Latest news with #DeonStander
Yahoo
13-05-2025
- Business
- Yahoo
AVY Q1 Earnings Call: Tariff Uncertainty Clouds Steady Organic Growth and Margin Performance
Adhesive manufacturing company Avery Dennison (NYSE:AVY) met Wall Street's revenue expectations in Q1 CY2025, but sales were flat year on year at $2.15 billion. Its non-GAAP profit of $2.30 per share was in line with analysts' consensus estimates. Is now the time to buy AVY? Find out in our full research report (it's free). Revenue: $2.15 billion vs analyst estimates of $2.16 billion (flat year on year, in line) Adjusted EPS: $2.30 vs analyst estimates of $2.31 (in line) Adjusted EBITDA: $352.4 million vs analyst estimates of $353.4 million (16.4% margin, in line) Adjusted EPS guidance for Q2 CY2025 is $2.40 at the midpoint, below analyst estimates of $2.58 Operating Margin: 11.9%, in line with the same quarter last year Free Cash Flow was -$59.9 million, down from $64.1 million in the same quarter last year Organic Revenue rose 2.3% year on year, in line with the same quarter last year Market Capitalization: $13.46 billion Avery Dennison's first quarter performance was shaped by consistent demand in its core Materials and Solutions Groups, with management citing high-value product categories and sequential margin expansion as key drivers. CEO Deon Stander highlighted strong organic growth in high-value segments such as graphics, reflective solutions, and industrial tapes, as well as a rebound in North American label volumes after prior-year destocking. The Solutions Group benefited from continued momentum in retail shelf-edge solutions and food labeling, offsetting softness in certain apparel-related categories. Looking ahead, Avery Dennison's forward guidance reflects caution amid increased macroeconomic and trade-related uncertainty. Management pointed to evolving tariffs, particularly those affecting Chinese apparel exports, as a primary reason for restricting visibility to quarterly guidance. CFO Gregory Lovins explained that tariff impacts and potential shifts in global sourcing strategies could pressure apparel demand and margins, prompting the company to activate scenario planning and cost containment measures. Stander noted, 'It is more difficult to predict and forecast full-year results,' as the company balances investment in growth areas with proactive risk management. Avery Dennison's management attributed the quarter's steady results to targeted growth in high-value product lines, operational efficiency, and resilience in core markets. They also addressed evolving challenges in global trade policy and related impacts on customer demand, especially in apparel and logistics. High-value category momentum: Management highlighted strong organic growth in high-value categories, including graphics, reflective solutions, and industrial tapes, which now represent over a third of Materials Group sales. These segments saw high single-digit growth, offsetting weaker base business performance. Sequential recovery in North America: Label volume in North America improved from the prior year, aided by normalization of customer inventories and working capital. This helped stabilize Materials Group results despite softer demand in Europe and flat trends in China. Solutions Group project execution: The Solutions Group delivered top-line and margin expansion, driven by the successful rollout of shelf-edge solutions (VESCOM) at CVS Health and ongoing pilots with major grocery retailers like Kroger. Apparel-related growth was mixed: core apparel rose mid-single digits, but certain personalized and sports categories faced declines due to program timing. RFID and intelligent label outlook: Management emphasized continued progress in enterprise-wide intelligent labels, particularly in apparel and food, while logistics applications experienced expected declines. While new food pilots and compliance-driven retail programs are advancing, management does not anticipate another large-scale logistics rollout in 2025. Tariff and macroeconomic headwinds: Leadership acknowledged elevated uncertainty from recent tariff changes, particularly affecting apparel labels for garments exported from China to the U.S. While direct cost impacts are considered manageable, the indirect effect on discretionary demand is less predictable, leading to a more cautious approach for the remainder of the year. Avery Dennison's management expects near-term results to hinge on trade policy developments, apparel market demand, and the company's ability to grow high-value categories while managing costs. Tariff-driven apparel uncertainty: Management believes that ongoing U.S.