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Avery Dennison Beats on Q4 Earnings, Initiates 2016 View

Avery Dennison CorporationAVY reported adjusted earnings of 85 cents per share in the fourth quarter of 2015, which declined 6% from 90 cents earned in the year-ago quarter. Earnings however beat the Zacks Consensus Estimate of 78 cents, a positive earnings surprise of 9%.

Including restructuring costs and other items, earnings from continuing operations were 61 cents per share in the quarter, compared with 75 cents per share in the year-ago quarter.

Avery Dennison Corporation (AVY) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Total revenue declined 9% to $1,455 million from $1,605 million in the prior-year quarter. Revenues beat the Zacks Consensus Estimate of $1,450 million. On an organic basis, sales grew 7% year on year.

Cost of sales in the reported quarter went down 11% year over year to $1,063 million. Gross profit dipped 5% to $392 million while gross margin expanded 110 basis points (bps) to 27%.

Marketing, general and administrative expenses were $266 million compared with $285 million in the year-ago quarter. Adjusted operating profit decreased 3% to $126 million. Adjusted operating margin improved 60 bps on a year-over-year basis to 8.7%.

Segmental Performance

Revenues from the Pressure-sensitive Materials segment decreased 10% to $1,055 million. On an organic basis, sales increased 7%. Sales of both Label and Packaging Materials and combined Graphics and Performance Tapes increased in the mid single digits. Adjusted operating profit decreased 7% to $116 million from $125 million in the year-ago quarter. The impact of productivity initiatives helped offset higher employee-related costs.

Revenues from the Retail Branding and Information Solutions segment declined 6% to $382 million from $406 million in the year-earlier quarter. Organic sales, however, increased 8%. The segment's adjusted operating income increased 17% to $32 million as the impact of productivity initiatives offset higher employee-related costs.

The Vancive Medical Technologies segment reported net sales of $18 million, down 20% from $22.5 million in the year-ago quarter. On an organic basis, sales dropped 13%. The segment reported adjusted operating profit of $0.4 million as against an operating loss of $0.4 million a year ago.

Financial Updates

Avery Dennison ended the year with cash and cash equivalents of $159 million, down from $207 million at the end of the prior year. Cash from operating activities during 2015 was $474 million, up from $355 million in 2014.

Long-term debt of the company increased to $964 million at the end of 2015 from $940 million at 2014 end. The company repurchased 3.9 million shares in 2015 for $232 million and paid $133 million in dividends.

Cost Reduction Activities

In 2015, Avery Dennison realized approximately $71 million in savings from restructuring. The company incurred restructuring charges of approximately $59 million.

Full-year Performance

Avery Dennison reported adjusted earnings per share of $3.44 in 2015, up 11% year over year, surpassing the Zacks Consensus Estimate of $3.38. Earnings also outpaced the company's guidance of $3.30-$3.40 per share. Including one-time items, earnings for the year were $2.95 per share compared with $2.58 per share in the prior year.

Revenues declined 6% year over year to $5,967 million, falling short of the Zacks Consensus Estimate of $5,978 million. On an organic basis, net sales increased 5%.

Guidance

For 2016, Avery Dennison expects adjusted earnings per share in the range of $3.65 to $3.85, reflecting annual growth of 6% to 12%. Including one-time items, earnings are projected to come in between $3.15 and $3.35.

Pasadena, CA-based Avery Dennison manufactures pressure-sensitive materials. The company has over 200 manufacturing and distribution facilities in more than 60 countries.

Currently, Avery Dennison carries a Zacks Rank #4 (Sell). Some better-ranked industrial product stocks include Albany International Corp. AIN , Astec Industries, Inc. ASTE and Codexis, Inc. CDXS . All three stocks carry a Zacks Rank #2 (Buy).

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ASTEC INDS INC (ASTE): Free Stock Analysis Report

AVERY DENNISON (AVY): Free Stock Analysis Report

ALBANY INTL A (AIN): Free Stock Analysis Report

CODEXIS INC (CDXS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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