Highlights:
* 4Q21 Reported EPS of
* Adjusted EPS (non-GAAP) of
* 4Q21 Net sales increased 9.7% to
* Sales growth ex. currency (non-GAAP) of 18.5%
* Organic sales growth (non-GAAP) of 12.8%
* FY21 Reported EPS of
* Adjusted EPS (non-GAAP) of
* FY21 Net sales increased 20.6% to
* Sales growth ex. currency (non-GAAP) of 18.6%
* Organic sales growth (non-GAAP) of 15.6%
* FY22 Reported EPS guidance of
* Adjusted EPS guidance of
'2021 marked the company's tenth consecutive year of strong top- and bottom-line growth,' said
'Our strong performance comes at a challenging time as the global health crisis continues, supply chains are tight and significant inflationary pressures persist.
'2021 marked an important milestone for the company, as the final year of measurement for the five-year financial targets we communicated in early 2017,' added Butier. ' I'm pleased to report that we achieved our long-term goals for this period.'
'For 2022, we expect to again deliver strong top- and bottom-line growth and are targeting continued progress toward our 2025 goals,' said Butier.
'Once again, I want to thank our entire team for their tireless efforts to keep one another safe while delivering for all our stakeholders.'
Operational/Market Update
In the fourth quarter, uncertainty surrounding the global health crisis remained elevated as many parts of the world experienced an increase in COVID-19 cases. The safety and well-being of employees remains the company's top priority. The company has continued to adapt its world-class safety protocols as the pandemic evolves. All manufacturing locations are currently operational.
The company continues to actively manage through a dynamic supply and demand environment. Demand across the majority of its businesses and regions remains strong, while raw materials, freight and labor availability continue to be constrained. The company continuesto leverage its global scale and work closely with customers and suppliers to minimize disruptions. Inflation remains persistent and additional pricing and material re-engineering actions are being implemented to offset higher costs.
Fourth Quarter 2021 Results by Segment
Label and Graphic Materials
Reported sales increased 3% to
Label and Packaging Materials sales were up low-double digits from prior year on an organic basis, with strong growth in both high value product categories and the base business.
Sales increased by low-double digits organically in the combined Graphics and Reflective Solutions businesses.
On an organic basis, sales were up mid-teens in
Reported operating margin decreased 370 basis points to 12.2%. Adjusted EBITDA margin decreased 310 basis points to 14.5%, as the benefit from higher organic volume/mix was more than offset by the net impact of pricing, freight and raw material costs and the impact of the extra week in 2020.
The higher revenue base from price increases alone, with no corresponding incremental EBITDA as they are offsetting inflation, reduced margin by ~140 basis points.
Retail Branding and Information Solutions
Reported sales increased 30% to
Intelligent Labels was up more than 20% organically.
Reported operating margin decreased 60 basis points to 14.7%. Adjusted EBITDA margin decreased 30 basis points to 19.3%, as the benefits from acquisitions and higher volume were more than offset by growth investments, higher employee-related costs and the headwind from prior-year temporary cost reduction actions.
The
Industrial and Healthcare Materials
Reported sales increased 2% to
Reported operating margin decreased 360 basis points to 8.8%. Adjusted EBITDA margin decreased 300 basis points to 12.9% as the benefit from productivity was more than offset by the net impact of pricing, freight and raw material costs, the impact of the extra week in 2020, higher employee-related costs and growth investments.
The higher revenue base from price increases alone, with no corresponding incremental EBITDA as they are offsetting inflation, reduced margin by ~90 basis points.
Other
Balance Sheet and Capital Deployment
During 2021, the company deployed
The company's balance sheet remains strong, with ample capacity to continue executing our long term capital allocation strategy. Net debt to adjusted EBITDA (non-GAAP) was 2.2 at the end of the fourth quarter, below the lower end of the company's long-term target range.
Income Taxes
The company's reported effective tax rate was 25% for both the fourth quarter and the full year. The company's adjusted (non-GAAP) tax rate was 23.9% for the fourth quarter and 25% for the full year.
The company's 2022 adjusted tax rate is expected to be in the mid-twenty percent range based on current tax regulations.
Cost Reduction Actions
In the fourth quarter and full year 2021, the company realized
Guidance
In its supplemental presentation materials, 'Fourth Quarter and Full Year 2021 Financial Review and Analysis,' the company provides a list of factors that it believes will contribute to its 2022 financial results. Based on the factors listed and other assumptions, the company expects 2022 reported earnings per share of
Excluding an estimated
For more details on the company's results, see the summary tables accompanying this news release, as well as the supplemental presentation materials, 'Fourth Quarter and Full Year 2021 Financial Review and Analysis,' posted on the company's website at www.investors.averydennison.com, and furnished to the
Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.
About Avery Dennison
'Safe Harbor' Statement under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this document are 'forward-looking statements' intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties. Forward-looking statements also include those related to our acquisition of
We believe that the most significant risk factors that could affect our financial performance in the near-term include: (i) the impacts to underlying demand for our products and/or foreign currency fluctuations from global economic conditions, political uncertainty, changes in environmental standards and governmental regulations, including as a result of COVID-19; (ii) availability of raw materials; (iii) competitors' actions, including pricing, expansion in key markets, and product offerings; (iv) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through price increases, without a significant loss of volume; and (v) the execution and integration of acquisitions, including the acquisition of
Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but are not limited to, risks and uncertainties relating to the following:
COVID-19
International Operations - worldwide and local economic and market conditions; changes in political conditions; and fluctuations in foreign currency exchange rates and other risks associated with foreign operations, including in emerging markets
Our Business - changes in our markets due to competitive conditions, technological developments, environmental standards, laws and regulations, and customer preferences; fluctuations in demand affecting sales to customers; execution and integration of acquisitions, including the acquisition of
Our Vestcom Acquisition - risks related to future opportunities and plans for the combined company, including the uncertainty of expected future financial performance and results of the combined company; unknown liabilities; and the possibility that, if we do not achieve the perceived benefits of the acquisition as rapidly or to the extent anticipated by financial analysts or investors, the market price of our common stock could decline
Income Taxes - fluctuations in tax rates; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; retention of tax incentives; outcome of tax audits; and the realization of deferred tax assets
Information Technology - disruptions in information technology systems, including cyber-attacks or other intrusions to network security; successful installation of new or upgraded information technology systems; and data security breaches
Human Capital - recruitment and retention of employees; fluctuations in employee benefit costs; and collective labor arrangements
Our Indebtedness - credit risks; our ability to obtain adequate financing arrangements and maintain access to capital; volatility of financial markets; fluctuations in interest rates; and compliance with our debt covenants
Ownership of Our Stock - potential significant variability of our stock price and amounts of future dividends and share repurchases
Legal and Regulatory Matters - protection and infringement of intellectual property and impact of legal and regulatory proceedings, including with respect to environmental, health and safety, anti-corruption and trade compliance
Other Financial Matters - fluctuations in pension costs and goodwill impairment
For a more detailed discussion of these factors, see 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in our 2020 Form 10-K, filed with the
The forward-looking statements included in this document are made only as of the date of this document, and we undertake no obligation to update these statements to reflect subsequent events or circumstances, other than as may be required by law.
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For more information and to listen to a live broadcast or an audio replay of the quarterly conference call with analysts, visit the
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