Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related notes thereto.

NON-GAAP FINANCIAL MEASURES

We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparisons with the results of competitors for quarters and year-to-date periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are also useful to their assessments of our performance and operating trends, as well as liquidity. Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K.

Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing.

We use the non-GAAP financial measures defined below in this MD&A.

• Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, the currency adjustments for transitional reporting of highly inflationary economies and the reclassification of sales between segments. Additionally, where applicable, sales change ex. currency is also adjusted for an extra week in our fiscal year and the calendar shift resulting from an extra week in the prior fiscal year. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations. Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025; fiscal years 2026 and beyond will be coincident with the calendar year beginning on January 1 and ending on December 31.

• Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures.

We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales change from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period.

• Adjusted free cash flow refers to cash flow provided by operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments, less net cash used for Argentine Blue Chip Swap securities. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases and acquisitions.

• Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities divided by annualized current quarter net sales. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations.

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OVERVIEW AND OUTLOOK

Fiscal Year

In January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year. Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025 and fiscal years 2026 and beyond will begin on January 1 and end on December 31.

Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

			Three Months Ended June 28, 2025						Six Months Ended June 28, 2025
Reported net sales change			(1)		%				—		%
Foreign currency translation			—						1
Sales change ex. currency(1)			(1)						1
Organic sales change(1)			(1)		%				1		%

(1)Totals may not sum due to rounding.

In the three months ended June 28, 2025, net sales decreased on an organic basis compared to the same period in the prior year primarily due to the impact of raw material deflation-related price reductions, partially offset by higher volume/mix. In the six months ended June 28, 2025, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume/mix, partially offset by the impact of raw material deflation-related price reductions.

Net Income

Net income increased from approximately $349 million in the first six months of 2024 to approximately $355 million in the first six months of 2025. The primary factors affecting this increase were:

• Benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs

• Higher volume/mix

These items were partially offset by the net impact of raw material deflation-related price reductions.

Cost Reduction Actions

2025 Actions

We recorded $12.9 million in restructuring charges, net of reversals, during the six months ended June 28, 2025. These charges consisted of severance and related costs for the reduction of approximately 460 positions, as well as asset impairment charges, at various locations across our company. Our 2025 actions are primarily intended to optimize our operational footprint.

Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information.

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Cash Flow

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net cash provided by operating activities			$	192.5					$	317.5
Purchases of property, plant and equipment			(66.0)						(96.3)
Purchases of software and other deferred charges			(15.2)						(12.9)
Purchases of Argentine Blue Chip Swap securities			—						(34.2)
Proceeds from sales of Argentine Blue Chip Swap securities			—						24.0
Proceeds from sales of property, plant and equipment			15.7						.3
Proceeds from insurance and sales (purchases) of investments, net			8.8						2.2
Adjusted free cash flow			$	135.8					$	200.6

During the first six months of 2025, net cash provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments, changes in operational working capital, higher trade rebate payments, and tax payments, net of refunds, partially offset by the prior-year settlement payment for the Adasa legal matter. During the first six months of 2025, adjusted free cash flow decreased compared to the same period last year primarily due to a decrease in net cash provided by operating activities, partially offset by lower purchases of property, plant and equipment and higher proceeds from the sales of property, plant and equipment.

Outlook

Beginning in the first quarter of 2025, the U.S. announced tariffs on goods imported into the U.S. from numerous countries, many of which responded with reciprocal tariffs and other actions on goods imported from the U.S. The U.S. government continues to negotiate with other countries regarding the tariffs; to enable these negotiations, it paused certain of these tariffs until August 1, 2025. As it relates to the direct impact of these tariffs, a relatively small portion of our global materials purchases is impacted and the vast majority of our imports and exports between the U.S., Canada and Mexico are compliant with the United States-Mexico-Canada Agreement (“USMCA”). Based on current information, we estimate that the overall direct impact will likely increase our total raw material costs by a low single digit rate. To mitigate the direct impact to our operations, we have implemented strategic sourcing adjustments and pricing surcharges. The indirect impact on demand for our products and solutions is more uncertain. While a majority of our products and solutions relates to less discretionary consumer staples, we also serve more discretionary and cyclical markets, such as industrials, durables and apparel. In the second quarter of 2025, we estimated that the indirect impact on apparel end markets resulted in a mid-single digit rate decrease in our sales in overall apparel categories.

