Avery Dennison Corporation
) reported adjusted earnings of 69 cents per share in the fourth
quarter of 2013, which beat the Zacks Consensus Estimate of 67
cents. The reported figure was also up 44% from 48 cents in the
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Including restructuring costs and other items, earnings from
continuing operations were 45 cents per share in the quarter
compared with 28 cents in the year-ago quarter.
Total revenue increased 7% (organic as well as reported basis) to
$1.584 billion from $1.483 billion in the prior-year quarter.
Revenues also surpassed the Zacks Consensus Estimate of $1.537
Cost of sales in the reported quarter rose 6% year over year to
$1.17 billion. Gross profit increased 8.9% to $416 million from
$382 million in the prior-year quarter. Gross margin expanded 30
basis points to 26%.
Marketing, general & administrative expenses were $299
million versus $289 million in the year-ago quarter. Adjusted
operating profit increased 26% to $117 million while adjusted
operating margin improved 110 basis points to 7.4% on a
Total revenue in the
segment increased 8% to $1.14 billion. Label and Packaging
Materials sales rose in mid single digits while sales for
Graphics, Reflective, and Performance Tapes increased in low
double digits. Adjusted operating profit increased 21.7% to
$110.8 million in the quarter driven by benefit of productivity
initiatives, lower restructuring costs and higher volume, which
helped mitigate changes in product mix.
Total revenue from
Retail Branding and Information Solutions
increased 2% to $417.4 million from $407.5 million in the
year-earlier quarter. The improvement was driven by increased
demand from European retailers and brands. The segment's adjusted
operating income rose 26% to $31.5 million on productivity
initiatives and higher volumes, partially offset by
Other specialty converting businesses
segment reported net sales of $17.4 million, up 15% from $15.1
million in the year-ago quarter. The segment reported an
operating loss of $2.1 million, narrower than the year-ago
quarter loss of $2.5 million.
Avery ended 2013 with cash and cash equivalents of $352 million,
up from $235.4 million in 2012. Cash from operations for the
fiscal 2013 was $320.1 million versus $513.4 million in prior
Long-term debt of the company increased to $951 million as of Dec
28, 2013 from $702 million as of Dec 29, 2012.
Debt-to-capitalization ratio contracted to 41% as of Dec 28, 2013
from 44% as of Dec 29, 2012. Avery reported free cash flow of
$304 million in 2013, up from $303 million in 2012. Avery
repurchased 6.6 million shares for $283 million in fiscal 2013.
Cost Reduction Activities
In 2013, the company realized approximately $75 million in
savings from the restructuring program initiated in the first
half of 2012. The company incurred restructuring costs, net of
gain on sale of assets, of around $23 million in 2013.
Fiscal 2013 Performance
For full-year 2013, Avery reported adjusted earnings per share
(EPS) of $2.68, a 37% improvement from $1.96 in 2012. Earnings
were within the company's guidance range of $2.60 to $2.70 per
share. The results marginally surpassed the Zacks Consensus
Estimate of $2.66. Including one-time items, EPS was $2.16
compared with $2.08 in the prior year.
Revenues for the year 2013 increased 5% year over year to $6.14
billion. Revenues surpassed the Zacks Consensus Estimate of $6.09
Fiscal 2014 Outlook
Avery expects its full-year 2014 adjusted earnings in the range
of $2.90 to $3.20 per share. Including an estimated $0.30 per
share for restructuring costs and other items, the company's
earnings guidance was in the range of $2.60 to $2.90.
Pasadena, California-based Avery Dennison manufactures
pressure-sensitive materials and tickets, tags, labels and other
converted products. The company has over 200 manufacturing and
distribution facilities in more than 60 countries.
Currently, Avery has a Zacks Rank #4 (Sell). Among other
companies in the same industry,
United Stationers Inc.
) is slated to announce fourth-quarter 2013 results on Feb 13 and
ACCO Brands Corp.
) on Feb 12. Another peer,
CompX International Inc.
) is also expected to report its fourth-quarter results soon.