Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its fourth quarter and full year ended December 28, 2013. All non-GAAP financial measures referenced in this document are reconciled to GAAP in the attached tables. 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. Results reflect classification of Office and Consumer Products (OCP) and Designed and Engineered Solutions (DES) businesses as discontinued operations.
"I'm happy to report another year of excellent progress toward our long-term goals," said Dean Scarborough, Avery Dennison chairman, president and CEO. "We delivered a solid finish to a strong year, with higher-than-expected top-line growth, a significant increase in earnings, and solid free cash flow.
"Both of our core businesses beat their sales targets through innovation and share gain," Scarborough added. "At the same time, they delivered outstanding margin expansion, further strengthening their competitive positions. I thank all the members of our global team for their contributions to these results.
"We will continue to deliver on our long-term financial commitments through top-line growth, margin expansion, and disciplined capital management, while returning significant cash to shareholders through dividends and share repurchase," Scarborough said.
Fourth Quarter 2013 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, product line exits, acquisitions and divestitures. Adjusted operating margin refers to earnings before interest expense and taxes, excluding restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
PSM segment sales increased approximately 8 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low double digits.Operating margin improved 180 basis points to 9.5 percent as the benefit of higher volume, lower restructuring costs, and productivity initiatives more than offset the impact of changes in product mix. Adjusted operating margin improved 100 basis points.
Retail Branding and Information Solutions (RBIS)
RBIS segment sales increased approximately 3 percent driven by increased demand from European retailers and brands.Operating margin increased 460 basis points to 7.4 percent as the benefit of productivity initiatives and higher volume, as well as the impact of a prior year impairment and a gain on sale of assets, more than offset higher employee-related expenses. Adjusted operating margin improved 140 basis points.
Other: Share Repurchases
The company repurchased 6.6 million shares in 2013 at an aggregate cost of $283 million.
On July 1, 2013, the company completed the sale of its OCP and DES businesses. Net loss per share from discontinued operations was $(0.02) in the quarter.
The full-year tax rate was 33 percent, in line with expectations.
Cost Reduction Actions
In 2013, the company realized approximately $75 million in savings from the program initiated in the first half of 2012. The company incurred restructuring costs, net of gain on sale of assets, of approximately $23 million in 2013.
In its supplemental presentation materials, "Fourth Quarter and Full Year 2013 Financial Review and Analysis," the company provides a list of factors that it believes will contribute to its 2014 financial results. Based on the factors listed and other assumptions, the company expects 2014 earnings per share from continuing operations of $2.60 to $2.90. Excluding an estimated $0.30 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $2.90 to $3.20.
Note: Throughout this release and the supplemental presentation materials, amounts on a per share basis reflect fully diluted shares outstanding.