Certain factors that we believe may contribute to or impact our 2025 results are described below.

• We anticipate elevated uncertainty related to trade policy and the macroeconomic environment.

• In the third quarter of 2025, we anticipate a sequential decrease in operating income due to volume seasonality.

• For the full year:

◦We expect a favorable impact to our net sales and operating income from foreign currency translation, based on recent rates.

◦We anticipate incremental savings from restructuring actions, net of transition costs.

◦We expect our effective tax rate to be in the mid-twenty percent range.

ANALYSIS OF RESULTS OF OPERATIONS FOR THE SECOND QUARTER

Income Before Taxes

			Three Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales			$	2,220.5					$	2,235.3
Cost of products sold			1,581.4						1,572.6
Gross profit			639.1						662.7
Marketing, general and administrative expense			352.4						373.9
Other expense (income), net			.5						27.0
Interest expense			34.0						29.2
Other non-operating expense (income), net			(3.3)						(5.8)
Income before taxes			$	255.5					$	238.4

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Gross Profit

Gross profit for the second quarter of 2025 decreased from the same period last year due to the net impact of raw material deflation-related price reductions and higher employee-related costs, partially offset by higher volume/mix and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs.

Marketing, General and Administrative Expense

Marketing, general and administrative expense decreased in the second quarter of 2025 compared to the same period last year primarily due to lower employee-related costs and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

Other Expense (Income), Net

			Three Months Ended
(In millions)			June 28, 2025						June 29, 2024
Other expense (income), net, by type
Restructuring charges, net of reversals:
Severance and related costs, net of reversals			$	7.9					$	6.3
Asset impairment and lease cancellation charges			.1						.9
Other items:
(Gain) loss on venture and other investments			1.8						15.0
Losses from Argentine peso remeasurement and Blue Chip Swap transactions			1.8						4.1
(Gain) loss on sales of assets			(11.1)						—
Outcomes of legal matters and settlements, net			—						.4
Transaction and related costs			—						.3
Other expense (income), net			$	.5					$	27.0

Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges.

Interest Expense

Interest expense increased in the second quarter of 2025 compared to the same period last year primarily due to higher interest related to the €500 million of senior notes we issued in November 2024 and an increase in commercial paper borrowings.

Net Income and Earnings per Share

			Three Months Ended
(In millions, except per share amounts and percentages)			June 28, 2025						June 29, 2024
Income before taxes			$	255.5					$	238.4
Provision for income taxes			66.5						61.6
Net income			$	189.0					$	176.8
Per share amounts:
Net income per common share			$	2.42					$	2.19
Net income per common share, assuming dilution			2.41						2.18
Effective tax rate			26.0		%				25.8		%

Provision for Income Taxes

Our effective tax rate for the three months ended June 28, 2025 was comparable to the same period last year. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

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RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SECOND QUARTER

During the fourth quarter of 2024, we modified our segment performance measure to exclude other expense (income), net. These changes align with how our chief operating decision maker evaluates segment performance and allocates resources. Prior-year periods have been conformed to the current period presentation. Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense; other non-operating expense (income), net; and other items.

Refer to Note 11, “Segment and Disaggregated Revenue Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Materials Group

			Three Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales including intersegment sales			$	1,596.2					$	1,585.1
Less intersegment sales			(46.0)						(38.3)
Net sales			$	1,550.2					$	1,546.8
Segment adjusted operating income(1)			242.5						244.5

(1)Segment adjusted operating income excluded other expense (income), net, and other items of $(7.0) million and $21.1 million in the second quarter of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, losses from Argentine peso remeasurement and Blue Chip Swap transactions, (gain) loss on venture and other investments, (gain) loss of sales of assets and outcomes of legal matters and settlements, net.

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

			Three Months Ended
			June 28, 2025
Reported net sales change			—		%
Reclassification of sales between segments			(1)
Foreign currency translation			(1)
Sales change ex. currency(1)			(1)
Organic sales change(1)			(1)		%

(1)Totals may not sum due to rounding.

