Avery Dennison Corp

Avery Dennison Corporation is a global leader in materials science and digital identification solutions, serving an array of industries worldwide including home and personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive. The company operates in more than 50 countries with over 200 manufacturing and distribution facilities as of December 31, 2025. International operations constituted a substantial majority of the business, representing approximately 69% of net sales in 2025, with approximately 40% of net sales originating in emerging markets. The company's reportable segments for fiscal year 2025 were Materials Group and Solutions Group, which comprised approximately 69% and 31%, respectively, of total net sales.

In the Materials Group, the largest competitors in label materials include UPM Adhesive Materials, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation, Inc.; and an array of smaller regional and local companies. For graphics and reflective products, the largest competitors are 3M Company and the Orafol Group. For performance tapes products, competitors include 3M; Tesa-SE, a subsidiary of Beiersdorf AG; Nitto Denko Corporation; and numerous regional and specialty suppliers. In the Solutions Group, primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; SML Group Limited; Arizon RFID Technology Cayman Co Ltd; and Tageos SAS, a subsidiary of Fedrigoni Group. The company believes that its technical expertise, size and scale of operations, broad line of quality products, reliable service, product and process innovation, distribution capabilities, and brand strength are the primary advantages in maintaining and further developing its competitive position.

The company generates revenue through the sale of labeling and functional materials, radio-frequency identification inlays and tags, software applications that connect the physical and digital, and offerings that enhance branded packaging and carry or display information. Revenue is recognized when control of products is transferred to a customer, generally upon shipment or delivery depending on specific terms of sale. The company's customer base is highly fragmented, with no single customer representing 10% or more of net sales in 2025. The company's business model includes both transactional sales to converters and distributors, as well as recurring elements through ongoing product and solution supply relationships.

The Materials Group is a leading global provider to the pressure-sensitive label and graphics industries, with innovative products including label materials, graphics and reflective materials, and functional bonding materials like tapes. Label materials are sold worldwide to converters for labeling, decorating and specialty applications in the food, home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits and logistics market segments. Graphics and reflective products include a variety of films sold to the architectural, commercial sign, digital printing and related market segments, as well as durable cast and reflective films for construction, automotive and fleet transportation and traffic and safety applications. Performance tapes products include Fasson-brand and Avery Dennison-brand tapes and other pressure-sensitive adhesive-based materials and converted products, mechanical fasteners and performance polymers used in non-mechanical fastening, bonding and sealing systems for various automotive, electronics, building and construction, general industrial, personal care, and medical applications. In 2025, Materials Group net sales including intersegment sales were $6,267.3 million ¹, with segment adjusted operating income of $922.2 million ².

The Solutions Group is a leading provider of information and branding solutions covering worldwide marketplace needs ranging from digital identification and data management to branding and embellishment, productivity, pricing and retail media. Its ultra-high-frequency RFID solutions empower customers across multiple retail and industry segments including apparel, logistics, food and grocery, and general retail to connect the physical and digital worlds. Branding solutions include brand embellishments, graphic tickets, tags, and labels, and sustainable packaging. Information solutions include item-level RFID solutions; visibility and loss prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand protection and security solutions; and Vestcom-brand shelf-edge productivity and media solutions. In 2025, Solutions Group net sales including intersegment sales were $2,817.3 million ³, with segment adjusted operating income of $286.3 million ⁴.

In 2025, the company acquired W.F. Taylor Holdings, Inc. ("Taylor Adhesives"), a Georgia-based flooring adhesives business, for aggregate purchase consideration of approximately $390 million ⁵, which expanded the high-value category portfolio in the Materials Group reportable segment. The company also made venture investments in five companies developing technological solutions believed to have the potential to advance its businesses. During 2025, the company recorded $48.8 million ⁶ in restructuring charges, net of reversals, related to 2025 actions consisting of severance and related costs for the reduction of approximately 1,200 ⁷ positions, as well as asset impairment charges, at numerous locations across the company. The company repurchased 3.2 million ⁸ shares of its common stock at an aggregate cost of $575.6 million ⁹ in 2025. In April 2025, the Board authorized the repurchase of shares with a fair market value of up to $750 million ¹⁰, with $526.3 million ¹¹ remaining authorized as of December 31, 2025. The company paid dividends per share of $3.70 ¹² in 2025, and in April 2025 increased the quarterly dividend rate to $0.94 ¹³ per share, representing an increase of approximately 7% from the previous quarterly dividend rate of $0.88 ¹⁴ per share.

Net sales for 2025 were $8,855.5 million ¹⁵, compared to $8,755.7 million ¹⁶ in 2024 and $8,364.3 million ¹⁷ in 2023. Net income was $688.0 million ¹⁸ in 2025, compared to $704.9 million ¹⁹ in 2024 and $503.0 million ²⁰ in 2023. Diluted earnings per share were $8.79 ²¹ in 2025, compared to $8.73 ²² in 2024 and $6.20 ²³ in 2023. Gross profit was $2,546.3 million ²⁴ in 2025, compared to $2,530.7 million ²⁵ in 2024. Net cash provided by operating activities was $881.4 million ²⁶ in 2025, compared to $938.8 million ²⁷ in 2024. Adjusted free cash flow was $707.1 million ²⁸ in 2025, compared to $699.5 million ²⁹ in 2024.

The company anticipates a favorable impact to full-year net sales and operating income from foreign currency translation, based on recent rates. The company anticipates an unfavorable impact to operating income from higher interest expense. The company anticipates the full-year effective tax rate to be in the mid-twenty percent range. The company anticipates incremental savings from restructuring actions, net of transition costs. The company anticipates an unfavorable impact to operating income from normalization of the majority of 2025 temporary cost savings, which was largely related to lower incentive compensation.

