Avery Dennison Corporation ( AVY ) reported adjusted
earnings of 59 cents per share in the first-quarter 2013, up 37%
from the 43 cents per share in the year-ago quarter and ahead of
the Zacks Consensus Estimate of 57 cents. Including restructuring
costs and other items, earnings from continuing operations were 66
cents per share in the quarter compared with 42 cents in the
year-ago quarter.ACCO BRANDS CP (ACCO): Free Stock Analysis
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Total revenue increased 4% to $1.499 billion from $1.443 billion
in the prior-year quarter, but way short of the Zacks Consensus
Estimate of $1.53 billion. On an organic basis, revenues increased
Cost of sales in the reported quarter rose 3% to $1.1 billion.
Gross profit increased 7% to $4028 million from $377 million in the
prior-year quarter. Gross margin expanded 70 basis points to
Marketing, general & administrative expenses were $301 million
versus $289 million in the year-ago quarter. Adjusted operating
profit increased 14% to $101 million. Adjusted operating margin
improved 60 basis points to 6.7%.
Total revenue in the Pressure-sensitive Materials segment
increased 3% to $1.1 billion. Label and Packaging Materials sales
increased in low-single digits while sales for Graphics,
Reflective, and Performance Tapes increased slightly. Adjusted
operating profit increased 6% to $108.5 million in the quarter.
Adjusted operating margin expanded 30 basis points to 9.9%, driven
by benefit of productivity initiatives and higher volume which
helped mitigate changes in product mix and higher employee-related
Total revenue from Retail Branding and Information Solutions
increased 6% to $382.7 million from $360.1 million in the
year-earlier quarter. The improvement was driven by increased
demand from U.S. and European retailers and brands. The segment's
adjusted operating income rose 59% to $17.6 million with adjusted
operating margin expanding 150 basis points to 4.6% on productivity
initiatives, higher volumes, partially offset by employee related
Other specialty converting businesses segment reported net sales
of $18.2 million, up 2% from $18 million in the year-ago quarter.
The segment reported an operating loss of $2.7 million, narrower
than the year ago quarter's loss of $3.2 million.
As of Mar 31, 2013, Avery Dennison had cash and cash equivalents
of $208 million versus $191 million as of Mar 31, 2012. Long-term
debt was at $702 million as of Mar 31, 2013 compared with $703.7
million as of Mar 31, 2012. Cash flow from operating activities was
a usage of $65.7 million during the quarter compared with an inflow
of 10.7 million in the prior year quarter. Avery repurchased 1.5
million shares during the quarter for $62 million.
Cost Reduction Actions
The company had initiated a restructuring program in the first
half of 2012 to trim down costs across all its segments. In this
regard, the company has incurred restructuring costs of
approximately $56 million in 2012, and expects to incur $25 million
in 2013. In the first quarter of 2013, Avery incurred restructuring
costs, net of gain on sale of assets, of approximately $7 million.
Avery expects to realize more than $100 million in annualized
savings from this program by mid-2013.
Fiscal 2013 Outlook
The company expects adjusted earnings in the range of $2.40 to
$2.75 per share. Free cash flow from continuing operations is
expected between $275 million and $315 million in 2013.
Sale of Businesses
In the fourth quarter, Avery announced that it has entered into an
agreement with CCL Industries Inc., a global leader in specialty
packaging solutions to divest its Office and Consumer Products and
Designed and Engineered Solutions businesses, for $500 million in
cash. The businesses have been classified as discontinued
operations in the first quarter earnings results. Avery has
received all regulatory clearances for the sale and expects it to
be completed by mid 2013. The net proceeds of approximately $400
million will be utilized to repurchase shares and make an
additional pension contribution.
Avery continues to deliver healthy organic growth in both the core
segments - Pressure-Sensitive Materials and Retail Branding and
Information Solutions. Now, with the divestiture of the
underperforming Office and Consumer Products unit, the company will
be able to focus on these core segments and increase its growth
profile. Avery currently retains a short-term Zacks Rank #2
Pasadena, California-based Avery Dennison manufactures
pressure-sensitive materials, and tickets, tags, labels other
converted products. Avery has over 200 manufacturing and
distribution facilities encompassing more than 60 countries.
An Avery Dennison peer, United Stationers Inc. (
USTR ) reported
first quarter earnings of 56 cents, up 24% from 45 cents earned in
the year-ago quarter but way short of the Zacks Consensus Estimate
of 77 cents. Among other peers, The Standard Register
Company ( SR
) and ACCO Brands Corporation ( ACCO ) are yet to
announce their first quarter results.