Avery Dennison Sales Accelerated on Materials Rebound
Adjusted operating margin widened 70 basis points to 13.6% in the second quarter.
Avery Dennison Corporation (AVY), a materials-science and digital-identification company, posted faster second-quarter growth as its Materials business returned to organic expansion.
Net sales rose 10.9% from a year earlier to $2.463 billion, compared with a 0.7% decline in the year-earlier quarter. Organic sales increased 7.6% after declining 1.0% a year earlier, while acquisitions and currency translation added 1.3 and 2.0 percentage points, respectively, to reported growth.
Adjusted earnings rose 19.4% to $2.89 a share, outpacing the 16.4% increase in adjusted net income as diluted shares outstanding declined to 76.4 million from 78.3 million. Adjusted EBITDA increased 11.8% sequentially to $421.0 million, a sharper step-up than the slight increase recorded between the third and fourth quarters of 2024.
Materials Group sales climbed 15.9% to $1.796 billion, including 9.7% organic growth, reversing organic declines in the second and third quarters of 2024. High-single-digit volume and mix growth drove most of the advance, while pricing contributed in the low single digits. Base categories grew by low double digits and outpaced mid-single-digit growth in high-value categories; both groups had declined by low single digits in the third quarter of 2024.
Solutions Group organic sales increased 2.6%, with apparel sales up by high single digits, reversing declines in both measures a year earlier. Reported segment sales slipped 0.5% to $666.8 million, but adjusted operating margin expanded 150 basis points to 11.5%.
The stronger operating performance converted into cash. Second-quarter adjusted free cash flow nearly doubled to $365.4 million from $188.9 million, while first-half adjusted free cash flow increased to $469.8 million from $135.8 million.
Avery Dennison returned $347 million to shareholders during the first half, down from $503 million a year earlier, chiefly because share-repurchase spending declined to $198 million from $360 million. First-half restructuring charges rose to about $34 million from $13 million, while disclosed savings increased to roughly $34 million from $30 million.