Avery Dennison reported adjusted earnings per share of $2.45 for the fourth quarter, surpassing consensus estimates by $0.05 and marking a 2.9% increase from $2.38 a year earlier. Revenue rose 3.4% year-over-year, driven by stronger demand in high-value labeling solutions. Gross margin expanded to 28.7%, up 60 basis points from the prior year, reflecting productivity gains and favorable mix in RFID and intelligent label categories.

In the Materials Group, sales climbed 5.1% to $1.5 billion, with organic volumes up low single digits despite deflationary price pressures. Adjusted EBITDA margin held at 16.6%, supported by cost-saving initiatives. The Solutions Group delivered $724 million in revenue, a 1.5% increase, with high-value categories up high single digits. Adjusted EBITDA margin remained robust at 17.8%, as productivity improvements offset higher employee-related costs and strategic growth investments.

For 2025, the company achieved adjusted EPS of $9.53 and generated over $700 million in adjusted free cash flow, reflecting disciplined capital allocation. High-value categories now represent approximately 45% of total revenue. Cash returned to shareholders totaled $861 million through dividends and repurchases, including 3.2 million shares repurchased for $572 million. Net debt to adjusted EBITDA ended the year at 2.4x, underscoring a strong balance sheet.

Management expects first-quarter reported EPS of $2.27 to $2.33, and adjusted EPS of $2.40 to $2.46 after excluding an estimated $0.13 per share of restructuring and other items. Key initiatives for 2026 include advancing innovation in digital identification, expanding high-value product penetration, and sustaining productivity improvements to support margin expansion and free cash flow generation.