Avery Dennison Corporation (NYSE:AVY) Q2 2017 Earnings Conference Call - Final Transcript

Jul 25, 2017 • 12:00 pm ET

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Avery Dennison Corporation (NYSE:AVY) Q2 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Welcome to Avery Dennison Earnings Conference Call for the Second Quarter ended July 1, 2017.

This call is being recorded and will be available for replay from 11 AM Pacific Time today through midnight Pacific Time, July 28. To access the replay, please dial 800-633-8284 or 402-977-9140 for international callers. The conference ID number is 21820266.

(Operator Instructions)

I'd now like to turn the call over to Garrett Gabel, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, sir.

Executive
Garrett Gabel

Thank you, Pemma. Today, we will discuss our preliminary unaudited second quarter results. The non-GAAP financial measures that we use are defined, qualified and reconciled with GAAP on schedules A-4 to A-8 of the financial statements accompanying today's earnings release.

(Forward-Looking Cautionary Statements)

On the call today are Mitch Butier, President and Chief Executive Officer; and Greg Lovins, Senior Vice President and Chief Financial Officer. Also joining us today is Cindy Guenther, how has recently picked up responsibility for the treasury function for the company and will also be resuming her former role as IRO, while I take on the Divisional CFO role for the Label and Graphic Materials segment.

I'll now turn the call over to Mitch.

Executive
Mitch Butier

Good day, everyone. And Garrett, congratulations on your new role as Head of Finance for LGM, you've done a great job leading Investor Relations and FP&A over the last few quarters. And Cindy, welcome back. Greg and I and the rest of the investment community -- we're looking forward to partnering with you again.

Executive
Cyndy Guenther

Thanks a lot. It's good to be back.

Executive
Garrett Gabel

Thank you, Mitch. Thanks.

Executive
Mitch Butier

Now focusing on our results. Q2 was another strong quarter, with excellent progress on many strategic fronts in each of our operating segments. Adjusted EPS was up 20% for the quarter, and we raised our earnings guidance to also reflect a 20% increase for the year, reflecting both strong operating performance and a sustainably lower tax rate.

Our continued strong performance speaks to the strength of our market positions and the strategic foundations we have laid. LGM, our largest business, continues to exhibit strong profitability and solid sales growth. The transformation in RBS is clearly resonating with customers and delivering solid sales growth while we accelerate the pace of margin expansion, as promised. And we are building a stronger position in IHM, which offers great promise for long-term value creation as we leverage LGM's strength to target attractive end markets where we are underpenetrated.

As you know, M&A is becoming a more important part of our story as we use it to accelerate our strategy to expand in high-value segments. To that end, we completed two acquisitions in the quarter: Yongle, an industrial tapes business in China that serves global markets; and Finesse, a small supplier of advanced wound care products in Ireland.

These acquisitions are consistent with our stated strategy: expanding our position in high-growth segments that offer above-average profitability and leverage our core capabilities.

Now let me give you the headlines for the