FOR IMMEDIATE RELEASE

Highlights:

• FY22 Reported EPS of $9.21, up 4%
  • Adjusted EPS (non-GAAP) of $9.15, up 3%, up 11% ex. currency
• FY22 Net sales increased 7.5% to $9.0 billion
  • Sales growth ex. currency (non-GAAP) of 13.1%
  • Organic sales growth (non-GAAP) of 9.5%
• 4Q22 Reported EPS of $1.51
  • Adjusted EPS (non-GAAP) of $1.65, down 23%
• 4Q22 Net sales declined 7.2% to $2.0 billion
  • Sales change ex. currency (non-GAAP) of (0.8%)
  • Organic sales change (non-GAAP) of (0.9%)
• FY23 Reported EPS guidance of $8.85 to $9.25
  • Adjusted EPS guidance of $9.15 to $9.55

MENTOR, Ohio, February 2, 2023 – Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its fourth quarter and full year ended December 31, 2022. Non-GAAP financial measures referenced in this release are reconciled from GAAP in the attached financial schedules. Unless otherwise indicated, comparisons are to the same period in the prior year.

“We delivered impressive results in 2022, once again achieving double-digit earnings growth on a constant currency basis,” said Mitch Butier, Chairman and CEO. “Both our Materials and Solutions Groups delivered strong top-and bottom-line results while accelerating adoption of Intelligent Labels.

“Our strong performance came amidst a very challenging environment that was capped by volume declines in the fourth quarter due to significant inventory reductions downstream,” added Butier. “Recent volume trends are indicative of patterns in previous slowdowns; we have been activating countermeasures accordingly.

“Despite the challenges in the macro environment, we remain well-positioned to continue our long track record of earnings growth in 2023, including accelerating growth in Intelligent Labels,” said Butier.

“Once again, I want to thank our entire team for continuing to raise their game to address the unique challenges at hand and deliver value for all our stakeholders.”

Fourth Quarter 2022 Results by Segment

Materials Group

• Reported sales decreased 5% to $1.4 billion. Sales were up 2% ex. currency and 2% on an organic basis.
  • Label materials sales were up by low-single digits on an organic basis, with growth in both high-value and base product categories.
    • Pricing more than offset a low-double-digit volume decline, driven by inventory destocking.
    • On an organic basis, sales were down low-to-mid single digits in North America; sales were up low-double digits in Western Europe and mid-single digits in emerging markets.
  • Sales increased by low-single digits organically in the Graphics and Reflective Solutions businesses.
  • Sales increased by low-double digits organically in the combined Performance Tapes and Medical businesses.
• Reported operating margin decreased 110 basis points to 10.7%. Adjusted EBITDA (non-GAAP) decreased by 15% to $184 million, with adjusted EBITDA margin (non-GAAP) of 12.8%.

Solutions Group

• Reported sales decreased 11% to $585 million. Sales were down 7% ex. currency and 8% on an organic basis.
  • High-value categories sales were up mid-single digits on an organic basis.
  • Sales decreased by high-teens organically in base solutions, as customers adjusted inventory levels.
  • Enterprise-wide Intelligent Labels sales for the full year were up approximately 15% on an organic basis.
• Reported operating margin decreased 590 basis points to 8.8%. Adjusted EBITDA decreased by 27% to $93 million, with adjusted EBITDA margin of 15.9%.

Other

Balance Sheet and Capital Deployment

During 2022, the company deployed $40 million for acquisitions and returned $618 million in cash to shareholders, up $217 million, through a combination of share repurchases and dividends. The company repurchased 2.2 million shares at an aggregate cost of $380 million. Net of dilution from long-term incentive awards, the company’s year-end share count was down 2.0 million compared to the same time last year.

The company’s balance sheet remains strong, with ample capacity to continue executing its long-term capital allocation strategy. Net debt to adjusted EBITDA (non-GAAP) was 2.2 at the end of the fourth quarter.

In January 2023, the company extended the maturity date of its revolving credit facility (“Revolver”) to February 2026 and increased its capacity to $1.2 billion in support of the company’s continued growth.

Income Taxes

The company’s reported effective tax rate was 27.4% for the fourth quarter and 24.2% for the full year. The company’s adjusted tax rate (non-GAAP) was 21.1% for the fourth quarter and 24.7% for the full year.

The company’s 2023 adjusted tax rate is expected to be in the mid-twenty percent range based on current tax regulations.

Cost Reduction Actions

During 2022, the company realized approximately $26 million in pre-tax savings from restructuring, net of transition costs, and incurred pre-tax restructuring charges of approximately $8 million.

Guidance

In its supplemental presentation materials, “Fourth Quarter and Full Year 2022 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2023 financial results. Based on the factors listed and other assumptions, the company expects 2023 reported earnings per share of $8.85 to $9.25.

Excluding an estimated $0.30 per share impact of restructuring charges and other items, the company expects 2023 adjusted earnings per share of $9.15 to $9.55.

For more details on the company’s results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, “Fourth Quarter and Full Year 2022 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.

Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.

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