Avery Dennison Sales Rise 5% as Adjusted EPS Edges Up to $2.42

Avery Dennison grew third-quarter sales 5.2% to $2.3 billion and posted a 2.1% gain in adjusted earnings per share, as the labels and RFID maker leaned on productivity to offset higher inflation and customer destocking.

Adjusted EPS came in at $2.42, up from $2.37 a year earlier, while reported EPS rose 5.2% to $2.24 from $2.13, according to the earnings release Avery Dennison filed with an 8-K on Thursday. Sales rose 4.9% excluding currency and 3.7% on an organic basis. Net income edged up 2.0% to $169.7 million.

Materials grows, margins narrow

The larger Materials Group lifted reported sales 8.5% to $1.6 billion, up 4.9% organically, with both its high-value and base categories growing at mid-single-digit rates. Price contributed a mid-single-digit benefit, with low-single-digit growth in volume and mix.

Profitability went the other way. The segment's adjusted operating margin fell 110 basis points to 14.1%, as productivity was more than offset by negative volume and mix and higher employee-related costs, the company said.

The Solutions Group, which includes apparel and RFID offerings, saw reported sales slip 1.8% to $687 million, though sales rose 0.8% organically. Its adjusted operating margin improved 80 basis points to 10.8%.

For the company overall, adjusted operating income was roughly flat at $282.1 million, and the adjusted operating margin narrowed to 12.1% from 12.7%.

"In the face of higher inflation and customer destocking impacts, our teams demonstrated strong operational agility, delivering robust productivity and generating impressive free cash flow," President and CEO Deon Stander said in the release.

Cash flow and buybacks

Adjusted free cash flow was $246.0 million in the quarter, down from $268.7 million, but the year-to-date total reached $715.8 million, compared with $404.5 million a year earlier.

Through the first three quarters, Avery Dennison returned $481 million to shareholders through buybacks and dividends. It repurchased 1.5 million shares for $257 million, and its share count, net of dilution, was 1.9 million lower than a year earlier. Net debt to adjusted EBITDA stood at 2.2 times.

Restructuring actions produced about $54 million of pre-tax savings so far this year, against about $43 million of pre-tax restructuring charges.

Full-year outlook

The company expects full-year 2026 reported EPS of $9.45 to $9.59 and adjusted EPS of $10.10 to $10.24, excluding an estimated $0.65 a share of restructuring charges and other items.

In its supplemental presentation, Avery Dennison said it anticipates reported sales growth of about 5.5% and organic growth of about 3.5% for the year. It now expects more than $65 million of incremental savings from restructuring, up from more than $60 million previously, and trimmed planned fixed and IT capital spending to about $240 million from about $260 million.

The outlook assumes the vast majority of remaining customer inventory destocking happens in the fourth quarter, the company said.

Sources

1. Avery Dennison Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 29, 2026 (accession 0000008818-26-000162)

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