Avery Dennison Corp (AVY) Q3 2023 Earnings: Sequential Improvement Despite Market Challenges
Avery Dennison Corp (NYSE:AVY) reports Q3 2023 earnings in line with expectations, showing sequential improvement
Company deployed $204 million for acquisitions and returned $309 million in cash to shareholders in the first three quarters of 2023
AVY expects further sequential improvement in Q4 2023, with an anticipated growth of over twenty percent annually in Intelligent Labels
Company's balance sheet remains strong with net debt to adjusted EBITDA at 2.6x at the end of the third quarter
On October 25, 2023, Avery Dennison Corp (NYSE:AVY) released its Q3 2023 earnings report. Despite slow market conditions, the company's earnings per share were in line with expectations and showed sequential improvement. The company's Intelligent Labels platform continued to accelerate adoption into new categories, promising further growth in the coming years.
Financial Highlights
Avery Dennison Corp (NYSE:AVY) reported net sales of $2,098.3 million for Q3 2023, a decrease of 9.4% compared to the same period in the prior year. The company's operating income was $206.9 million, representing a decrease of 29% compared to Q3 2022. The company's net income was $138.3 million, a decrease of 38% compared to the same period in the prior year.
During the first three quarters of 2023, the company deployed $204 million for acquisitions and returned $309 million in cash to shareholders through dividends and share repurchases. The company's balance sheet remains strong, with a net debt to adjusted EBITDA ratio of 2.6x at the end of the third quarter.
Company's Outlook
According to Deon Stander, president and CEO of Avery Dennison Corp (NYSE:AVY), the company expects further sequential improvement in the fourth quarter. This is due to the moderation of inventory destocking and the acceleration of non-apparel intelligent label programs. The company also expects to deliver more than twenty percent growth annually in the coming years in Intelligent Labels, as adoption accelerates in logistics, food, and general retail, and apparel rebounds.
Summary of Financial Tables
The company's financial tables show a detailed breakdown of its performance across different segments. The Materials Group reported net sales of $1,456.0 million, a decrease of 14.0% compared to the same period in the prior year. The Solutions Group reported net sales of $642.3 million, an increase of 3.1% compared to Q3 2022.
The company's balance sheet shows a strong financial position, with total assets of $8,133.1 million and total liabilities of $6,069.5 million as of September 30, 2023. The company's cash and cash equivalents stood at $209.9 million at the end of the third quarter.
Conclusion
Avery Dennison Corp (NYSE:AVY)'s Q3 2023 earnings report shows a resilient performance amidst challenging market conditions. The company's strategic focus on its Intelligent Labels platform and disciplined capital deployment indicate a promising outlook for the fourth quarter and beyond.
This article first appeared on GuruFocus.
