# Avery Dennison Corp: Form 10-Q for the period ended Jun 28, 2025

- Company: [Avery Dennison Corp](/companies/avy.md) (CIK 8818)
- Form: 10-Q
- Filed: 2025-07-29
- Accepted by EDGAR: Jul 29, 2025, 16:12 ET
- Period: 2025-06-28
- Accession: 0000008818-25-000040
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/8818/000000881825000040/avy-20250628.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/8818/000000881825000040/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-28.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-03-30 to 2025-06-28 | $2.22bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-12-29 to 2025-06-28 | $4.37bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-03-30 to 2025-06-28 | $1.58bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-12-29 to 2025-06-28 | $3.11bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-03-30 to 2025-06-28 | $639.1m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-12-29 to 2025-06-28 | $1.26bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-03-30 to 2025-06-28 | $352.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-12-29 to 2025-06-28 | $699.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2025-03-30 to 2025-06-28 | $34.0m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-12-29 to 2025-06-28 | $64.9m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-03-30 to 2025-06-28 | $66.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-12-29 to 2025-06-28 | $127.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-03-30 to 2025-06-28 | $189.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-12-29 to 2025-06-28 | $355.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-03-30 to 2025-06-28 | $2.41 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-12-29 to 2025-06-28 | $4.50 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-03-30 to 2025-06-28 | $2.42 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-12-29 to 2025-06-28 | $4.51 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-03-30 to 2025-06-28 | 78,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-12-29 to 2025-06-28 | 78,900,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-12-29 to 2025-06-28 | $192.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-12-29 to 2025-06-28 | $66.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-12-29 to 2025-06-28 | $142.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2024-12-29 to 2025-06-28 | $360.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-28 | $215.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-28 | $3.18bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-28 | $8.57bn | us-gaap:Assets |
| Current liabilities | at 2025-06-28 | $3.06bn | us-gaap:LiabilitiesCurrent |
| Current portion of debt | at 2025-06-28 | $922.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2025-06-28 | $2.20bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 41,587 characters.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related notes thereto.

### NON-GAAP FINANCIAL MEASURES

We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparisons with the results of competitors for quarters and year-to-date periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are also useful to their assessments of our performance and operating trends, as well as liquidity. Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K.

Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing.

We use the non-GAAP financial measures defined below in this MD&A.

- *Sales change ex. currency* refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, the currency adjustments for transitional reporting of highly inflationary economies and the reclassification of sales between segments. Additionally, where applicable, sales change ex. currency is also adjusted for an extra week in our fiscal year and the calendar shift resulting from an extra week in the prior fiscal year. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations. Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025; fiscal years 2026 and beyond will be coincident with the calendar year beginning on January 1 and ending on December 31.
- *Organic sales change* refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures.

We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales change from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period.

- *Adjusted free cash flow* refers to cash flow provided by operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments, less net cash used for Argentine Blue Chip Swap securities. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases and acquisitions.
- *Operational working capital as a percentage of annualized current quarter net sales* refers to trade accounts receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities divided by annualized current quarter net sales. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations.

### OVERVIEW AND OUTLOOK

### Fiscal Year

In January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year. Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025 and fiscal years 2026 and beyond will begin on January 1 and end on December 31.

### Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

|  | Three Months Ended June 28, 2025 | Six Months Ended June 28, 2025 |
| --- | ---: | ---: |
| Reported net sales change | (1)% | —% |
| Foreign currency translation | — | 1 |
| Sales change ex. currency(1) | (1) | 1 |
| Organic sales change(1) | (1)% | 1% |

(1) Totals may not sum due to rounding.

In the three months ended June 28, 2025, net sales decreased on an organic basis compared to the same period in the prior year primarily due to the impact of raw material deflation-related price reductions, partially offset by higher volume/mix. In the six months ended June 28, 2025, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions.

