Avery Dennison Corporation (AVY) Q2 2023 Earnings Call Transcript

For the period ending July 1, 2023

July 25, 2023 1:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions] And welcome to Avery Dennison's Earnings Conference Call for the Second Quarter ended on July 1, 2023. This call is being recorded and will be available for replay from 5:00 pm Eastern Time today through midnight Eastern Time, July 28.

To access the replay, please dial 800-633-8284 or 402-977-9140 for international callers. The conference ID number is 22020692.

Now, I'd like to turn the call over now to John Eble, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, sir.

John Eble

Thank you, Tommy. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled from GAAP on schedules A4 to A9 of the financial statements accompanying today's earnings release.

We remind you that we'll 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 Mitch Butier, Chairman and Chief Executive Officer; Deon Stander, President and Chief Operating Officer; and Greg Lovins; Senior Vice President and Chief Financial Officer.

I'll now turn the call over to Mitch.

Mitch Butier

Thanks, John, and hello, everyone.

We delivered $1.92 of EPS in the second quarter, up sequentially from previous quarters, a trend we expect to continue in coming periods. Volumes in our base business continued to recover from slow market conditions, largely destocking while our Intelligent Labels platform accelerates adoption in new categories.

While it's good to see the continuing sequential improvements in our materials businesses and the building momentum in Intelligent Labels, the pace of our recovery is slower than anticipated. Our results for the quarter were below our expectation due to lower revenue, particularly in June, something the team was able to largely offset through cost reduction actions.

Clearly, our intel in April understated the magnitude of the market challenges, particularly inventory builds. That combined with the fact that the drop-off in volume was steeper in Q4 and Q1, we assume the duration of the lower volume period would be shorter. We got that part wrong. What we have been clear on and remain confident in, is that this period of challenging results will soon pass.