Avery Dennison Corporation
( AVY) reported adjusted earnings of 54 cents per share in the
fourth-quarter 2012, up 50% from the 36 cents per share in the
year-ago quarter and ahead of the Zacks Consensus Estimate of 49
cents. Including restructuring costs and other items, earnings
from continuing operations were 33 cents per share in the quarter
compared with 27 cents in the year-ago quarter.
Total revenue increased 5.3% to $1.532 billion from $1.454
billion in the prior-year quarter. Revenues were ahead of the
Zacks Consensus Estimate of $1.472 billion. On an organic basis,
revenues increased approximately 7%.
Cost of sales in the reported quarter rose 3.5% to $1.134
billion. Gross profit increased 11% to $398 million from $359
million in the prior-year quarter. Gross margin expanded 130
basis points to 26%.
Marketing, general & administrative expenses were $296.3
million versus $287.7 million in the year-ago quarter. Adjusted
operating profit jumped 43% to $101 million. Adjusted operating
margin improved 170 basis points to 6.6%.
Total revenue in the Pressure-sensitive Materials segment
increased 4% to $1.06 billion. On an organic basis, revenues
increased 6%. Adjusted operating profit increased 17% to $92.2
million in the quarter. Adjusted operating margin expanded 100
basis points to 8.7%
Total revenue from Retail Branding and Information Solutions
increased 10% to $406.6 million from $370.5 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 shot up 96% to $25.3
million with adjusted operating margin expanding 270 basis points
to 6.2% on productivity initiatives, higher volumes, partially
offset by employee related expenses.
Other specialty converting businesses segment reported net
sales of $65.5 million, up 9% from $60 million in the year-ago
quarter based on higher volume. Adjusted operating profit was
$4.2 million compared with a loss of $3.7 million in the
prior-year quarter. Adjusted operating margin was 6.4% in the
Fiscal 2012 Performance
Avery reported adjusted EPS of $2.08 in fiscal 2012, up 20%
from $1.74 in fiscal 2011. Fiscal results outperformed the Zacks
Consensus Estimate of $2.03 as well as the company's guided range
of $2.00 to $2.05 per share. Including one-time items, EPS from
continuing operations in the year stood at $1.63, up 12% from
$1.45 in the prior year.
Revenues inched up 0.2% year over year to $6.036 billion in
2012 and surpassed the Zacks Consensus Estimate of $5.976 billion
As of 2012 end, cash and cash equivalents of the company were
$235 million versus $178 million as of 2011 end. Long-term debt
decreased to $702.7 million as of 2012 end from $954.2 million as
of 2011 end.
Cash flow from operating activities was $513.4 million during
the year compared with $422.7 million in the prior fiscal. Avery
repurchased 7.9 million shares during the year for $235
Cost Reduction Actions
The company had initiated a restructuring program in the first
half of 2012 to reduce costs across all segments of the business.
In this regard, the company has incurred restructuring costs of
approximately $56 million in 2012, and expects to incur $25
million in 2013. 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
$2.80 per share. Free cash flow from continuing operations is
expected between $275 million and $325 million in 2013.
Sale of Businesses
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 transaction, pursuant to customary closing conditions, is
expected to be completed in 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 of
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.
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.
Avery currently retains a short-term Zacks Rank #3 (Hold).
The Standard Register Company
United Stationers Inc.
ACCO Brands Corporation
) are yet to announce their fourth quarter results.
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