Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations, and comparisons are to the same period in the prior year. Results reflect classification of Office and Consumer Products (OCP) and Designed and Engineered Solutions (DES) as discontinued operations.
- 2Q13 Reported EPS (including discontinued operations) of $0.68
- Adjusted EPS (non-GAAP, continuing operations) of $0.71
- 2Q13 Net sales grew approx. 4 percent to $1.55 billion
- Net sales up approx. 5 percent on organic basis
- Returned $205 million of cash to shareholders in the first half, including the repurchase of 3.5 million shares for $149 million
- Restructuring program achieved annualized savings of $105 million
- OCP and DES sale completed July 1; expect net proceeds of approx. $400 million
- Narrowed adjusted EPS guidance to $2.50 to $2.70, an increase of 28% to 38% compared to prior year
"I'm pleased to report another quarter of strong earnings growth, driven by restructuring and other productivity actions we initiated last year," said Dean Scarborough, Avery Dennison chairman, president and CEO. "Pressure-sensitive Materials continued to benefit from its leadership position in emerging markets, growth through innovation, and significant productivity gains. Retail Branding and Information Solutions delivered its fourth consecutive quarter of strong sales growth with continued margin expansion in the first half.
"We passed two significant milestones, delivering $105 million of restructuring savings and completing the sale of Office and Consumer Products and Designed and Engineered Solutions," Scarborough added. "We are committed to achieving our earnings and free cash flow targets, and to returning the vast majority of that cash to shareholders. In the first half, we distributed over $200 million to shareholders through dividends and the repurchase of 3.5 million shares."
Second Quarter 2013 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, product line exits, acquisitions and divestitures. Adjusted operating margin refers to earnings before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
PSM segment sales increased approximately 4 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low single digits.
Operating margin improved 180 basis points to 10.5 percent as the benefit of productivity initiatives, higher volume, and lower restructuring costs more than offset the impact of changes in product mix. Adjusted operating margin improved 130 basis points.
Retail Branding and Information Solutions (RBIS)
RBIS segment sales increased approximately 8 percent driven by increased demand from U.S. and European retailers and brands.
Operating margin declined 20 basis points to 5.6 percent due to higher restructuring costs. Adjusted operating margin improved 110 basis points as the benefit of productivity initiatives and higher volume more than offset higher employee-related expenses.
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