Avery Dennison Corporation (NYSE:AVY) Q3 2019 Earnings Conference Call - Final Transcript

Oct 23, 2019 • 01:00 pm ET


Avery Dennison Corporation (NYSE:AVY) Q3 2019 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 Third Quarter ended September 28, 2019. [Operator Instructions] This call is being recorded, and will be available for replay from 12:00 p.m. Pacific Time today through midnight Pacific Time October 26. To access the replay, please dial 800-633-8284 or +1-402-977-9140 for international callers. The conference ID number is 21896770.

I would now like to turn the call over to Cindy Guenther, Avery Dennison's Vice President of Investor Relations and Finance. Please go ahead, madam.

Cindy Guenther

Thank you, Ash. Today we'll discuss our preliminary unaudited third quarter results.

Please note that throughout today's discussion, we will be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified and reconciled with GAAP on Pages A-4 to A-8 attached to the financial statements accompanying today's earnings release and the appendix of our supplemental presentation materials.

We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the safe harbor statement included in today's earnings release.

On the call today are Mitch Butier, Chairman, President and Chief Executive Officer; and Greg Lovins, Senior Vice President and Chief Financial Officer.

I'll now turn the call over to Mitch.

Mitch Butier

Thanks, Cindy, and good day, everyone. We delivered solid profit growth in the third quarter, despite softer-than-usual market demand with EPS once again up double digits over prior year on a constant currency basis. Our focuses in this slower growth environment has been to protect, even expand our margins in the base business while driving faster-than-average growth in high value categories like RFID. We're executing well on both fronts.

We appear to have recaptured most of the shares we recently lost in LGM. Our intelligent labels platform continues to drive over 20% growth from RFID-enabled solutions, and IHM's commercial execution continues to improve. At the same time, our relentless focus on productivity was again the key driver of margin expansion for the company this quarter. In sum, we are making good progress against our key strategic priorities and are on track to deliver our long-term financial targets.

Label and Graphic Materials posted strong profitability on roughly a point of organic growth for the quarter, driven primarily by volume. High value categories again grew faster than base. As I mentioned, so all of the market data isn't in yet for the third quarter, we have good reason to believe that by the end of the quarter we had recaptured the bulk of the share we seeded at the tail end of the inflationary cycle.

In terms of global market trends, it appears that the soft market conditions that we saw in the first half of the year, largely continued into the third quarter with a modest improvement in Europe, offset by a moderation of demand in South Asia.

Retail Branding and Information Solutions delivered solid organic growth driven by