Avery Dennison Corporation · NYSE:AVY
Avery Dennison — Q1 2007 Earnings Presentation
13 slides from Avery Dennison's earnings presentation, Apr 24, 2007
Slide 1: First Quarter 2007 Financial Review and Analysis
First Quarter 2007 Financial Review and Analysis (Unaudited) April 24, 2007
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information presented in this document may constitute "forward-looking" statements. These statements and financial or other business targets are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation contains certain non-GAAP measures as defined by SEC rules. The most directly comparable GAAP measures have been included in the earnings news release for the quarter. Reconciliations of non-GAAP measures to the most directly comparable GAAP measu
Slide 4: Overview
Overview Net sales increased 3.9% over prior year Adjusted unit volume growth was approx. 3% (adjusted for product line divestitures, impact of Q4-06 forward buy related to January price increase in office products binder category, and exited low-margin business) Underlying unit volume growth improv
Slide 5: Overview (continued)
Overview (continued) Operating margin before restructuring and asset impairment charges increased by 10 basis points Benefits from 2006 restructuring and other productivity improvements were partially offset by negative segment mix, transition costs associated with new productivity improvement actio
Slide 6: Management Analysis of Underlying Sales Trends
Core volume growth (est.) 1.5% 1.0% 3.0% 1.0% 1.5% Comparability adjustments(1) 0.5% 1.5% (0.5)% (0.5)% 1.5% "Underlying" volume growth 2.0% 2.5% 2.5% 0.5% 3.0% Reported Sales Growth (0.4)% (0.1)% 4.6% 3.5% 3.9% Management Analysis of Underlying Sales Trends (continuing operations) (1) Adjustments f
Slide 7: Margin Analysis (continuing operations)
Gross Profit Margin (Total Company) 26.2% 26.6% 27.6% Operating Margin (non-GAAP*): Pressure-Sensitive Materials 9.7% 8.9% 9.4% Office and Consumer Products 12.6% 15.3% 18.0% Retail Information Services 4.6% 6.4% 7.6% Other Specialty Converting 6.8% 4.0% 1.5% Total Company 8.4% 8.3% 9.0% Impact of R
Slide 8: Key Factors Impacting Margin
Key Factors Impacting Margin Gross profit margin declined 35 basis points compared with prior year to 26.2% Benefits from 2006 restructuring and other productivity improvements were more than offset by unfavorable segment mix and transition costs associated with new productivity improvement actions
Slide 9: Q1-2007 Segment Overview: Pressure-Sensitive Materials
PRESSURE-SENSITIVE MATERIALS Reported sales of $860 mil., up 9.2% compared with prior year Organic sales growth of approx. 5% Change in sales for roll materials business by region, adjusted for the effect of currency: Mid single-digit growth in Europe (largest region for this business) North America
Slide 10: Q1-2007 Segment Overview (continued): Office and Consumer Products
Q1-2007 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $214 mil., down 10.6% compared with prior year Divestiture of filing product lines in Europe represented 3.4 points of sales decline Impact of Q4 forward buy in anticipation of January price increase for binders redu
Slide 11: First Quarter Cash Flow and Debt-To-Total Capital
First Quarter Cash Flow and Debt-To-Total Capital Millions, except as noted 2007 2006 Cash flow from operations $ 11.9 $ 21.7 Payment for capital expenditures $ 56.4 $ 51.5 Payment for software and other deferred charges $ 15.0 $ 8.8 Free Cash Flow(1) $(59.5) $(38.6) Dividends $ 42.7 $ 42.8 Share Re
Slide 12: 2007 Earnings Guidance: Key Considerations
Key Assumptions: Excludes impact of pending Paxar acquisition Reported revenue guidance unchanged at 2% to 5%, with higher expected benefit from currency offset by modest decline from price/mix Other assumptions for the year unchanged from January outlook: Moderate inflation in raw material costs la
Slide 13: 2007 Earnings and Free Cash Flow Guidance
2007 Earnings and Free Cash Flow Guidance 2007 Guidance Reported (GAAP) Earnings Per Share $3.95 - $4.25 Add Back: Estimated Restructuring and Asset Impairment Charges* $0.05 - $0.10 Adjusted (non-GAAP) Earnings Per Share $4.05 to $4.30 * Subject to upward revision as plans are finalized Capital Exp