The company's strategy includes continuing to grow in emerging markets, which exposed it to less stable geopolitical conditions, civil unrest, economic volatility, and other risks. Approximately 40% of net sales in 2025 originated in emerging markets. The profitable growth of the business in emerging markets is an important part of the long-term growth strategy. Growing the proportion of the portfolio in high-value categories that serve markets growing faster than gross domestic product, represent large pools of potential profit and leverage core capabilities is an important part of the long-term growth strategy. High-value products and solutions include specialty and durable label materials, graphics and reflective solutions, industrial and medical tapes, and trade and specialty adhesives; intelligent labels that use RFID tags and inlays; shelf-edge pricing, productivity and consumer engagement solutions; and external embellishments.

The company's innovation efforts focus on anticipating market and customer challenges and opportunities, and applying technology to address them. Investment in innovation aims to accelerate growth by developing new products and solutions, expand margins through material re-engineering, and enable customer success by leveraging scalable innovation platforms and delivering sustainability initiatives and advanced technologies. Research and development efforts include sustainable innovation and design of products that advance the circular economy, reduce materials and waste, use recycled content, and extend product end-of-life or enable product recycling. The company has established strategic innovation platforms and priorities focused on delivering products and solutions that advance the circular economy, reduce supply chain waste and address the need for increased recyclability of packaging.

The company anticipates incremental savings from restructuring actions, net of transition costs. The company had incremental savings from restructuring actions, net of transition costs, of more than $60 million ³⁰ in 2025. As part of a continuous efficiency improvement culture, the company intends to continue efforts to reduce costs, which have in the past included, and may continue to include, facility closures and square footage reductions, headcount reductions, organizational restructuring, process standardization, and manufacturing relocation. The company anticipates an unfavorable impact to operating income from normalization of the majority of 2025 temporary cost savings, which was largely related to lower incentive compensation.

The company continues to invest in long-term growth and margin expansion plans, with approximately $200 million ³¹ in capital expenditures, including fixed assets and information technology, in 2025. In 2025, the company opened its first RFID inlay and label production site in India. The company also expanded Materials Group's manufacturing capabilities in Brazil, France, India, China and Ohio; moved Solutions Group's Vietnam business into a new, expanded facility; and made additional investments in both capacity and business development globally for the Intelligent Labels platform.

Research and development expenses were $137 million ³² in 2025. Capital expenditures, including fixed assets and information technology, were approximately $200 million ³³ in 2025. In April 2025, the Board authorized the repurchase of shares of common stock with a fair market value of up to $750 million ³⁴, in addition to the amount outstanding under the previous Board authorization. As of December 31, 2025, shares in the aggregate amount of $526.3 million ³⁵ remained authorized for repurchase under the 2025 Board authorization. The company increased the quarterly dividend rate by approximately 7% in April 2025 to $0.94 ³⁶ per share.

The indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in the overall apparel categories over the second, third and fourth quarters of 2025. The company's outlook assumes that tariff-related uncertainty will persist, and further developments in international trade relations and their broader impact to macroeconomic conditions could have a material adverse effect on the business. Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all imports, with higher rates on certain goods. In July 2025, the U.S. and the European Union agreed to a framework for a trade deal that included a baseline tariff rate of 15% on most goods imported from the European Union into the U.S.

The company faces risks from changes in worldwide economic, geopolitical, social and labor conditions. Macroeconomic developments such as impacts from slower growth in geographic regions, inflation resulting from increased raw material, energy and freight costs, labor shortages, geopolitical, social, supply chain and other disruptions, and uncertainty in global credit or financial markets could result in a material adverse effect on the business. Foreign currency translation increased 2025 net sales by approximately $29 million ³⁷ compared to the prior year. The company estimates that the indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in overall apparel categories over the second, third and fourth quarters of 2025.

The company faces material risks from the impact of tariffs and trade policy uncertainty, which resulted in an aggregate low single digit rate decrease in sales in overall apparel categories over the second, third and fourth quarters of 2025 ³⁸. The company's substantial international operations, with approximately 69% of net sales originating outside the U.S. in 2025 ³⁹, expose it to foreign currency fluctuations; foreign currency translation increased 2025 net sales by approximately $29 million ⁴⁰ compared to the prior year. Raw material cost volatility is a significant risk, as raw materials represent a significant portion of costs and a critical factor in profitability. The company had approximately $3.73 billion ⁴¹ of debt at December 31, 2025, and a downgrade of short-term credit ratings could impact access to commercial paper markets. The company's average variable-rate borrowings were approximately $739 million ⁴² in 2025, exposing it to interest rate increases. The carrying value of goodwill was $2.27 billion ⁴³ as of December 31, 2025, and an impairment could negatively impact results of operations.

Management's message emphasizes the company's position as a global leader in materials science and digital identification solutions, with a focus on making possible products and solutions that advance the industries served. The forward-looking statements include specific guidance elements: the company anticipates a favorable impact to full-year net sales and operating income from foreign currency translation based on recent rates; an unfavorable impact to operating income from higher interest expense; a full-year effective tax rate in the mid-twenty percent range; incremental savings from restructuring actions, net of transition costs; and an unfavorable impact to operating income from normalization of the majority of 2025 temporary cost savings, largely related to lower incentive compensation. The strategic priorities emphasized for the period ahead include continuing to grow in emerging markets, increasing the proportion of the portfolio in high-value categories, and leveraging the strengths of the Materials and Solutions groups to drive growth by delivering leading solutions at the intersection of the physical and digital worlds.