MENTOR, Ohio (News release) -- Avery Dennison Corporation, a leading global materials science and digital identification solutions company, announced preliminary, unaudited results for its first quarter ended March 31, 2026. 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 strong first quarter results, with adjusted EPS of $2.47, once again reflecting the strength and resilience of our overall portfolio to deliver growth in a dynamic environment," said Deon Stander, president and CEO.

"We are executing a clear strategy to drive earnings growth. This is underpinned by our proven playbook focused on innovation, commercial excellence, and service-led differentiation to gain share with rigorous productivity, procurement, and cost management. This playbook allows us to deliver value for our customers, while offsetting inflationary pressures and maintaining supply continuity.

"I want to again extend my gratitude to our entire team. Our success reflects our team's agility and their dedication ensures that we continue to execute our strategic priorities and deliver results in 2026 and beyond."

First Quarter 2026 Results by Segment

Materials Group

• Reported sales increased 11.4% to $1.6 billion. Sales were up 3.6% ex. currency.
• Sales up 1.9% on an organic basis
  • Mid-single digit volume/mix growth partially offset by deflation-related price reductions
  • Base categories up mid-single digits; high-value categories down low-single digits
  • Graphics and Reflectives down mid-single digits; Performance Materials down low-single digits
• Reported operating margin of 14.9%
  • Adjusted operating margin (non-GAAP) of 15.4%, down 20 basis points
  • Adjusted EBITDA margin (non-GAAP) of 17.8%, up 10 basis points, as productivity and the net benefit of pricing and raw material costs, including raw material re-engineering, were partially offset by mix and higher employee-related costs

Solutions Group

• Reported sales decreased 2.8% to $649 million. Sales were down 0.9% ex. currency.
• Sales down 0.9% on an organic basis
  • Sales in high-value categories up low-single digits
    • Embelex and Vestcom up mid-single digits
    • Intelligent Labels down low-single digits
  • Sales in base categories down mid-single digits
  • Overall apparel categories comparable to prior year
• Reported operating margin of 7.5%
  • Adjusted operating margin of 9.0%, down 120 basis points
  • Adjusted EBITDA margin of 16.4%, down 80 basis points, as productivity and the net benefit of pricing and raw material costs were more than offset by higher employee-related costs and investments

Other

Capital Deployment and Balance Sheet

The company continues to deploy capital in a disciplined manner, executing its long-term capital allocation strategy.

During the first quarter of 2026, the company returned $133 million in cash to shareholders through a combination of dividends and share repurchases. The company repurchased 0.3 million shares, with payments for share purchases totaling $61 million. Net of dilution from long-term incentive awards, the company's share count at the end of the quarter was down 1.9 million compared to the same time last year.

The company's balance sheet remains strong. Net debt to adjusted EBITDA (non-GAAP) was 2.4x at the end of the first quarter.

Income Taxes

The company's reported effective tax rate was 30.1% in the first quarter. The adjusted tax rate (non-GAAP) for the quarter was 26.2%.

Cost Reduction Actions

In the first quarter, the company realized approximately $17 million in pre-tax savings from restructuring actions and incurred approximately $16 million in pre-tax restructuring charges.

Guidance

In its supplemental presentation materials, "First Quarter 2026 Financial Review and Analysis," the company provides a list of factors that it believes will contribute to its financial results. Based on the factors listed and other assumptions, the company expects second quarter 2026 reported earnings per share of $2.21 to $2.31.

Excluding an estimated ~$0.22 per share impact of other items and restructuring charges, the company expects second quarter 2026 adjusted earnings per share of $2.43 to $2.53.

For more details on the company's results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, "First Quarter 2026 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.