Avery Dennison reported Q4 adjusted earnings per share of $2.45, surpassing the Zacks Consensus Estimate of $2.40 and marking a 2.9% increase from $2.38 a year earlier. Consolidated revenues rose year-over-year, driven by an expanded gross margin of 28.7%. Adjusted EBITDA margin for the quarter stood at 16.4%, reflecting disciplined cost management despite higher employee-related expenses. Net sales in high-value categories continued to grow, contributing to the margin expansion and underlining the resilience of key growth drivers within the business.

In the Materials Group, reported sales climbed 5.1% to $1.5 billion, with currency-neutral growth of 0.3% and a slight organic decline of 0.9% due to deflationary pricing. Intelligent Labels led high-value category growth with high single-digit gains, offsetting modest declines in base categories. Adjusted operating margin was 14.2%, down 60 basis points year-over-year. In the Solutions Group, sales increased 1.5% to $724 million, with high single-digit growth in Embelex and low single-digit gains in Intelligent Labels, while base solutions declined mid-single digits. Adjusted operating margin held at 11.2%, down 20 basis points, and adjusted EBITDA margin remained stable at 17.8%.

During Q4, Avery Dennison generated over $700 million in adjusted free cash flow and returned $191 million to shareholders via dividends and $119 million in share repurchases (0.7 million shares). For the full year 2025, the company delivered adjusted EPS of $9.53, repurchased 3.2 million shares for $572 million, and returned $861 million in cash to shareholders. Net debt to adjusted EBITDA stood at 2.4x at year-end, reflecting a strong balance sheet. High-value categories now represent approximately 45% of total revenue, underscoring the success of strategic investments and productivity initiatives that yielded over $60 million in pre-tax cost savings.

Avery Dennison expects Q1 2026 reported earnings per share between $2.27 and $2.33. Excluding an estimated $0.13 per share of restructuring and other charges, adjusted EPS is projected at $2.40 to $2.46. The guidance assumes continued volume growth in high-value categories, stable margin performance, and ongoing benefits from productivity measures, while managing headwinds from tariff impacts and softer consumer demand.