In the second quarter of 2025, net sales decreased on an organic basis compared to the same period in the prior year mainly due to the impact of raw material deflation-related price reductions, partially offset by favorable volume/mix. On an organic basis, net sales increased by a low single digit rate in North America, decreased by a mid-single digit rate in Europe, the Middle East and North Africa, were comparable in Asia Pacific and increased by a mid-single digit rate in Latin America.

Segment Adjusted Operating Income

Segment adjusted operating income decreased in the second quarter of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material input costs, partially offset by productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and favorable volume/mix.

Solutions Group

			Three Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales including intersegment sales			$	682.8					$	703.9
Less intersegment sales			(12.5)						(15.4)
Net sales			$	670.3					$	688.5
Segment adjusted operating income(1)			67.0						69.8

(1)Segment adjusted operating income excluded other expense (income), net, and other items of $7.2 million and $5.7 million in the second quarter of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments and transaction and related costs.

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Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

			Three Months Ended
			June 28, 2025
Reported net sales change			(3)		%
Reclassification of sales between segments			2
Foreign currency translation			—
Sales change ex. currency(1)			(1)
Organic sales change(1)			(1)		%

(1)Totals may not sum due to rounding.

In the second quarter of 2025, net sales decreased on an organic basis compared to the same period in the prior year due to a low single digit rate increase in high-value categories, which was more than offset by a decrease of a mid-single digit rate in the base business. Company-wide, on an organic basis, net sales of intelligent labels were comparable to the same period in the prior year.

Segment Adjusted Operating Income

Segment adjusted operating income decreased in the second quarter of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material costs and growth investments, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

ANALYSIS OF RESULTS OF OPERATIONS FOR THE SIX MONTHS YEAR-TO-DATE

Income Before Taxes

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales			$	4,368.8					$	4,386.6
Cost of products sold			3,108.2						3,091.7
Gross profit			1,260.6						1,294.9
Marketing, general and administrative expense			699.4						739.1
Other expense (income), net			20.4						39.6
Interest expense			64.9						57.8
Other non-operating expense (income), net			(6.6)						(14.4)
Income before taxes			$	482.5					$	472.8

Gross Profit

Gross profit for the first six months of 2025 decreased from the same period last year primarily due to the net impact of pricing and raw material input costs, higher employee-related costs and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume/mix.

Marketing, General and Administrative Expense

Marketing, general and administrative expense decreased in the first six months of 2025 compared to the same period last year primarily due to lower employee-related costs and benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs, partially offset by growth investments.

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Other Expense (Income), Net

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Other expense (income), net, by type
Restructuring charges, net of reversals:
Severance and related costs, net of reversals			$	12.6					$	11.2
Asset impairment and lease cancellation charges			.3						2.0
Other items:
(Gain) loss on venture and other investments			16.1						17.2
Losses from Argentine peso remeasurement and Blue Chip Swap transactions			2.5						15.4
(Gain) loss on sales of assets			(11.1)						—
Outcomes of legal matters and settlements, net			—						(6.5)
Transaction and related costs			—						.3
Other expense (income), net			$	20.4					$	39.6

Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges.

Interest Expense

Interest expense increased for the six months of 2025 compared to the same period last year primarily due to higher interest related to the €500 million of senior notes we issued in November 2024 and an increase in commercial paper borrowings.

Net Income and Earnings per Share

			Six Months Ended
(In millions, except per share amounts and percentages)			June 28, 2025						June 29, 2024
Income before taxes			$	482.5					$	472.8
Provision for income taxes			127.2						123.6
Net income			$	355.3					$	349.2
Per share amounts:
Net income per common share			$	4.51					$	4.34
Net income per common share, assuming dilution			4.50						4.31
Effective tax rate			26.4		%				26.1		%

Provision for Income Taxes

Our effective tax rate for the six months ended June 28, 2025 was comparable to the same period last year. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SIX MONTHS YEAR-TO-DATE

Materials Group

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales including intersegment sales			$	3,120.2					$	3,128.6
Less intersegment sales			(89.9)						(85.3)
Net sales			$	3,030.3					$	3,043.3
Segment adjusted operating income(1)			472.8						485.0

(1)Segment adjusted operating income excluded other expense (income), net, and other items of $(2.6) million and $35.5 million in the first six months of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, losses from Argentine peso remeasurement and Blue Chip Swap transactions, (gain) loss on venture and other investments, (gain) loss of sales of assets and outcomes of legal matters and settlements, net.

