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1 | Avery Dennison Investor Presentation

Avery Dennison

Investor PresentationAugust 2014

Unless otherwise indicated, the discussion of the company’s results is focused on its continuing operations, and

comparisons are to the same period in the prior year.

Forward-Looking StatementsCertain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but not limited to risks and uncertainties relating to the following: fluctuations in demand affecting sales to customers; the financial condition and inventory strategies of customers; changes in customer order patterns; worldwide and local economic conditions; fluctuations in cost and availability of raw materials; our ability to generate sustained productivity improvement; our ability to achieve and sustain targeted cost reductions; impact of competitive products and pricing; loss of significant contracts or customers; collection of receivables from customers; selling prices; business mix shift; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; outcome of tax audits; timely development and market acceptance of new products, including sustainable or sustainably-sourced products; investment in development activities and new production facilities; fluctuations in currency exchange rates and other risks associated with foreign operations; integration of acquisitions and completion of potential dispositions; amounts of future dividends and share repurchases; customer and supplier concentrations; successful implementation of new manufacturing technologies and installation of manufacturing equipment; disruptions in information technology systems; successful installation of new or upgraded information technology systems; data security breaches; volatility of financial markets; impairment of capitalized assets, including goodwill and other intangibles; credit risks; our ability to obtain adequate financing arrangements and maintain access to capital; fluctuations in interest and tax rates; fluctuations in pension, insurance, and employee benefit costs; impact of legal and regulatory proceedings, including with respect to environmental, health and safety; changes in governmental laws and regulations; changes in political conditions; impact of epidemiological events on the economy and our customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.

We believe that the most significant risk factors that could affect our financial performance in the near-term include: (1) the impact of economic conditions on underlying demand for our products; (2) competitors' actions, including pricing, expansion in key markets, and product offerings; and (3) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through selling price increases, without a significant loss of volume.

For a more detailed discussion of these and other factors, see “Risk Factors” and “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in our 2013 Form 10-K, filed on February 26, 2014 with the Securities and Exchange Commission and subsequent quarterly reports on Form 10-Q. The forward-looking statements included in this document are made only as of the date of this document, and we undertake no obligation to update these statements to reflect subsequent events or circumstances, other than as may be required by law.

Use of Non-GAAP Financial MeasuresThis presentation contains certain non-GAAP financial measures as defined by SEC rules. As required by these rules, we have defined, qualified, and reconciled these non-GAAP financial measures to the most directly comparable GAAP financial measures, in the Appendix of this document.


> Sustainable competitive advantages in

two core businesses

» Global reach, scale

» Product breadth, technical expertise, innovation

» Service, quality

> #1 share positions worldwide

> Premium pricing and above industry

margins

> Targeting double-digit adjusted EPS

CAGR through 2018

> Strong, consistent FCF with solid

balance sheet enabling significant

return of cash to shareholders

Overview

2013 Net Sales (as reported) = $6.1 billion

2013 Sales by Segment and End Market

PSM

73%

RBIS

26%

Vancive Medical

Technologies

1%

Retail Apparel

22%

Medical / Healthcare

5%

Industrial / Durable

17%

Logistics & Shipping

17%Non-durable Consumer

Goods39%


2013 Sales by End Market

U.S.

25%

Western

Europe

23%Eastern

Europe &

MENA

9%

Asia

30%

Latin

America

8%

Other*

5%

U.S.37%

Western Europe

29%

Eastern Europe &

MENA8% Asia

(ex-Japan)14%

LatinAmerica

7%Other*

5%

* Canada, Australia, South Africa, and Japan

Emerging Markets ~30%


Pressure-Sensitive Materials (PSM)

2013 Sales $4.5 bil.

Organic Sales Growth 4.7%

Adjusted Operating Margin* 10.2%

FINANCIAL SNAPSHOT

> Leading manufacturer of self-adhesive

film and paper label material

> Packaged goods end markets:» Home & Personal Care

» Food & Beverage

» Pharmaceutical

> Variable information end markets:» Shipping Labels

» Bar Codes

> 10,000+ printing company customers

serving packaged goods and logistics

companies around the globe

> Large and growing addressable markets» 38% of segment sales in emerging markets

* Excluding restructuring charges and other items


Pressure-Sensitive Materials (PSM)

> Our products enable:

» Increased shelf appeal of consumer packaged goods

» Maximized design options for a wide range of containers

» Printing with a broad range of inks, resolutions and finishing techniques

» Label application at high speed

» High-impact fleet and architecture branding

» Bonding solutions (tapes) with greater functionality and/or lower total applied cost

Rigid Film Squeezable Film Coated Paper Thermal Paper Graphics & Tapes


Industry leader in expanding market

> Unmatched scale and global footprint

» 2.5 times larger than nearest competitor

» Local manufacturing and distribution across

the globe

> Industry-leading service, quality,

and technical expertise

> Innovation leader in the space

» Significant benefits from manufacturing

adhesives

> Unique commercial relationships and

market insights


Retail Branding & Information Solutions (RBIS)

2013 Sales $1.6 bil.

Organic Sales Growth 4.9%

Adjusted Operating Margin* 6.3%

FINANCIAL SNAPSHOT

> Global leader (>5x nearest

competitor) in branding &

information solutions for apparel

industry

» Branding solutions: graphic tags,

packaging, labeling,

embellishments

» Information solutions: inventory

tracking & routing, loss prevention,

price management, brand

protection


http://en.wikipedia.org/wiki/File:Marks_&_Spencer_new_logo.svg


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Key Drivers of Value Creation

