second quarter 2026
Filed Jul 30, 2026Avery Dennison announces second quarter 2026 results, with net sales up 10.9%, adjusted EPS up 19.4%, and full-year adjusted EPS guidance of $10.00 to $10.30.
Reported sales, adjusted earnings, adjusted operating income, adjusted EBITDA, and net income increased year over year. Materials Group delivered double-digit reported and organic sales growth, while Solutions Group returned to ex-currency and organic growth despite a reported sales decline. Margin expansion, shareholder returns, and reaffirmed full-year EPS ranges support the strong result.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total net salesGAAP | $2,462.9 million | – | 10.9% |
| Sales change ex. currencynon-GAAP | 8.9% | – | 8.9% |
| Organic sales changenon-GAAP | 7.6% | – | 7.6% |
| Reported EPSGAAP | $2.67 | – | – |
| Adjusted EPSnon-GAAP | $2.89 | – | 19.4% |
| Adjusted operating incomenon-GAAP | $334.6 million | – | 16.7% |
| Adjusted operating marginnon-GAAP | 13.6% | – | – |
| Adjusted EBITDAnon-GAAP | $421.0 million | – | 14.6% |
| Adjusted EBITDA marginnon-GAAP | 17.1% | – | – |
| Net incomeGAAP | $204.1 million | – | 8.0% |
| Net income marginGAAP | 8.3% | – | – |
| Adjusted net incomenon-GAAP | $220.5 million | – | 16.4% |
| Adjusted net income marginnon-GAAP | 9.0% | – | – |
| Reported effective tax rateGAAP | 27.8% | – | – |
| Adjusted tax ratenon-GAAP | 27.4% | – | – |
| Reported effective tax rate for the six months ended June 30, 2026GAAP | 28.8% | – | – |
| Adjusted tax rate for the six months ended June 30, 2026non-GAAP | 26.8% | – | – |
| Pre-tax savings from restructuring actions in the first half of 2026other | approximately $34 million | – | – |
| Pre-tax restructuring charges in the first half of 2026GAAP | approximately $34 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Materials GroupSales were up 11.5% ex. currency and up 9.7% on an organic basis. Volume/mix growth was high single digits and price was up low single digits; high-value categories were up mid-single digits and base categories were up low double digits. | $1,796.1 million | – | 15.9% |
| Solutions GroupSales were up 2.6% ex. currency and up 2.6% on an organic basis. High-value categories and base categories were each up low single digits, while overall apparel categories were up high single digits. | $666.8 million | – | (0.5)% |
full year 2026 outlook
- NoteReported EPS of $9.40 to $9.70
- NoteAdjusted EPS of $10.00 to $10.30
- NoteExcluding an estimated $0.60 per share impact of other items and restructuring charges
Capital returns
- During the first half of 2026, the company returned $347 million in cash to shareholders through a combination of share repurchases and dividends.
- The company repurchased 1.2 million shares, with payments for share purchases totaling $198 million.
- Net of dilution from long-term incentive awards, the company’s share count at the end of the second quarter was down 2.1 million compared to the same time last year.
What drove it
- Total reported net sales increased 10.9%, with 8.9% sales growth ex. currency and 7.6% organic sales growth.
- Materials Group organic sales increased 9.7%, supported by high-single-digit volume/mix growth, low-single-digit price growth, and growth in both high-value and base categories.
- Materials Group adjusted EBITDA margin was 18.0%, up 20 basis points, as volume, productivity, and the net benefit of pricing and raw material costs, including raw material re-engineering, were partially offset by mix and higher employee-related costs.
- Solutions Group adjusted EBITDA margin was 18.6%, up 150 basis points, as productivity was partially offset by higher employee-related costs.
- Adjusted operating income increased 16.7% and adjusted net income increased 16.4%.
Concerns
- Solutions Group reported sales decreased 0.5%, despite 2.6% growth ex. currency and on an organic basis.
- Materials Group margin benefits were partially offset by mix and higher employee-related costs.
- Solutions Group productivity benefits were partially offset by higher employee-related costs.