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Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

			Six Months Ended
			June 28, 2025
Reported net sales change			—		%
Reclassification of sales between segments			(1)
Foreign currency translation			1
Sales change ex. currency(1)			—
Organic sales change(1)			—		%

(1) Totals may not sum due to rounding

In the first six months of 2025, net sales were comparable on an organic basis compared to the same period in the prior year mainly due to higher volume/mix offsetting the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by a low single digit rate in North America, decreased by a low single digit rate in Europe, the Middle East and North Africa, were comparable in Asia Pacific and increased by a mid-single digit rate in Latin America.

Segment Adjusted Operating Income

Segment adjusted operating income decreased in the first six months of 2025 compared to the same period last year primarily due to the net impact of pricing and raw material input costs and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume/mix.

Solutions Group

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net sales including intersegment sales			$	1,364.2					$	1,369.6
Less intersegment sales			(25.7)						(26.3)
Net sales			$	1,338.5					$	1,343.3
Segment adjusted operating income(1)			135.2						130.7

(1)Segment adjusted operating income excluded other expense (income), net, and other items of $17.3 million and $3.8 million in the first six months of 2025 and 2024, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments, transaction and related costs and outcomes of legal matters and settlements, net.

Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

			Six Months Ended
			June 28, 2025
Reported net sales change			—		%
Reclassification of sales between segments			2
Foreign currency translation			1
Sales change ex. currency(1)			2
Organic sales change(1)			2		%

(1)Totals may not sum due to rounding

In the first six months of 2025, net sales increased on an organic basis compared to the same period in the prior year due to low single digit rate increases in high-value categories and the base business. Company-wide, on an organic basis, net sales of intelligent labels increased by a low single digit rate compared to the same period in the prior year.

Segment Adjusted Operating Income

Segment adjusted operating income increased in the first six months of 2025 compared to the same period last year primarily due to benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and higher volume, partially offset by the net impact of pricing and raw material costs and growth investments.

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FINANCIAL CONDITION

Liquidity

Operating Activities

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net income			$	355.3					$	349.2
Depreciation			100.3						98.7
Amortization			58.4						57.2
Provision for credit losses and sales returns			25.3						28.2
Stock-based compensation			14.7						17.4
Deferred taxes and other non-cash taxes			(12.0)						(3.8)
Other non-cash expense and loss (income and gain), net			20.8						46.6
Changes in assets and liabilities and other adjustments			(370.3)						(276.0)
Net cash provided by operating activities			$	192.5					$	317.5

During the first six months of 2025, net cash provided by operating activities decreased compared to the same period last year primarily due to higher incentive compensation payments, changes in operational working capital, higher trade rebate payments, and tax payments, net of refunds, partially offset by the prior-year settlement payment for the Adasa legal matter.

Investing Activities

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Purchases of property, plant and equipment			$	(66.0)					$	(96.3)
Purchases of software and other deferred charges			(15.2)						(12.9)
Purchases of Argentine Blue Chip Swap securities			—						(34.2)
Proceeds from sales of Argentine Blue Chip Swap securities			—						24.0
Proceeds from sales of property, plant and equipment			15.7						.3
Proceeds from insurance and sales (purchases) of investments, net			8.8						2.2
Proceeds from settlement of net investment hedges			6.2						—
Payments for acquisitions, net of cash acquired, and venture investments			(10.7)						(1.9)
Net cash used in investing activities			$	(61.2)					$	(118.8)

Purchases of Property, Plant and Equipment

During the first six months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe and certain countries in Asia Pacific, primarily China; in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, and in the U.S. During the first six months of 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment in certain countries in Asia Pacific, including China and Vietnam, in the U.S. and in certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S. and certain countries in Europe, primarily France.

Purchases of Software and Other Deferred Charges

During the first six months of 2025 and 2024, we primarily invested in information technology upgrades in the U.S.

