The Top 5 Analyst Questions From Avery Dennison's Q1 Earnings Call
Avery Dennison's first quarter results met Wall Street expectations, with sales flat year over year and non-GAAP earnings per share in line with consensus. Management highlighted volume growth across both its Materials and Solutions Groups, driven by strength in high-value categories like graphics, reflective solutions, and industrial tapes. CEO Deon Stander attributed the quarter's performance to 'strong growth in high-value categories,' especially in the Materials Group, and noted that North American label volumes improved as customer inventory actions normalized. The company also benefited from productivity initiatives, which helped sustain margins despite deflation-related pricing pressure and a dynamic trade environment.
Is now the time to buy AVY? Find out in our full research report (it's free).
Revenue: $2.15 billion vs analyst estimates of $2.16 billion (flat year on year, in line)
Adjusted EBITDA: $352.4 million vs analyst estimates of $353.4 million (16.4% margin, in line)
Adjusted EPS guidance for Q2 CY2025 is $2.40 at the midpoint, below analyst estimates of $2.56
Operating Margin: 11.9%, in line with the same quarter last year
Organic Revenue rose 2.3% year on year, in line with the same quarter last year
Market Capitalization: $13.6 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Ghansham Panjabi (Baird) asked about the effect of tariffs on apparel demand and pre-buying behavior. CEO Deon Stander clarified there was no significant pre-buying in Q1, but apparel order activity softened toward the end of the quarter due to tariff uncertainty.
John McNulty (BMO Capital Markets) queried about the jump in working capital and tariff mitigation. CFO Gregory Lovins explained that higher rebate and incentive payments, not inventory shifts, drove the increase, and that price surcharges and sourcing adjustments would help offset tariff costs.
Jeffrey Zekauskas (JPMorgan) questioned the rationale for accelerated share buybacks amid limited visibility. Lovins replied that the buybacks were opportunistic, triggered by share price declines and in line with the company's longstanding capital allocation discipline.
George Staphos (Bank of America) asked about the company's capacity to accommodate sourcing shifts out of China and the stability of logistics exposure. Stander noted that Avery Dennison's global network can handle moderate shifts, but full supply chain transitions depend on garment manufacturing capacity in destination countries.
Mike Roxland (Truist Securities) raised concerns about competitive dynamics in intelligent labels, particularly logistics. Stander responded that Avery Dennison maintains majority share through innovation, cost leadership, and strong customer support, and expects new product innovation to reinforce its position.
In the coming quarters, the StockStory team will monitor (1) the pace of apparel demand recovery or further decline as tariff impacts play out, (2) progress in expanding high-value intelligent label programs across food, retail, and logistics, and (3) the effectiveness of cost containment measures and scenario planning in maintaining margins. We will also watch for updates on new customer rollouts and any further shifts in trade policy or macro conditions.
Avery Dennison currently trades at $173.93, in line with $174.95 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it's free).
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