Avery Dennison Corporation (NYSE:AVY) Q3 2020 Earnings Conference Call - Final Transcript

Oct 21, 2020 • 01:00 pm ET

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Avery Dennison Corporation (NYSE:AVY) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to Avery Dennison's Earnings Conference Call for the Third Quarter ended September 26, 2020. During the presentation, all participants will be in a listen-only mode. This call is being recorded and will be available for replay from noon Pacific Time today, through midnight Pacific Time, October 24. To access the replay, please dial 800-6 33-8284 or 1-402-977-9140 for international callers. The conference ID number is 21930680.

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

Executive
Cynthia S. Guenther

Thank you, Frank. Please note that throughout today's discussion, 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 A4 to A9 of the financial statements accompanying today's earnings release. 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. We undertake no obligation to update these statements to reflect subsequent events or circumstances, other than as may be required by law.

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.

Executive
Mitchell R. Butier

Thanks Cindy and hello everyone. Once again, we are proving our resilience across business cycles. Revenue came in significantly better than we anticipated at the start of the quarter, which, combined with our cost reduction actions, enabled us to deliver 15% growth in adjusted earnings per share, and strong free cash flow in the quarter, despite lower sales. We said coming into this year, that a key focus of ours in a lower growth environment, was to protect our overall profitability. We're delivering on that promise.

Margins expanded significantly in the third quarter, reflecting the successful execution of our long-term strategies, as well as the team's fast response in implementing temporary cost saving actions, in a better than expected volume environment.

Even with the sharp drop in volume in the second quarter, our year-to-date adjusted EBITDA margin is up 80 basis points to 14.9%. Our strong performance reflects the agility of our teams, which have come together extraordinarily well in navigating one of the most challenging periods we've experienced as a company. In this environment, our focus continues to be on ensuring the health and well-being of our employees, delivering for our customers, supporting our communities, and minimizing the impact of the recession for our shareholders, and I'm pleased with the progress we are making on all fronts.

Now, despite our best efforts to protect employee health, we have identified roughly 350 confirmed cases of the virus, within our 30,000 plus workforce, with the majority of cases apparently reflecting community spread, rather than a work based source of infection. Fortunately, about three quarters of the employees impacted have already recovered. While all sides were operational throughout