Purchases and Proceeds from Sales of Argentine Blue Chip Swap Securities

During the first six months of 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $10 million. Refer to Note 12, “Supplemental Financial Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Proceeds from Sales of Property, Plant and Equipment

During the first six months of 2025, we received proceeds from the sale of property in China.

Proceeds from Insurance and Sales (Purchases) of Investments, Net

During the first six months of 2025, we received higher proceeds from sales from investments and insurance policies.

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Proceeds from Settlement of Net Investment Hedges

During the first six months of 2025, we settled €420 million notional amount of net investment hedges.

Payments for Acquisitions, Net of Cash Acquired, and Venture Investments

During the first six months of 2025 and 2024, we made several venture investments.

Financing Activities

			Six Months Ended
(In millions)			June 28, 2025						June 29, 2024
Net increase (decrease) in borrowings with maturities of three months or less			$	816.2					$	(2.2)
Repayments of long-term debt and finance leases			(551.6)						(3.5)
Dividends paid			(142.9)						(136.2)
Share repurchases			(360.0)						(40.7)
Net (tax withholding) proceeds related to stock-based compensation			(12.6)						(18.4)
Payments for settlement of fair value hedges			(13.5)						—
Other			15.9						(1.1)
Net cash used in financing activities			$	(248.5)					$	(202.1)

Borrowings and Repayment of Debt

During the first six months of 2025 and 2024, our commercial paper borrowings were used to fund the repayment of long-term debt, dividend payments, share repurchases, capital expenditures and other general corporate purposes.

In the first quarter of 2025, we repaid our €500 million of senior notes at maturity using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings.

In the second quarter of 2025, we repaid our $25 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

Refer to Note 3, “Debt,” to the unaudited Condensed Consolidated Financial Statements for more information.

Dividends Paid

We paid dividends of $1.82 per share in the first six months of 2025 compared to $1.69 per share in the same period last year. In April 2025, we increased our quarterly dividend rate to $0.94 per share, representing an increase of approximately 7% from our previous quarterly dividend rate of $0.88 per share.

Share Repurchases

During the first six months of 2025 and 2024, we repurchased approximately 2.0 million and 0.2 million shares of our common stock, respectively.

In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to the amount outstanding under our previous Board authorization. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

Net (Tax Withholding) Proceeds Related to Stock-based Compensation

Tax withholding for stock-based compensation was lower in the first six months of 2025 compared to 2024 primarily due to a lower number of shares vesting for certain performance-based awards based on our performance against the objectives established for the awards.

Payments for Settlement of Fair Value Hedges

During the first six months of 2025, we settled €420 million notional amount of fair value hedges.

Analysis of Selected Balance Sheet Accounts

Long-lived Assets

In the six months ended June 28, 2025, goodwill increased by approximately $52 million to $2.03 billion, reflecting the impact of foreign currency translation.

In the six months ended June 28, 2025, other intangibles resulting from business acquisitions, net, decreased by approximately $39 million to $716.4 million, primarily reflecting current year amortization expense, partially offset by the impact of foreign currency translation.

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Avery Dennison Corporation

Refer to Note 2, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” to the unaudited Condensed Consolidated Financial Statements for more information.

Shareholders’ Equity Accounts

As of June 28, 2025, the balance of our shareholders’ equity was $2.20 billion. Refer to Note 8, “Supplemental Equity and Comprehensive Income Information,” to the unaudited Condensed Consolidated Financial Statements for more information.

Impact of Foreign Currency Translation

			Six Months Ended
(In millions)			June 28, 2025
Change in net sales			$	(45)

International operations generated approximately 69% of our net sales during the six months ended June 28, 2025. Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.

The unfavorable impact of foreign currency translation on net sales in the first six months of 2025 compared to the same period last year was primarily related to sales in Brazil and Mexico.

Effect of Foreign Currency Transactions

The impact on net income from transactions denominated in foreign currencies is largely mitigated because the costs of our products are generally denominated in the same currencies in which they are sold. In addition, to reduce our income and cash flow exposure to transactions in foreign currencies, we enter into foreign exchange forward, option and swap contracts where available and appropriate. Refer to Note 5, “Financial Instruments,” to the unaudited Condensed Consolidated Financial Statements for more information.