Accelerate RFID Adoption

» Mid-term growth projection of 20%+

» 3-yr CAGR (2010-2013) ~40%

Exterior Embellishment

Share Gains

Global Supply Chain

Optimization

Share growth within key high-value segments

Market Segment Leadership

Global leadership in integrated, end-to-end inventory & loss prevention solutions

Performance innovation & leading brand partnership

Faster, highly-flexible, capital efficient supply chain and manufacturing footprint


Market Segment Strategy

2 - 4%

“Innovation”

• Innovation – Embellish/labels

• Global compliance & protection

• Sustainable solutions

Premium Fashion

2 - 4%

“Creativity”

• Creative packaging and labels

• Brand protection & consistency

• Global compliance

Fast Fashion

2 - 4%

“Speed”

• Blended in-plant /Service Bureau

• Quick response products/solutions

• Global compliance/automation

Contemporary Fashion

1 - 3%

“Simplification”

• Inventory visibility & accuracy

• Price management

• Global compliance/automation

* Internal assessment / plan

Value

0 - 2%

“Cost”

• Global Compliance

• Blended in-plant /Service Bureau

• Private brand development

Performance /

Outdoor Athletic

Projected Segment

Unit CAGR*

Segments

RBIS Segment

Share ’13-’18*

Key Growth Drivers

RBIS Segment

Share ‘08 – ‘13




Improving RBIS’s Productivity / Asset Utilization

2009

o 58 Sites

o 6.6 mil Sq Footage

o 50 Mfg Sites

2013

o 48 Sites

o 5.2 mil Sq Ft ( ~20%)

o 39 Mfg / Fast Response Sites

~1.4 mil Sq Ft Global Reduction

Sales per Sq Ft

‘09

$202

‘13

$308

53%

‘18

$350+

Reliability %

‘09

86.1

‘13

97.9

14%

‘18

99.0+

Key Actions

> Implemented hub and spoke

structure

> Plant closures

> Sites repurposed to fast response

units

> Technology consolidations

> Standardized org structures

> Integrated supply chain

> Lean manufacturing culture

> Digital conversion

» Increased digital printing capacity

to 30%+ in 2013; ~60% increase

since 2011

» Targeting 50%+ digital printing

capacity by 2015


Portfolio Overview — Long-Term Targets (2014 – 2018)

PSM

RBIS

Vancive Medical

Technologies

ORGANIC SALES

GROWTH

(5-YEAR CAGR)

GAAP EBIT MARGIN

ADJ.* EBIT MARGIN

(BY 2018)

$4.5 bil. 4 - 5% 10 - 11%

10 - 11%

$1.6 bil. 4 - 5% 9.5 - 10.5%

$74 mil. 10%+ ~10%


10 - 11%

~10%

2013 SALES


Organic Sales Growth (CAGR(1)) 4% – 5%

Targeting Continued Strong Progress Through 2018

(1) Reflects five-year compound annual growth rates, with 2013 as the base period

(2) Excluding restructuring charges and other items

(3) Net operating profit, excluding restructuring charges and other items, after taxes divided by average invested capital

1.7x to 2.0xNet Debt to EBITDA

16%+

(up 4+ pts vs 2013)

2018 Return on Total Capital

(ROTC)(3)

12% – 15%+Adjusted(2) EPS Growth (CAGR(1))

9% – 10%

(up ~ 2 pts vs 2013 adj(2))2018 Operating Margin


Capital discipline is a key contributor to value creation

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2009 2010 2011 2012 2013

Fixed Asset (Net PP&E) Turnover (1)

(1) WholeCo annual net sales divided by 2-point average consolidated net PP&E for years 2009 through 2012; 2013 reflects continuing operations for both sales and net PP&E

(2) WholeCo operational working capital at year-end divided by annualized fourth quarter net sales for years 2009 through 2012; 2013 reflects continuing operations for both operational working capital

and net sales

(3) Net Debt / LTM WholeCo Adj. EBITDA, 4-qtr Avg.; adj. EBITDA excludes restructuring charges and other items

Operational Working Capital % of Sales (2)

0%

3%

6%

9%

12%

15%

2009 2010 2011 2012 2013

Impact of Discontinued Operations

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2009 2010 2011 2012 2013

Long-Term Target

(annual average)

Net Debt / Adj. EBITDA(3)


5-Year Capital Deployment

($ in millions)

2014 - 2018

Cumulative

Capital Sources:

Leverage Capacity (2013) ~ $350

Add'l Leverage Capacity (Organic EBITDA Growth) up to $700

Cash Flow from Ops before Restructuring $2,700 - $2,900

Available Capital $3,300 - $4,000

Capital Uses: % of Total

Restructuring < $150 < 5%

Capex ~ $1,000 25% - 30%

Dividends ~ $750 ~ 20%

Add'l Capital Available to Shareholders / M&A $1,400 - $2,000 ~ 50%

Total Capital Available to Shareholders / M&A $2,150 - $2,750 ~ 70%


© 2011 Avery Dennison Corporation. All rights reserved. Avery Dennison and all other Avery brands, product names and codes are trade marks of Avery Dennison Corporation. All

other brands and product names are trademarks of their respective owners. Fortune 500 is a trademark of Time, Inc. Personal a nd company names and other information on

samples depicted are fictitious. Any resemblance to actual names and addresses is purely coincidental .

avery dennison presentation name here - · pdf file8 | avery dennison investor presentation...

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