### Net Income

Net income increased from approximately $349 million in the first six months of 2024 to approximately $355 million in the first six months of 2025. The primary factors affecting this increase were:

- Benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs
- Higher volume/mix

These items were partially offset by the net impact of raw material deflation-related price reductions.

### Cost Reduction Actions

#### 2025 Actions

We recorded $12.9 million in restructuring charges, net of reversals, during the six months ended June 28, 2025. These charges consisted of severance and related costs for the reduction of approximately 460 positions, as well as asset impairment charges, at various locations across our company. Our 2025 actions are primarily intended to optimize our operational footprint.

Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information.

### Cash Flow

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $192.5 | $317.5 |
| Purchases of property, plant and equipment | (66.0) | (96.3) |
| Purchases of software and other deferred charges | (15.2) | (12.9) |
| Purchases of Argentine Blue Chip Swap securities | — | (34.2) |
| Proceeds from sales of Argentine Blue Chip Swap securities | — | 24.0 |
| Proceeds from sales of property, plant and equipment | 15.7 | .3 |
| Proceeds from insurance and sales (purchases) of investments, net | 8.8 | 2.2 |
| Adjusted free cash flow | $135.8 | $200.6 |

During the first six months of 2025, net cash provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments, changes in operational working capital, higher trade rebate payments, and tax payments, net of refunds, partially offset by the prior-year settlement payment for the Adasa legal matter. During the first six months of 2025, adjusted free cash flow decreased compared to the same period last year primarily due to a decrease in net cash provided by operating activities, partially offset by lower purchases of property, plant and equipment and higher proceeds from the sales of property, plant and equipment.

### Outlook

Beginning in the first quarter of 2025, the U.S. announced tariffs on goods imported into the U.S. from numerous countries, many of which responded with reciprocal tariffs and other actions on goods imported from the U.S. The U.S. government continues to negotiate with other countries regarding the tariffs; to enable these negotiations, it paused certain of these tariffs until August 1, 2025. As it relates to the direct impact of these tariffs, a relatively small portion of our global materials purchases is impacted and the vast majority of our imports and exports between the U.S., Canada and Mexico are compliant with the United States-Mexico-Canada Agreement (“USMCA”). Based on current information, we estimate that the overall direct impact will likely increase our total raw material costs by a low single digit rate. To mitigate the direct impact to our operations, we have implemented strategic sourcing adjustments and pricing surcharges. The indirect impact on demand for our products and solutions is more uncertain. While a majority of our products and solutions relates to less discretionary consumer staples, we also serve more discretionary and cyclical markets, such as industrials, durables and apparel. In the second quarter of 2025, we estimated that the indirect impact on apparel end markets resulted in a mid-single digit rate decrease in our sales in overall apparel categories.

Certain factors that we believe may contribute to or impact our 2025 results are described below.

- We anticipate elevated uncertainty related to trade policy and the macroeconomic environment.
- In the third quarter of 2025, we anticipate a sequential decrease in operating income due to volume seasonality.
- For the full year:
- We expect a favorable impact to our net sales and operating income from foreign currency translation, based on recent rates.
- We anticipate incremental savings from restructuring actions, net of transition costs.
- We expect our effective tax rate to be in the mid-twenty percent range.

### ANALYSIS OF RESULTS OF OPERATIONS FOR THE SECOND QUARTER

### Income Before Taxes

*(In millions)*

|  | Three Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales | $2,220.5 | $2,235.3 |
| Cost of products sold | 1,581.4 | 1,572.6 |
| Gross profit | 639.1 | 662.7 |
| Marketing, general and administrative expense | 352.4 | 373.9 |
| Other expense (income), net | .5 | 27.0 |
| Interest expense | 34.0 | 29.2 |
| Other non-operating expense (income), net | (3.3) | (5.8) |
| Income before taxes | $255.5 | $238.4 |

20

#### Gross Profit

Gross profit for the second quarter of 2025 decreased from the same period last year due to the net impact of raw material deflation-related price reductions and higher employee-related costs, partially offset by higher volume/mix and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs.