-China tariff changes could continue to disrupt apparel label demand, with apparel sales expected to decline mid-single digits in the near term. The team is working with customers to facilitate supply chain shifts and is implementing pricing surcharges to offset direct input cost inflation. Expansion in high-value categories: The company sees growth potential in intelligent labels, food labeling, and shelf-edge solutions, especially as adoption expands in grocery and general retail. Management is investing in these areas to diversify revenue streams and reduce exposure to cyclical end markets. Proactive cost management: In response to macroeconomic uncertainty, management has activated scenario-based planning, including temporary cost controls and identification of structural actions if demand deteriorates. This approach is designed to protect margins and sustain free cash flow, even in a lower-volume environment. Ghansham Panjabi (Baird): Asked whether recent tariff announcements prompted pre-buying or order shifts in apparel. Management clarified that no significant pull-forward occurred, but early Q2 apparel demand is trending lower as brands re-evaluate sourcing and pricing strategies under new tariffs. John McNulty (BMO Capital Markets): Inquired about the rise in working capital and the company's approach to mitigating low single-digit tariff impacts. CFO Gregory Lovins explained the increase was due to higher incentive and rebate payments, and tariff headwinds will be addressed through pricing surcharges and sourcing adjustments. Jeffrey Zekauskas (JPMorgan): Questioned if the decline in apparel demand is mainly a China event and rationale for accelerating share buybacks amid limited visibility. Management attributed the apparel softness to China tariffs and justified buybacks based on valuation, noting the recent uncertainty emerged after the repurchases. George Staphos (Bank of America): Probed Avery Dennison's capacity to support customer supply chain shifts out of China and the outlook for intelligent label growth. Management said its global network can accommodate moderate shifts, but overall industry capacity remains a constraint; intelligent label programs remain on track except for apparel-related volatility. Mike Roxland (Truist Securities): Sought details on competitive dynamics in intelligent labels for logistics and mitigation strategies for share erosion. CEO Deon Stander outlined innovation, process efficiency, and customer support as key levers to maintain majority share and support future logistics rollouts. In the coming quarters, the StockStory team will monitor (1) the pace at which apparel brands adapt sourcing and pricing strategies in response to tariffs, (2) the execution and scaling of intelligent label pilots in food and retail, and (3) signs of margin resilience as cost control measures are deployed. The timing and impact of potential large-scale logistics customer rollouts and further macroeconomic developments will also be critical factors to track. Avery Dennison currently trades at a forward P/E ratio of 16.7×. Should you double down or take your chips? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Fibre2Fashion
26-04-2025
- Business
- Fibre2Fashion
US' Avery Dennison Q1 sales flat, organic growth at 2.3%
American manufacturer of adhesive materials Avery Dennison Corporation has reported total net sales of $2.1 billion in the first quarter (Q1) of 2025 ended March 29, reflecting a marginal decline of 0.1 per cent year-over-year (YoY). On a constant currency and organic basis, sales increased by 2.3 per cent. The company reported earnings per share (EPS) of $2.09, with adjusted EPS at $2.30, up 0.4 per cent and approximately 4 per cent excluding currency impacts in Q1 2025. Avery Dennison has reported net sales of $2.1 billion in Q1 2025, down 0.1 per cent YoY but up 2.3 per cent organically. Adjusted EPS rose 0.4 per cent to $2.30. Materials and Solutions segments delivered strong margins despite cost pressures. The company expects Q2 reported EPS of $2.25â€'$2.45. CEO Deon Stander highlighted the team's agility and resilience amid ongoing market uncertainty. Segment-wise, the Materials Group posted sales of $1.5 billion, down 1.1 per cent YoY but up 1.2 per cent organically. The Solutions Group recorded $668.2 million in sales, a 2.0 per cent YoY increase and a 4.9 per cent rise on an organic and constant currency basis. Materials segment's operating margin stood at 15.3 per cent, while the adjusted operating margin was 15.6 per cent, down 50 basis points (bps). The adjusted EBITDA margin was 17.7 per cent, down 60 bps, as productivity gains and higher volumes were offset by pricing and raw material costs. Despite these pressures, margins remained strong, in line with expectations, and improved by 70 bps sequentially. Solutions segment reported an operating margin of 8.7 per cent and an adjusted operating margin of 10.2 per cent, up 90 bps. Adjusted EBITDA margin improved to 17.2 per cent, up 110 bps YoY, driven by productivity gains and higher volume, partially offset by growth investments. In its supplemental presentation 'First Quarter 2025 Financial Review and Analysis,' Avery outlined key factors influencing its outlook and expects reported EPS for the second quarter of 2025 to be between $2.25 and $2.45. Excluding an estimated impact of approximately $0.05 per share from restructuring charges and other items, adjusted EPS is projected to range from $2.30 to $2.50. 