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- **Breakthrough Partnership**: Walmart RFID adoption in fresh food to drive IL segment growth of 10-15% over 2 years.
- **Q3 Financial Strength**: Adjusted EPS up 2% YoY to $2.37, with EBITDA margin expansion and strong free cash flow.
- **Q4 Growth Outlook**: 5-7% sales growth (vs. 1.5% YoY in Q3), EPS up 2% YoY, supported by extra days and M&A.
- **Tariff Mitigation**: Full cost offset via sourcing and pricing, with sequential raw material deflation stabilizing.
- **Shareholder Returns**: $670M returned vs. $390M M&A, maintaining top quartile ROIC.

**【CEO Summary Section】**
- Delivered solid Q3 with EPS up 2% YoY, above midpoint of expectations, despite trade policy headwinds.
- Materials Group: Adjusted EBITDA margin +50bps YoY, driven by productivity and volume mix. High-value categories saw sequential improvement, with specialty durable labels and adhesives growth offsetting declines in graphics and tapes.
- Solutions Group: Organic sales +4%, led by Vestcom (+10%) and Embelex (+10%). Apparel IL sales recovered to mid-single-digit growth, partially offsetting base apparel softness.
- **New Walmart Partnership**: RFID adoption in fresh food (bakery, meat, deli) expected to contribute high single-digit to low double-digit growth over 2 years, with rollout starting Q4 2025.
- Full-year outlook: Sales and EPS growth expected, with Q4 growth rate improving vs. Q3.

**【CFO Financial Commentary】**
- Adjusted EPS: $2.37 (up 2% YoY), above midpoint of guidance). Adjusted EBITDA margin: 16.5% (up 10bps YoY). Free cash flow: $270M.
- **Q4 Guidance**: Sales growth 5-7% (vs. 1.5% YoY in Q3), EPS $2.35-2.45 (midpoint +2% YoY). Includes 2% from extra days, 1% from Taylor Adhesives acquisition.
- Tariff mitigation: Strategic sourcing and pricing surcharges fully offset direct costs. Sequential raw material cost deflation expected to stabilize.
- **Capital Allocation**: $670M returned to shareholders (buybacks +7% dividend growth) vs. $390M for Taylor Adhesives acquisition.

**【Q&A Highlights】**
- **Walmart Partnership Scale**: 1.5B+ packages over 2 years, targeting 200B+ IL units in food. Expected to drive high single-digit to low double-digit growth in IL segment.
- **IL Pipeline**: Growing in all key segments (food, apparel, logistics), with 3-5+ new programs expected in 2026.
- **Tariff Impact**: Base apparel volumes down low single digits YoY, but sequential improvement in Q3. Materials Group volumes stable but cautious on emerging markets.
- **Calendar Change**: Shifting to Gregorian calendar adds 4 days to Q4 2025, contributing ~2% sales growth but limited margin impact.


Avery Dennison Corporation (AVY) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

AVY

AVY fundamentals

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