#### Marketing, General and Administrative Expense

Marketing, general and administrative expense decreased in the second quarter of 2025 compared to the same period last year primarily due to lower employee-related costs and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

#### Other Expense (Income), Net

*(In millions)*

| Other expense (income), net, by type Restructuring charges, net of reversals: | Three Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Severance and related costs, net of reversals | $7.9 | $6.3 |
| Asset impairment and lease cancellation charges | .1 | .9 |
| Other items: |  |  |
| (Gain) loss on venture and other investments | 1.8 | 15.0 |
| Losses from Argentine peso remeasurement and Blue Chip Swap transactions | 1.8 | 4.1 |
| (Gain) loss on sales of assets | (11.1) | — |
| Outcomes of legal matters and settlements, net | — | .4 |
| Transaction and related costs | — | .3 |
| Other expense (income), net | $.5 | $27.0 |

Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges.

#### Interest Expense

Interest expense increased in the second quarter of 2025 compared to the same period last year primarily due to higher interest related to the €500 million of senior notes we issued in November 2024 and an increase in commercial paper borrowings.

### Net Income and Earnings per Share

*(In millions, except per share amounts and percentages)*

|  | Three Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Income before taxes | $255.5 | $238.4 |
| Provision for income taxes | 66.5 | 61.6 |
| Net income | $189.0 | $176.8 |
| Per share amounts: |  |  |
| Net income per common share | $2.42 | $2.19 |
| Net income per common share, assuming dilution | 2.41 | 2.18 |
| Effective tax rate | 26.0% | 25.8% |

#### Provision for Income Taxes

Our effective tax rate for the three months ended June 28, 2025 was comparable to the same period last year. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

### RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SECOND QUARTER

During the fourth quarter of 2024, we modified our segment performance measure to exclude other expense (income), net. These changes align with how our chief operating decision maker evaluates segment performance and allocates resources. Prior-year periods have been conformed to the current period presentation. Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense; other non-operating expense (income), net; and other items.

Refer to Note 11, “Segment and Disaggregated Revenue Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

### Materials Group

*(In millions)*

|  | Three Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales including intersegment sales | $1,596.2 | $1,585.1 |
| Less intersegment sales | (46.0) | (38.3) |
| Net sales | $1,550.2 | $1,546.8 |
| Segment adjusted operating income(1) | 242.5 | 244.5 |

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $(7.0) million and $21.1 million in the second quarter of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, losses from Argentine peso remeasurement and Blue Chip Swap transactions, (gain) loss on venture and other investments, (gain) loss of sales of assets and outcomes of legal matters and settlements, net.

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

|  | Three Months Ended June 28, 2025 |
| --- | ---: |
| Reported net sales change | —% |
| Reclassification of sales between segments | (1) |
| Foreign currency translation | (1) |
| Sales change ex. currency(1) | (1) |
| Organic sales change(1) | (1)% |

(1) Totals may not sum due to rounding.

In the second quarter of 2025, net sales decreased on an organic basis compared to the same period in the prior year mainly due to the impact of raw material deflation-related price reductions, partially offset by favorable volume/mix. On an organic basis, net sales increased by a low single digit rate in North America, decreased by a mid-single digit rate in Europe, the Middle East and North Africa, were comparable in Asia Pacific and increased by a mid-single digit rate in Latin America.

#### Segment Adjusted Operating Income

Segment adjusted operating income decreased in the second quarter of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material input costs, partially offset by productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and favorable volume/mix.

### Solutions Group

*(In millions)*

|  | Three Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales including intersegment sales | $682.8 | $703.9 |
| Less intersegment sales | (12.5) | (15.4) |
| Net sales | $670.3 | $688.5 |
| Segment adjusted operating income(1) | 67.0 | 69.8 |

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $7.2 million and $5.7 million in the second quarter of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments and transaction and related costs.

#### Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

|  | Three Months Ended June 28, 2025 |
| --- | ---: |
| Reported net sales change | (3)% |
| Reclassification of sales between segments | 2 |
| Foreign currency translation | — |
| Sales change ex. currency(1) | (1) |
| Organic sales change(1) | (1)% |

(1) Totals may not sum due to rounding.

In the second quarter of 2025, net sales decreased on an organic basis compared to the same period in the prior year due to a low single digit rate increase in high-value categories, which was more than offset by a decrease of a mid-single digit rate in the base business. Company-wide, on an organic basis, net sales of intelligent labels were comparable to the same period in the prior year.

#### Segment Adjusted Operating Income

Segment adjusted operating income decreased in the second quarter of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material costs and growth investments, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

### ANALYSIS OF RESULTS OF OPERATIONS FOR THE SIX MONTHS YEAR-TO-DATE

### Income Before Taxes

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales | $4,368.8 | $4,386.6 |
| Cost of products sold | 3,108.2 | 3,091.7 |
| Gross profit | 1,260.6 | 1,294.9 |
| Marketing, general and administrative expense | 699.4 | 739.1 |
| Other expense (income), net | 20.4 | 39.6 |
| Interest expense | 64.9 | 57.8 |
| Other non-operating expense (income), net | (6.6) | (14.4) |
| Income before taxes | $482.5 | $472.8 |

#### Gross Profit

Gross profit for the first six months of 2025 decreased from the same period last year primarily due to the net impact of pricing and raw material input costs, higher employee-related costs and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume/mix.

#### Marketing, General and Administrative Expense

Marketing, general and administrative expense decreased in the first six months of 2025 compared to the same period last year primarily due to lower employee-related costs and benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs, partially offset by growth investments.

#### Other Expense (Income), Net

*(In millions)*

| Other expense (income), net, by type Restructuring charges, net of reversals: | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Severance and related costs, net of reversals | $12.6 | $11.2 |
| Asset impairment and lease cancellation charges | .3 | 2.0 |
| Other items: |  |  |
| (Gain) loss on venture and other investments | 16.1 | 17.2 |
| Losses from Argentine peso remeasurement and Blue Chip Swap transactions | 2.5 | 15.4 |
| (Gain) loss on sales of assets | (11.1) | — |
| Outcomes of legal matters and settlements, net | — | (6.5) |
| Transaction and related costs | — | .3 |
| Other expense (income), net | $20.4 | $39.6 |

Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges.

#### Interest Expense

Interest expense increased for the six months of 2025 compared to the same period last year primarily due to higher interest related to the €500 million of senior notes we issued in November 2024 and an increase in commercial paper borrowings.

### Net Income and Earnings per Share

*(In millions, except per share amounts and percentages)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Income before taxes | $482.5 | $472.8 |
| Provision for income taxes | 127.2 | 123.6 |
| Net income | $355.3 | $349.2 |
| Per share amounts: |  |  |
| Net income per common share | $4.51 | $4.34 |
| Net income per common share, assuming dilution | 4.50 | 4.31 |
| Effective tax rate | 26.4% | 26.1% |

#### Provision for Income Taxes

Our effective tax rate for the six months ended June 28, 2025 was comparable to the same period last year. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

### RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SIX MONTHS YEAR-TO-DATE

### Materials Group

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales including intersegment sales | $3,120.2 | $3,128.6 |
| Less intersegment sales | (89.9) | (85.3) |
| Net sales | $3,030.3 | $3,043.3 |
| Segment adjusted operating income(1) | 472.8 | 485.0 |

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $(2.6) million and $35.5 million in the first six months of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, losses from Argentine peso remeasurement and Blue Chip Swap transactions, (gain) loss on venture and other investments, (gain) loss of sales of assets and outcomes of legal matters and settlements, net.

#### Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

|  | Six Months Ended June 28, 2025 |
| --- | ---: |
| Reported net sales change | —% |
| Reclassification of sales between segments | (1) |
| Foreign currency translation | 1 |
| Sales change ex. currency(1) | — |
| Organic sales change(1) | —% |

(1) Totals may not sum due to rounding

In the first six months of 2025, net sales were comparable on an organic basis compared to the same period in the prior year mainly due to higher volume/mix offsetting the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low single digit rate in North America, decreased by a low single digit rate in Europe, the Middle East and North Africa, were comparable in Asia Pacific and increased by a mid-single digit rate in Latin America.

#### Segment Adjusted Operating Income

Segment adjusted operating income decreased in the first six months of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material input costs and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume/mix.

### Solutions Group

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net sales including intersegment sales | $1,364.2 | $1,369.6 |
| Less intersegment sales | (25.7) | (26.3) |
| Net sales | $1,338.5 | $1,343.3 |
| Segment adjusted operating income(1) | 135.2 | 130.7 |

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $17.3 million and $3.8 million in the first six months of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments, transaction and related costs and outcomes of legal matters and settlements, net.

#### Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

|  | Six Months Ended June 28, 2025 |
| --- | ---: |
| Reported net sales change | —% |
| Reclassification of sales between segments | 2 |
| Foreign currency translation | 1 |
| Sales change ex. currency(1) | 2 |
| Organic sales change(1) | 2% |

(1) Totals may not sum due to rounding

In the first six months of 2025, net sales increased on an organic basis compared to the same period in the prior year due to low single digit rate increases in high-value categories and the base business. Company-wide, on an organic basis, net sales of intelligent labels increased by a low single digit rate compared to the same period in the prior year.

#### Segment Adjusted Operating Income

Segment adjusted operating income increased in the first six months of 2025 compared to the same period last year primarily due to benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and higher volume, partially offset by the net impact of pricing and raw material costs and growth investments.

### FINANCIAL CONDITION

### Liquidity

### Operating Activities

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net income | $355.3 | $349.2 |
| Depreciation | 100.3 | 98.7 |
| Amortization | 58.4 | 57.2 |
| Provision for credit losses and sales returns | 25.3 | 28.2 |
| Stock-based compensation | 14.7 | 17.4 |
| Deferred taxes and other non-cash taxes | (12.0) | (3.8) |
| Other non-cash expense and loss (income and gain), net | 20.8 | 46.6 |
| Changes in assets and liabilities and other adjustments | (370.3) | (276.0) |
| Net cash provided by operating activities | $192.5 | $317.5 |

During the first six months of 2025, net cash provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments, changes in operational working capital, higher trade rebate payments, and tax payments, net of refunds, partially offset by the prior-year settlement payment for the Adasa legal matter.

### Investing Activities

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Purchases of property, plant and equipment | $(66.0) | $(96.3) |
| Purchases of software and other deferred charges | (15.2) | (12.9) |
| Purchases of Argentine Blue Chip Swap securities | — | (34.2) |
| Proceeds from sales of Argentine Blue Chip Swap securities | — | 24.0 |
| Proceeds from sales of property, plant and equipment | 15.7 | .3 |
| Proceeds from insurance and sales (purchases) of investments, net | 8.8 | 2.2 |
| Proceeds from settlement of net investment hedges | 6.2 | — |
| Payments for acquisitions, net of cash acquired, and venture investments | (10.7) | (1.9) |
| Net cash used in investing activities | $(61.2) | $(118.8) |

#### Purchases of Property, Plant and Equipment

During the first six months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe and certain countries in Asia Pacific, primarily China; in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, and in the U.S. During the first six months of 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment in certain countries in Asia Pacific, including China and Vietnam, in the U.S. and in certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S. and certain countries in Europe, primarily France.

#### Purchases of Software and Other Deferred Charges

During the first six months of 2025 and 2024, we primarily invested in information technology upgrades in the U.S.

#### Purchases and Proceeds from Sales of Argentine Blue Chip Swap Securities

During the first six months of 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $10 million. Refer to Note 12, “Supplemental Financial Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

#### Proceeds from Sales of Property, Plant and Equipment

During the first six months of 2025, we received proceeds from the sale of property in China.

