in Europe and Asia.
- Apparel sales were down 6% in the quarter, with orders down high single digits in April and improving only slightly by the end of the quarter.
- The Embelex platform experienced a decline due to lower sourcing demand and slower orders from prominent US performance brands.
- Near-term growth in Intelligent Labels is likely to be impacted by trade policy, with more than 70% of the platform linked to apparel and general retail categories.
Ladies and gentlemen, thank you for standing by. (Operator Instructions)
Welcome to Avery Dennison's earnings conference call for the second quarter ended on June 28, 2025. This call is being recorded and will be available for replay after 4:00 PM, Eastern time, today and until midnight, Eastern time, July 29, 2025.
To access the replay, please dial 1-800-770-2030 or 1-609-800-9909 for international callers. The conference ID number is 585-5706.
I now like to turn the call over to John Eble, Avery Dennison's Vice President of Finance. Please go ahead, sir.
Thank you, Tiffany. 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.
We remind you that we'll make certain predictive statements that reflect our current views and estimates about our
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