'We delivered a strong first quarter, in-line with expectations, both our Materials and Solutions Groups achieved strong results in a dynamic environment. We have a proven track record of delivering strong results across cycles, due to the strength of our overall franchise,' said Deon Stander, president and chief executive officer (CEO) . 'While uncertainty is elevated, we are prepared for multiple scenarios as we progress through the year. Once again, I want to thank our agile, engaged and talented team for their focus on excellence and commitment to addressing challenges at hand.' Fibre2Fashion News Desk (SG)
Yahoo
23-04-2025
- Business
- Yahoo
Avery Dennison (NYSE:AVY) Posts Q1 Sales In Line With Estimates
Adhesive manufacturing company Avery Dennison (NYSE:AVY) met Wall Street's revenue expectations in Q1 CY2025, but sales were flat year on year at $2.15 billion. Its GAAP profit of $2.09 per share was 10.5% below analysts' consensus estimates. Is now the time to buy Avery Dennison? Find out in our full research report. Revenue: $2.15 billion vs analyst estimates of $2.16 billion (flat year on year, in line) EPS (GAAP): $2.09 vs analyst expectations of $2.34 (10.5% miss) Adjusted EBITDA: $352.4 million vs analyst estimates of $353.4 million (16.4% margin, in line) Operating Margin: 11.9%, in line with the same quarter last year Free Cash Flow was -$59.9 million, down from $64.1 million in the same quarter last year Organic Revenue rose 2.3% year on year, in line with the same quarter last year Market Capitalization: $13.81 billion 'We delivered a strong first quarter, in-line with expectations,' said Deon Stander, president and CEO. Founded as Kum Kleen Products, Avery Dennison (NYSE:AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries. Industrial packaging companies have built competitive advantages from economies of scale that lead to advantaged purchasing and capital investments that are difficult and expensive to replicate. Recently, eco-friendly packaging and conservation are driving customers preferences and innovation. For example, plastic is not as desirable a material as it once was. Despite being integral to consumer goods ranging from beer to toothpaste to laundry detergent, these companies are still at the whim of the macro, especially consumer health and consumer willingness to spend. A company's long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Avery Dennison's sales grew at a sluggish 4.4% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Avery Dennison's recent performance shows its demand has slowed as its revenue was flat over the last two years. We can dig further into the company's sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don't accurately reflect its fundamentals. Over the last two years, Avery Dennison's organic revenue was flat. Because this number aligns with its normal revenue growth, we can see the company's core operations (not acquisitions and divestitures) drove most of its results. This quarter, Avery Dennison's $2.15 billion of revenue was flat year on year and in line with Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to grow 2.7% over the next 12 months. While this projection implies its newer products and services will fuel better top-line performance, it is still below the sector average. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development. Avery Dennison has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.5%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it's a show of well-managed operations if they're high when gross margins are low. Analyzing the trend in its profitability, Avery Dennison's operating margin might fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but we're still happy with Avery Dennison's performance considering most Industrial Packaging companies saw their margins plummet. This quarter, Avery Dennison generated an operating profit margin of 11.9%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Avery Dennison's unimpressive 4.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. Although it wasn't great, Avery Dennison's two-year annual EPS growth of 2.2% topped its flat revenue. In Q1, Avery Dennison reported EPS at $2.09, down from $2.13 in the same quarter last year. This print missed analysts' estimates. Over the next 12 months, Wall Street expects Avery Dennison's full-year EPS of $8.69 to grow 15.9%. This was an in line quarter, with revenue and EBITDA meeting expectations. Operating margin was unchanged compared to the same quarter last year. The stock remained flat at $174.50 immediately following the results. The latest quarter from Avery Dennison's wasn't that good. One earnings report doesn't define a company's quality, though, so let's explore whether the stock is a buy at the current price. When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