#### Proceeds from Insurance and Sales (Purchases) of Investments, Net

During the first six months of 2025, we received higher proceeds from sales from investments and insurance policies.

#### Proceeds from Settlement of Net Investment Hedges

During the first six months of 2025, we settled €420 million notional amount of net investment hedges.

#### Payments for Acquisitions, Net of Cash Acquired, and Venture Investments

During the first six months of 2025 and 2024, we made several venture investments.

### Financing Activities

*(In millions)*

|  | Six Months Ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net increase (decrease) in borrowings with maturities of three months or less | $816.2 | $(2.2) |
| Repayments of long-term debt and finance leases | (551.6) | (3.5) |
| Dividends paid | (142.9) | (136.2) |
| Share repurchases | (360.0) | (40.7) |
| Net (tax withholding) proceeds related to stock-based compensation | (12.6) | (18.4) |
| Payments for settlement of fair value hedges | (13.5) | — |
| Other | 15.9 | (1.1) |
| Net cash used in financing activities | $(248.5) | $(202.1) |

#### Borrowings and Repayment of Debt

During the first six months of 2025 and 2024, our commercial paper borrowings were used to fund the repayment of long-term debt, dividend payments, share repurchases, capital expenditures and other general corporate purposes.

In the first quarter of 2025, we repaid our €500 million of senior notes at maturity using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings.

In the second quarter of 2025, we repaid our $25 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

Refer to Note 3, “Debt,” to the unaudited Condensed Consolidated Financial Statements for more information.

#### Dividends Paid

We paid dividends of $1.82 per share in the first six months of 2025 compared to $1.69 per share in the same period last year. In April 2025, we increased our quarterly dividend rate to $0.94 per share, representing an increase of approximately 7% from our previous quarterly dividend rate of $0.88 per share.

#### Share Repurchases

During the first six months of 2025 and 2024, we repurchased approximately 2.0 million and 0.2 million shares of our common stock, respectively.

In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to the amount outstanding under our previous Board authorization. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

#### Net (Tax Withholding) Proceeds Related to Stock-based Compensation

Tax withholding for stock-based compensation was lower in the first six months of 2025 compared to 2024 primarily due to a lower number of shares vesting for certain performance-based awards based on our performance against the objectives established for the awards.

#### Payments for Settlement of Fair Value Hedges

During the first six months of 2025, we settled €420 million notional amount of fair value hedges.

### Analysis of Selected Balance Sheet Accounts

#### Long-lived Assets

In the six months ended June 28, 2025, goodwill increased by approximately $52 million to $2.03 billion, reflecting the impact of foreign currency translation.

In the six months ended June 28, 2025, other intangibles resulting from business acquisitions, net, decreased by approximately $39 million to $716.4 million, primarily reflecting current year amortization expense, partially offset by the impact of foreign currency translation.

Refer to Note 2, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” to the unaudited Condensed Consolidated Financial Statements for more information.

#### Shareholders’ Equity Accounts

As of June 28, 2025, the balance of our shareholders’ equity was $2.20 billion. Refer to Note 8, “Supplemental Equity and Comprehensive Income Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

### Impact of Foreign Currency Translation

*(In millions)*

|  | Six Months Ended June 28, 2025 |
| --- | ---: |
| Change in net sales | $(45) |

International operations generated approximately 69% of our net sales during the six months ended June 28, 2025. Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.

The unfavorable impact of foreign currency translation on net sales in the first six months of 2025 compared to the same period last year was primarily related to sales in Brazil and Mexico.

### Effect of Foreign Currency Transactions

The impact on net income from transactions denominated in foreign currencies is largely mitigated because the costs of our products are generally denominated in the same currencies in which they are sold. In addition, to reduce our income and cash flow exposure to transactions in foreign currencies, we enter into foreign exchange forward, option and swap contracts where available and appropriate. Refer to Note 5, “Financial Instruments,” to the unaudited Condensed Consolidated Financial Statements for more information.

