Avery Dennison Corporation (NYSE: AVY) is a Fortune 500 global materials science and digital identification solutions company. Founded in 1935 by Stan Avery in Los Angeles as Kum Kleen Products, it later became Avery Adhesives and merged with Dennison Manufacturing in 1990 to form Avery Dennison. The company is headquartered ...Avery Dennison Corporation (NYSE: AVY) is a Fortune 500 global materials science and digital identification solutions company. Founded in 1935 by Stan Avery in Los Angeles as Kum Kleen Products, it later became Avery Adhesives and merged with Dennison Manufacturing in 1990 to form Avery Dennison. The company is headquartered in Mentor, Ohio, and employs approximately 35,000 people worldwide.
Business segments: The company operates through two main segments: Materials Group and Solutions Group. The Materials Group specializes in pressure-sensitive materials, including labels, tapes, and other adhesive products, with brands like Fasson, JAC, and Avery Dennison. The Solutions Group provides RFID, branding, and information solutions, including item-level RFID tags, price ticketing, and brand protection, serving the apparel, retail, and logistics industries.
Products and services: Avery Dennison offers a wide range of products, from label materials and performance tapes (mechanical fasteners, precision-extruded plastic devices) to graphics and reflective films for architectural, signage, and transportation markets. They also provide sustainable packaging solutions, brand embellishments, and digital identification solutions like RFID inlays and IoT-enabled sensors.
Cost and financials: As of the latest TTM data, the company has a market cap of approximately $13.55 billion, with revenue per share of $120.58 and net income per share of $9.19. Gross profit margin is 29%, operating margin 12.4%, and net margin 7.6%. The company has a reasonable debt structure with debt-to-equity ratio of 1.58 and interest coverage of 8.08 times. Dividend yield is around 2.2%, with a payout ratio of 41.7%.
Operations and supply chain: Avery Dennison manages a complex global supply chain with an operating cycle of 128 days and cash conversion cycle of 43 days. Inventory turnover is 6.37 times, receivables turnover 5.16, and payables turnover 4.31. The company's capital expenditure accounts for about 1.8% of revenue, focusing on innovation and capacity.
Key people: Deon Stander is the President and CEO as of September 2023, succeeding Mitch Butier. Greg Lovins serves as Senior Vice President and CFO. Under Stander's leadership, the company continues to focus on materials science innovation and digital solutions.
Vision and culture: Avery Dennison's purpose is to make possible products and solutions that advance industries and improve lives. They emphasize sustainability, with commitment to reducing environmental impact through recyclable materials and circular economy initiatives. Their culture fosters innovation, starting with curiosity, and they have a strong focus on employee development and community engagement.
Operator: Ladies and gentlemen, welcome to Avery Dennison's Earnings Conference Call for the Second Quarter Ended on June 30, 2026. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a Q&A session. At that time, if you would like to ask a question, please raise your hand and enter the queue. As a reminder, this webcast is being recorded and will be available for replay on the Avery Dennison Investor Relations website. I would now like to turn the call over to William R. Gilchrist, Avery Dennison's vice president of investor relations. Please go ahead, sir.
William R. Gilchrist: Thank you, Ellen, and welcome to Avery Dennison's second quarter 2026 earnings Conference Call. Please note that throughout today's discussion, we will be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled from GAAP on schedules A-4 to A-8 of the financial statements accompanying today's earnings release. Remind you that we will make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the Safe Harbor statement included in today's earnings release. On the call today are Deon, President and Chief Executive Officer and Greg, senior vice president and chief financial officer. I will now turn the call over to Deon.
Deon Stander: Thanks, Bill, and good morning, everyone. We delivered strong second quarter results across the board. On a year-over-year basis, organic sales growth accelerated to 8%, adjusted EBITDA margins expanded, adjusted EPS grew by 19%, and adjusted free cash flow generation was strong at more than $360 million. While these results benefited from continued customer inventory stocking in Materials Group. Excluding this tailwind, we continue to drive a step change in the pace of our sales and earnings growth. Our performance this quarter once again demonstrated the strength and resilience of our portfolio. Sales growth was balanced across both base and high-value categories, with high-value categories returning to mid-single-digit growth as we expected. Combining this improved organic growth with our commercial and operational excellence allowed us to expand adjusted EBITDA margins across both segments, even against a volatile and inflationary cost backdrop. Our priorities are clear. We are continuing to drive both earnings growth and business resiliency by leaning into our proven playbook. First, we are investing in innovation- and service-led differentiation to drive share gains and expand new business opportunities. The strength of this focus was evident in our second quarter performance where organic sales growth accelerated. Second, we are executing commercial and operational agility including productivity and pricing actions to mitigate inflationary pressures. And third, we are generating strong free cash flow …