Analysis of Selected Financial Ratios

We utilize the financial ratios discussed below to assess our financial condition and operating performance. We believe this information assists our investors in understanding the factors impacting our cash flow other than net income and capital expenditures.

Operational Working Capital Ratio

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital (deficit) below. The working capital deficit (current assets minus current liabilities) as of the second quarter of 2024 was primarily due to our €500 million of senior notes due in the first quarter of 2025 and $300 million of senior notes due in the third quarter of 2024. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. As shown below, operational working capital, as a percentage of annualized current-quarter net sales, in the second quarter of 2025 increased compared to the second quarter of 2024.

(In millions, except percentages)			June 28, 2025						June 29, 2024
(A) Working capital (deficit)			$	121.7					$	(332.4)
Reconciling items:
Cash and cash equivalents			(215.9)						(208.8)
Other current assets			(314.5)						(250.5)
Short-term borrowings and current portion of long-term debt and finance leases			922.0						1,172.3
Accrued payroll and employee benefits and other current liabilities			832.6						814.5
(B) Operational working capital			$	1,345.9					$	1,195.1
(C) Second-quarter net sales, annualized			$	8,882.0					$	8,941.2
Operational working capital, as a percentage of annualized current-quarter net sales: (B) ÷ (C)			15.2		%				13.4		%

Accounts Receivable Ratio

The average number of days sales outstanding was 67 days in the second quarter of 2025 compared to 62 days in the second quarter of 2024, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter. The increase in average number of days sales outstanding was primarily due to the impact of customer destocking, timing of collections and impact of foreign currency translation.

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Inventory Ratio

Average inventory turnover was 6.2 in the second quarter of 2025 compared to 6.4 in the second quarter of 2024, calculated using the annualized second-quarter cost of products sold in 2025 and 2024, respectively, and divided by the inventory balance at quarter-end.

Accounts Payable Ratio

The average number of days payable outstanding was 75 days in the second quarter of 2025 compared to 76 days in the second quarter of 2024, calculated using the accounts payable balance at quarter-end divided by the respective annualized second-quarter cost of products sold. The decrease in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation.

Capital Resources

Capital resources used to fund our operational needs include cash flows from operations, cash and cash equivalents and debt financing, including access to commercial paper borrowings supported by our $1.20 billion revolving credit facility (the “Revolver”).

The Revolver is used as a back-up facility for our commercial paper borrowings and can be used for other corporate purposes. No balance was outstanding under the Revolver as of June 28, 2025 or December 28, 2024.

As of June 28, 2025, we had cash and cash equivalents of $215.9 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of June 28, 2025, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific.

To meet our U.S. cash requirements, we have several cost-effective liquidity options available. These options include borrowing funds at reasonable rates, including borrowings from foreign subsidiaries, and repatriating foreign earnings and profits. However, if we were to repatriate foreign earnings and profits, a portion would be subject to cash payments of withholding taxes imposed by foreign tax authorities. Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits.

Capital from Debt

The carrying value of our total debt increased by approximately $398 million in the first six months of 2025 to $3.55 billion, primarily reflecting higher commercial paper borrowings and the revaluation of our euro-denominated debt, partially offset by the repayment of our €500 million of senior notes and our $25 million of medium-term notes at their maturity in the first and second quarters of 2025, respectively.

Credit ratings are a significant factor in our ability to raise short- and long-term financing. The credit ratings assigned to us also impact the interest rates we pay and our access to commercial paper, credit facilities and other borrowings. A downgrade of our short-term credit ratings could impact our ability to access commercial paper markets. If our access to commercial paper markets were to become limited, we believe that the Revolver and our other credit facilities would be available to meet our short-term funding requirements. When determining a credit rating, we believe that rating agencies primarily consider our competitive position, business outlook, consistency of cash flows, debt level and liquidity, geographic dispersion and management team. We remain committed to maintaining an investment grade rating.

Off-Balance Sheet Arrangements, Contractual Obligations, and Other Matters

Refer to Note 10, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements for this information. Except as indicated therein, we have no material off-balance sheet arrangements as described in Item 303(b) of Regulation S-K.