### Analysis of Selected Financial Ratios

We utilize the financial ratios discussed below to assess our financial condition and operating performance. We believe this information assists our investors in understanding the factors impacting our cash flow other than net income and capital expenditures.

#### Operational Working Capital Ratio

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital (deficit) below. The working capital deficit (current assets minus current liabilities) as of the second quarter of 2024 was primarily due to our €500 million of senior notes due in the first quarter of 2025 and $300 million of senior notes due in the third quarter of 2024. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. As shown below, operational working capital, as a percentage of annualized current-quarter net sales, in the second quarter of 2025 increased compared to the second quarter of 2024.

*(In millions, except percentages)*

|  | June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| (A) Working capital (deficit) | $121.7 | $(332.4) |
| Reconciling items: |  |  |
| Cash and cash equivalents | (215.9) | (208.8) |
| Other current assets | (314.5) | (250.5) |
| Short-term borrowings and current portion of long-term debt and finance leases | 922.0 | 1,172.3 |
| Accrued payroll and employee benefits and other current liabilities | 832.6 | 814.5 |
| (B) Operational working capital | $1,345.9 | $1,195.1 |
| (C) Second-quarter net sales, annualized | $8,882.0 | $8,941.2 |
| Operational working capital, as a percentage of annualized current-quarter net sales: (B) ÷ (C) | 15.2% | 13.4% |

#### Accounts Receivable Ratio

The average number of days sales outstanding was 67 days in the second quarter of 2025 compared to 62 days in the second quarter of 2024, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter. The increase in average number of days sales outstanding was primarily due to the impact of customer destocking, timing of collections and impact of foreign currency translation.

#### Inventory Ratio

Average inventory turnover was 6.2 in the second quarter of 2025 compared to 6.4 in the second quarter of 2024, calculated using the annualized second-quarter cost of products sold in 2025 and 2024, respectively, and divided by the inventory balance at quarter-end.

#### Accounts Payable Ratio

The average number of days payable outstanding was 75 days in the second quarter of 2025 compared to 76 days in the second quarter of 2024, calculated using the accounts payable balance at quarter-end divided by the respective annualized second-quarter cost of products sold. The decrease in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation.

### Capital Resources

Capital resources used to fund our operational needs include cash flows from operations, cash and cash equivalents and debt financing, including access to commercial paper borrowings supported by our $1.20 billion revolving credit facility (the “Revolver”).

The Revolver is used as a back-up facility for our commercial paper borrowings and can be used for other corporate purposes. No balance was outstanding under the Revolver as of June 28, 2025 or December 28, 2024.

As of June 28, 2025, we had cash and cash equivalents of $215.9 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of June 28, 2025, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific.

To meet our U.S. cash requirements, we have several cost-effective liquidity options available. These options include borrowing funds at reasonable rates, including borrowings from foreign subsidiaries, and repatriating foreign earnings and profits. However, if we were to repatriate foreign earnings and profits, a portion would be subject to cash payments of withholding taxes imposed by foreign tax authorities. Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits.

#### Capital from Debt

The carrying value of our total debt increased by approximately $398 million in the first six months of 2025 to $3.55 billion, primarily reflecting higher commercial paper borrowings and the revaluation of our euro-denominated debt, partially offset by the repayment of our €500 million of senior notes and our $25 million of medium-term notes at their maturity in the first and second quarters of 2025, respectively.

Credit ratings are a significant factor in our ability to raise short- and long-term financing. The credit ratings assigned to us also impact the interest rates we pay and our access to commercial paper, credit facilities and other borrowings. A downgrade of our short-term credit ratings could impact our ability to access commercial paper markets. If our access to commercial paper markets were to become limited, we believe that the Revolver and our other credit facilities would be available to meet our short-term funding requirements. When determining a credit rating, we believe that rating agencies primarily consider our competitive position, business outlook, consistency of cash flows, debt level and liquidity, geographic dispersion and management team. We remain committed to maintaining an investment grade rating.

