Avery Dennison Corporation (NYSE:AVY) Q4 2017 Earnings Conference Call - Final Transcript

Jan 31, 2018 • 12:00 pm ET


Avery Dennison Corporation (NYSE:AVY) Q4 2017 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to Avery Dennison's Earnings Conference Call for the Fourth Quarter and Full Year ended December 30, 2017. (Operator Instructions)

This call is being recorded and will be available for replay from 11:00 a.m. Pacific time today through midnight Pacific time February 3. To access the replay, please dial 800-633-8284 or 1-402-977-9140 for international callers. The conference ID number is 21857410.

I would now like to turn the conference over to Cynthia Guenther, Avery Dennison's VP of IR and Finance. Please go ahead, Madam.

Cynthia Guenther

Thank you, Dmitra. Today, we'll discuss our preliminary unaudited fourth quarter and full year results. Please note that throughout today's discussions, we'll be making references to non-GAAP financial measures. The non-GAAP 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 and in the appendix of our supplemental presentation material.

(Forward-Looking Cautionary Statements)

On the call today are Mitch Butier, President and CEO; and Greg Lovins, SVP and CFO.

I'll now turn the call over to Mitch.

Mitchell Butier

I'm pleased to report another year of excellent progress towards our long-term strategic and financial goals. Sales grew 8% on a constant-currency basis. Adjusted operating margin expanded by 50 basis points, and adjusted EPS grew 24%. Our Label and Graphic Materials business continues to reach new heights. Retail Branding and Information Solutions posted both strong top line growth and significant margin expansion, and we made progress in expanding the platform for Industrial and Healthcare Materials.

This past year marked the company's sixth consecutive year of strong top line growth, margin expansion and double-digit adjusted EPS growth. This consistent performance reflects the resilience of our industry-leading market position, the strategic foundations we've laid and our agile and talented workforce. Our strategic playbook continues to work for us as we focus on 4 overarching priorities: driving outside growth in high-value product categories, growing profitably in our base businesses, relentlessly pursuing productivity improvement and remaining disciplined in our approach to capital management.

Our strong top line growth in 2017 reflected a balance of contributions from acquisitions and organic growth, driven by our large presence in emerging markets as well as in our faster-growing high-value categories such as specialty labels, industrial tapes and, of course, RFID. Emerging-market and high-value categories are the 2 key catalysts for growth across our entire portfolio. Roughly half of our total sales are now linked to one or both of these catalysts, and we continue to target above-average growth from them over the longer term.

In addition to the successful execution of our strategy to expand in high-value categories, we also delivered solid growth in our base businesses by carefully balancing the dynamics of price, volume and mix, by reducing complexity and by tailoring our go-to market strategies. Now equally important to top line results, we also maintained our strong focus on continuous productivity improvement. Product reengineering, lean operating principles and the effective execution of our multi-year