- The company identified global economic conditions, tariffs, geopolitical uncertainty, foreign currency fluctuations, raw-material cost and availability, and acquisition execution and integration as potential risks.
What to watch
- Whether Materials Group sustains high-single-digit volume/mix growth and the stated growth in high-value and base categories.
- Whether Solutions Group converts ex-currency and organic growth into reported sales growth.
- The sustainability of productivity, pricing, raw-material re-engineering, and margin expansion.
- Progress toward full-year 2026 reported EPS guidance of $9.40 to $9.70 and adjusted EPS guidance of $10.00 to $10.30.
- The pace of shareholder returns, including share repurchases and dividends, and net debt to adjusted EBITDA.
Balance sheet and cash flow
- Net debt to adjusted EBITDA (non-GAAP) was 2.3x at the end of the second quarter.
- The release described second-quarter cash flow growth but did not provide an operating cash flow or free cash flow amount.
Analysis
Avery Dennison reported a strong second quarter, with total net sales of $2,462.9 million, up 10.9%, including 8.9% growth ex. currency and 7.6% organic growth. Adjusted EPS was $2.89, up 19.4%, while GAAP net income increased to $204.1 million and adjusted net income increased to $220.5 million. The results point to broad underlying sales growth rather than a result driven solely by currency.
Materials Group was the principal growth contributor. Sales rose 15.9% to $1,796.1 million, including 9.7% organic growth, with high-single-digit volume/mix growth and low-single-digit price growth. Both high-value and base categories grew, while the segment's adjusted operating margin reached 15.8% and adjusted EBITDA margin reached 18.0%. The company attributed margin expansion to volume, productivity, and the net benefit of pricing and raw-material costs, including raw-material re-engineering, partly offset by mix and higher employee-related costs.
Solutions Group had a more mixed top-line result. Reported sales declined 0.5% to $666.8 million, but sales increased 2.6% both ex. currency and organically. Growth in high-value categories, base categories, and overall apparel categories accompanied significant margin improvement: adjusted operating margin was 11.5%, up 150 basis points, and adjusted EBITDA margin was 18.6%, also up 150 basis points. Productivity supported that expansion, although higher employee-related costs remained an offset.
Profitability increased faster than sales on an adjusted basis. Adjusted operating income increased 16.7% to $334.6 million, with adjusted operating margin of 13.6% versus 12.9%. Adjusted EBITDA increased 14.6% to $421.0 million, and adjusted net income increased 16.4% to $220.5 million. GAAP net income margin was 8.3% compared with 8.5%, while adjusted net income margin was 9.0% compared with 8.5%, making the difference between reported and adjusted profitability important to monitor.
Capital allocation remained active during the first half of 2026. Avery Dennison returned $347 million in cash to shareholders, repurchased 1.2 million shares for $198 million, and reported that its share count was down 2.1 million year over year net of long-term incentive dilution. Net debt to adjusted EBITDA was 2.3x at quarter-end. The company maintained full-year 2026 reported EPS guidance of $9.40 to $9.70 and adjusted EPS guidance of $10.00 to $10.30, excluding an estimated $0.60 per share impact of other items and restructuring charges.
Management, verbatim
We delivered very strong second quarter results, marked by stronger-than-anticipated sales growth, solid margin expansion and adjusted EPS of $2.89, reflecting the strength of our portfolio and our team’s execution excellence.
Deon Stander, president and CEO
Our focus on innovation and service-led differentiation continues to deliver for our customers, driving strong organic sales growth across both our high-value categories and base businesses.
Deon Stander, president and CEO
Not in the filing
stated, not guessed- GAAP gross profit and gross margin
- Non-GAAP gross profit and gross margin
- GAAP operating income and operating margin
- GAAP diluted EPS prior-year figure and year-over-year change
- Adjusted EPS prior-year figure
- Operating cash flow amount
- Free cash flow amount
- Cash and cash equivalents balance
- Total debt balance
- Net debt amount
- Quarterly dividend amount
- Revenue, gross-margin, operating-expense, and tax-rate guidance
- Prior-quarter comparisons for reported metrics
- Prior guidance for comparison
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.