### Off-Balance Sheet Arrangements, Contractual Obligations, and Other Matters

Refer to Note 10, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements for this information. Except as indicated therein, we have no material off-balance sheet arrangements as described in Item 303(b) of Regulation S-K.

## Market risk

As filed, 228 characters.

There have been no material changes to the information provided in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 that have not been disclosed in our periodic filings with the SEC.

## Controls and procedures

As filed, 2,313 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our disclosure controls system is based upon a global chain of financial and general business reporting lines that converge in our headquarters in Mentor, Ohio. As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of such time to provide reasonable assurance that information was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 5,090 characters.

There have been no material changes to the risk factors included in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 that have not been disclosed in our periodic filings with the SEC, except as set forth below.

**The demand for our products is impacted by the effects of, and changes in, worldwide economic, social, geopolitical and market conditions, and tariffs and related countermeasures, which could have a material adverse effect on our business.**

We have operations in more than 50 countries and our domestic and international operations are strongly influenced by matters beyond our control, including changes in geopolitical, social, economic and labor conditions, tax laws, and U.S. and international trade regulations (including tariffs), as well as the impact these changes have on demand for our products. In 2024, approximately 70% of our net sales were produced in international operations.

Macroeconomic developments such as impacts from slower growth in the geographic regions in which we operate; inflation, resulting from, among other things, increased raw material, energy, and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in the global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades.

Tensions remain in trade relations between the U.S. and other regions and countries, including Canada, Mexico, China and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all U.S. imports, with higher rates on certain goods. Additionally, it imposed significant tariffs on goods from Canada, Mexico, China and the European Union, each of which announced and/or imposed reciprocal tariffs. The amount of these tariffs or the classes of goods on which they are imposed could significantly increase. The U.S. government continues to negotiate with countries regarding the tariffs; to enable these negotiations, it paused certain of these tariffs until August 1, 2025. On July 27, 2025, the U.S. and the European Union agreed to a framework for a trade deal that included a baseline tariff rate of 15% on most goods imported from the European Union into the U.S. While the direct impacts on our operations after our mitigating actions have not been significant, our business could be materially adversely impacted by changes in U.S. and non-U.S. trade policies, including potential modifications to existing trade agreements and additional tariffs or other restrictions on free trade, impacting our raw materials or finished products. The indirect impact on demand for our products and solutions as a result of these events, which negatively impacted sales in overall apparel categories in the second quarter of 2025, is more uncertain and elevated as the outlook for global gross domestic product growth has reduced. Further developments in international trade relations could have a material adverse effect on our business.

In addition, business and operational disruptions or delays caused by geopolitical, social or economic instability and unrest – such as recent civil, political and economic disturbances in Argentina, Afghanistan, Syria, Iraq, Yemen, Iran, Turkey, North Korea, and Bangladesh and the related impact on global stability, the Russia-Ukraine war, the Israel-Hamas war, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could contribute to a climate of economic and geopolitical uncertainty that could have a material adverse effect on our business. Since the Russia-Ukraine war began in February 2022, we have maintained our position of not shipping products to the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European Union and other jurisdictions, is unknown and could have a material adverse effect on our business. In addition, since the beginning of the Israel-Hamas war in late 2023; our sales in Israel have declined, with sales representing less than 1% of our total net sales in 2024. We have experienced some disruptions in our operations in Israel and the Middle East and implemented plans to address these disruptions, as well as the impacts thereof in Gaza, Lebanon and other areas of the Middle East, while focusing on the continued safety of our Israeli employees and their families. The continued impact of this war and any related hostilities in the Middle East region or elsewhere is unknown and could have a material adverse effect on our business.

We are not able to predict the duration and severity of adverse economic, social, geopolitical or market conditions in the U.S. or other countries.

Filed Jul 29, 2025.
Source: SEC EDGAR, the filing index for accession 0000008818-25-000040. Last ingested by Listed: Oct 29, 2026, 06:47 ET. No prices; not investment advice.