Avery Dennison Corporation
) reported a adjusted net income of $38.1 million or 36 cents per
share in the fourth quarter of fiscal 2011, down considerably from
$89.6 million or 83 cents per share delivered in the year-ago
quarter. Adjusted earnings per share were well below the Zacks
Consensus Estimate of 46 cents per share.
The company incurred restructuring costs and special items of
$9.1 million or 9 cents per share. Including these charges, Avery
Dennison's income in the quarter stood at $29 million or 27 cents
per in the reported quarter.
The prior year's quarter excluded a benefit of $10.3 million or
10 cents. Including this net income in the prior year quarter was
$99.9 million or 93 cents per share.
Total revenue in the quarter dipped 0.5% to $1.45 billion from
$1.46 billion in the prior-year quarter, way short of the Zacks
Consensus Estimate of $1.6 billion. Increase in sales in the
Pressure-sensitive Materials segment was offset by declines in the
Retail Branding and Information Solutions and Other specialty
Cost of sales during the reported quarter dipped 0.2% to $1.096
billion. Gross profit declined 2% to $358.6 million from $364.1
million in the prior-year quarter.
Marketing, general & administrative expenses were $287.7
million versus $290.8 million in the year-ago quarter. Adjusted
operating income declined to $70.9 million from $73.3 million in
the year-earlier quarter.
Total revenue in the Pressure-sensitive Materials segment
increased 2% on a year-over-year basis to $960.5 million. Both
Label and Packaging Materials and Graphics and Reflective Solutions
saw growth in revenues. Adjusted operating profit remained flat at
Total revenue from Retail Branding and Information Solutions
declined to $368.4 million from $386.4 million in the year-earlier
quarter due to lower demand from retailers and brands in the U.S.
and Europe. Segmental adjusted operating income also decreased to
$16.3 million from $17.3 million in the prior-year quarter.
Other specialty converting businesses segment reported net sales
of $125.7 million, down 6% from $133.7 million in the year-ago
quarter. The segment posted an operating loss of $5.8 million
versus an operating loss of $2.8 million in the prior-year
Fiscal 2011 Performance
Avery Dennison reported adjusted EPS of $1.74 compared with
$2.39 in the prior fiscal. Results missed the Zacks Consensus
Estimate of $2.23. Including one-time items, EPS was $1.45
compared with $2.27 in the prior year. Results were below the
company's guided range of $2.15 and $2.30, and the Zacks Consensus
Estimate of $2.23.
Avery Dennison reported revenues of $6.03 billion, a 4.2%
increase over $5.78 billion in the prior year. Revenues were below
the Zacks Consensus Estimate of $6.69 billion.
As of fiscal 2011 end, cash and cash equivalents of the company
were $178 million versus $127.5 million as of fiscal 2010 end.
Long-term debt were $954.2 million as of fiscal 2011 end compared
with $956.2 million as of fiscal 2010 end.
Cash flow from operating activities was $422.7 million in fiscal
2011 compared with $486.7 million in 2010. The company generated
free cash flow of $292 during the year compared with $378.9 million
in the prior year.
Avery Dennison's board of directors announced an 8% increase in
its quarterly dividend to 27 cents. The dividend is payable March
21, 2012 to shareholders of record on March 7, 2012.
The company expects adjusted EPS to lie between $1.80 and $2.15
and free cash flow from continuing operations between $275 million
and $325 million.
The company has been successful in offsetting raw material costs
by implementing price increases and cost reduction initiatives. The
company experienced unexpected declines in volumes in fiscal 2011.
Now with the weaker Office Products business sold out, the company
will be able to focus on its market-leading, pressure-sensitive
materials business, and Retail Branding and Information Solutions
We maintain our Underperform recommendation on Avery Dennison.
The shares of Avery Dennison are currently maintaining a Zacks #5
Rank (Strong Sell rating) over the short term that corresponds with
our Underperform recommendation.
Pasadena, California-based Avery Dennison produces
pressure-sensitive materials, office products and a variety of
tickets, tags, labels and other converted products. Avery is a
Fortune 500 company operating over 200 manufacturing and
distribution facilities with roughly 32,000 employees in more than
60 countries. It competes primarily with
Bemis Company Inc.
Fortune Brands Inc.
AVERY DENNISON (
): Free Stock Analysis Report
): Free Stock Analysis Report
To read this article on Zacks.com click here.