Avery Dennison Beats Q1 Estimates; Materials Unit Shines Amidst Label Dip

MENTOR, OH – April 28, 2026 – Avery Dennison Corporation (NYSE: AVY) today announced strong first-quarter 2026 financial results that surpassed analyst expectations, showcasing the resilience of its diversified portfolio. The global materials science company reported adjusted earnings per share (EPS) of $2.47, a 7.4% increase from the same period last year, on the back of total net sales that grew 7.0% to $2.298 billion.

The quarter's success was largely propelled by the company's foundational Materials Group, which effectively counterbalanced a temporary slowdown in its high-growth Solutions Group. This performance underscores the effectiveness of the company's operational strategy in a complex global market.

“We delivered strong first quarter results, with adjusted EPS of $2.47, once again reflecting the strength and resilience of our overall portfolio to deliver growth in a dynamic environment,” said Deon Stander, president and CEO, in the company's press release. “We are executing a clear strategy to drive earnings growth.”

A Tale of Two Segments

The first-quarter results painted a picture of two distinct business trajectories. The Materials Group, Avery Dennison’s largest segment, served as the primary engine of growth. It posted an impressive 11.4% increase in reported sales to $1.6 billion. Organic sales for the group grew by 1.9%, a figure driven by mid-single-digit growth in volume and product mix within its base categories. This solid performance was robust enough to more than offset deflation-related price reductions and softness in some high-value categories like Graphics and Reflectives.

In contrast, the Solutions Group, which includes the company's strategic digital identification technologies, faced headwinds. The segment saw a 2.8% decrease in reported sales to $649 million, with organic sales down 0.9%. A key area of focus, Intelligent Labels, experienced a low-single-digit organic sales decline. Company reports attribute this dip to softness in the logistics end-market and a product transition related to microchips. Despite the overall segment decline, certain areas showed continued strength, with the Embelex and Vestcom businesses posting mid-single-digit growth.

While the dip in Intelligent Labels may raise questions, it appears to be a company-specific adjustment rather than an industry-wide problem. The broader global market for radio-frequency identification (RFID) technology remains on a strong growth trajectory, with projections showing the market expanding from approximately $18.6 billion in 2026 to over $30 billion by the early 2030s, fueled by expanding mandates from major retailers and the increasing digitization of supply chains.

Executing the 'Proven Playbook'

CEO Deon Stander credited the quarter's success to the company's “proven playbook focused on innovation, commercial excellence, and service-led differentiation to gain share with rigorous productivity, procurement, and cost management.” Evidence of this strategy is apparent in the company's financial discipline and operational efficiency.

Avery Dennison realized approximately $17 million in pre-tax savings from restructuring actions during the first quarter. Building on this momentum, the company has increased its full-year 2026 restructuring savings target to exceed $55 million. These cost-management efforts are critical to offsetting inflationary pressures and rising employee-related costs, allowing the company to maintain its adjusted EBITDA margin at 16.4%, on par with the previous year.

Simultaneously, the firm continues to invest in innovation to drive future growth. Its ongoing investments in its Intelligent Labels platform, including its partnership with ambient IoT pioneer Wiliot, signal a firm commitment to leading the charge in connecting the physical and digital worlds, even as the segment navigates short-term market fluctuations.

Disciplined Capital and Shareholder Returns

Reinforcing its reputation for strong financial stewardship, Avery Dennison continued its disciplined approach to capital allocation. The company returned a significant $133 million in cash to its shareholders during the first quarter. This comprised $72.3 million in dividends and $61 million in share repurchases, reducing its share count by 1.9 million compared to the prior year.

The company's commitment to shareholder returns is built on a solid financial foundation. It ended the quarter with a strong balance sheet, maintaining a net debt to adjusted EBITDA ratio of 2.4x. This consistent financial health has enabled Avery Dennison to build a remarkable track record, having increased its dividend for 15 consecutive years and maintained payments to shareholders for 56 straight years, making it an attractive prospect for income-focused investors.

A Cautious but Confident Outlook

Looking ahead, Avery Dennison provided guidance for the second quarter of 2026, projecting adjusted EPS to be in the range of $2.43 to $2.53. The midpoint of this guidance is slightly below some analyst consensus estimates, reflecting a cautious stance amidst ongoing investments and macroeconomic uncertainties. The company anticipates reported sales growth of 2% to 4%, with organic growth between 0% and 2% for the upcoming quarter.

The outlook accounts for several factors, including headwinds from higher employee-related costs and the reversal of temporary savings from 2025. However, it also incorporates tailwinds from recent customer pre-buys and favorable currency translation. With a full-year capital expenditure plan of approximately $260 million, Avery Dennison is clearly continuing to invest for the long term, balancing immediate profitability with strategic initiatives designed to secure future growth across its diverse business segments.