Avery Dennison Corporation
) reported adjusted earnings of 65 cents per share in the first
quarter of 2014, up 10% from 59 cents earned in the year-ago
quarter. The results, however, missed the Zacks Consensus
Estimate by a penny.
Including restructuring costs and other items, earnings from
continuing operations were 73 cents per share in the quarter,
compared with 66 cents in the year-ago quarter.
Total revenue increased 3% (organic as well as reported basis) to
$1.55 billion from $1.49 billion in the prior-year quarter,
driven by strong volume growth in Pressure-sensitive Materials.
However, the reported figure fell short of the Zacks Consensus
Estimate of $1.57 billion.
Cost of sales in the reported quarter rose 4% year over year to
$1.14 billion. Gross profit increased 1.4% to $407.2 million from
$401.7 million in the prior-year quarter. Nevertheless, gross
margin contracted 50 basis points (bps) to 26.3%.
Marketing, general and administrative expenses were $296.7
million versus $300.9 million in the year-ago quarter. Adjusted
operating profit increased 10% to $110.5 million. Adjusted
operating margin improved 40 bps to 7.1% on a year-over-year
Total revenue in the
segment increased 4% to $1.14 billion. Label and Packaging
Materials sales rose in mid single digits. Moreover, sales for
Graphics, Reflective and Performance Tapes increased in mid
double digits. Adjusted operating profit increased 4.4% to $113
million in the quarter driven by productivity improvement
initiatives and higher volume, partly offset by higher
Total revenue from
Retail Branding and Information Solutions
increased 1% to $387.7 million from $382.7 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 28% to $22.6 million on productivity
improvement initiatives and higher volumes, partially offset by
employee-related expenses and restructuring charges.
Vancive Medical Technologies
segment reported net sales of $18.9 million, up 4% from $18.2
million in the year-ago quarter. The segment reported an
operating loss of $2.6 million, narrower than the year-ago
quarter loss of $2.7 million.
As of Mar 29, 2014, Avery reported cash and cash equivalents of
$205 million versus $207.7 million as of Mar 30, 2013. The
company's cash usage from operating activities came in at $108
million in the reported quarter, compared with $65.7 million in
the prior-year quarter.
Long-term debt of the company increased to $950 million as of Mar
29, 2014 from $702 million as of Mar 30, 2013.
Debt-to-capitalization ratio contracted to 42.8% as of Mar 29,
2014 from 46% as of Mar 30, 2013. The company repurchased 1.2
million shares in the first quarter of 2014 at an aggregate cost
of $59 million.
Cost Reduction Activities
In the first quarter, the company realized approximately $10
million of savings from the restructuring program initiated in
the first half of 2012. Moreover, it incurred restructuring
costs, net of gain on sale of assets, of around $7 million in the
Fiscal 2014 Outlook
Avery reiterated 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
reaffirmed earnings guidance in the range of $2.60 to $2.90 per
share, with growth in the range of 8%-19%. The company expects to
incur cash restructuring costs of $45 million in 2014.
Pasadena, CA-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 #3 (Hold). Among other
companies in the same industry,
United Stationers Inc.
) will also announce first-quarter 2014 results today and
ACCO Brands Corp.
) on Apr 30. Another peer,
CompX International Inc.
) is also expected to report its first-quarter results soon.
ACCO BRANDS CP (ACCO): Free Stock Analysis
AVERY DENNISON (AVY): Free Stock Analysis
UTD STATIONERS (USTR): Free Stock Analysis
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