Avery Dennison 10-Q 2026-03-31

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026.

OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________ to ________________________

Commission file number 1-7685

AVERY DENNISON CORPORATION

(Exact name of registrant as specified in its charter)

Delaware						95-1492269
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
8080 Norton Parkway Mentor, Ohio						44060
(Address of Principal Executive Offices)						(Zip Code)

Registrant’s telephone number, including area code: (440) 534-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common stock, $1 par value						AVY						New York Stock Exchange
3.750% Senior Notes due 2034						AVY34						Nasdaq Stock Market
4.000% Senior Notes due 2035						AVY35						Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

x Large accelerated filer						o Accelerated filer						o Non-accelerated filer						o Smaller reporting company						o Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Number of shares of $1 par value common stock outstanding as of May 2, 2026: 76,490,385

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AVERY DENNISON CORPORATION

FISCAL FIRST QUARTER 2026 QUARTERLY REPORT ON FORM 10-Q

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						Page
SAFE HARBOR STATEMENT						1
PART I. FINANCIAL INFORMATION (UNAUDITED)
Item 1.			Financial Statements:
			Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025			2
			Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2026 and March 29, 2025			3
			Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2026 and March 29, 2025			4
			Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and March 29, 2025			5
			Notes to Unaudited Condensed Consolidated Financial Statements			6
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
			Non-GAAP Financial Measures			17
			Overview and Outlook			18
			Analysis of Results of Operations for the First Quarter			19
			Results of Operations by Reportable Segment for the First Quarter			21
			Financial Condition			22
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			25
Item 4.			Controls and Procedures			26
PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			27
Item 1A.			Risk Factors			27
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3.			Defaults Upon Senior Securities			28
Item 4.			Mine Safety Disclosures			28
Item 5.			Other Information			28
Item 6.			Exhibits			29
Signatures						30
Exhibits

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Safe Harbor Statement

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact, contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. Words such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “guidance,” “intend,” “may,” “might,” “objective,” “plan,” “potential,” “project,” “seek,” “shall,” “should,” “target,” “will,” “would,” or variations thereof, and other expressions that refer to future events and trends, identify forward-looking statements. Our forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties, which could cause our actual results to differ materially from the expected results, performance or achievements expressed or implied by such forward-looking statements.

We believe that the most significant risk factors that could affect our financial performance in the near term include: (i) the impact on underlying demand for our products from global economic conditions, tariffs, geopolitical uncertainty, and changes in environmental standards, regulations, and preferences; (ii) competitors’ actions, including pricing, expansion in key markets, and product offerings; (iii) the cost and availability of raw materials; (iv) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through price increases, without a significant loss of volume; (v) foreign currency fluctuations; and (vi) the execution and integration of acquisitions.

Certain risks and uncertainties are discussed in more detail under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2026. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but not limited to, risks and uncertainties related to the following:

• International Operations – worldwide economic, social, geopolitical and market conditions; changes in geopolitical conditions, including those related to trade relations and tariffs, China, recent conflicts involving the U.S., Israel and Iran and related hostilities in the Middle East, the Russia-Ukraine war, the Israel-Hamas war; fluctuations in foreign currency exchange rates; and other risks associated with international operations, including in emerging markets

• Our Business – fluctuations in demand affecting sales to customers; fluctuations in the cost and availability of raw materials and energy; changes in our markets due to competitive conditions, technological developments, laws and regulations, and customer preferences; environmental regulations and sustainability trends; the impact of competitive products and pricing; the execution and integration of acquisitions; selling prices; customer and supplier concentrations or consolidations; the financial condition of distributors; outsourced manufacturers; product and service quality claims; restructuring and other cost reduction actions; our ability to generate sustained productivity improvement and our ability to achieve and sustain targeted cost reductions; the timely development and market acceptance of new products, including sustainable or sustainably-sourced products; our investment in development activities and new production facilities; the collection of receivables from customers; and our sustainability and governance practices

• Information Technology – disruptions in information technology systems; cybersecurity events or other security breaches; and successful installation of new or upgraded information technology systems

• Income Taxes – fluctuations in tax rates; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; outcome of tax audits; and the realization of deferred tax assets

• Human Capital – recruitment and retention of employees and collective labor arrangements

• Our Indebtedness – our ability to obtain adequate financing arrangements and maintain access to capital; credit rating risks; fluctuations in interest rates; and compliance with our debt covenants

• Ownership of Our Stock – potential significant variability of our stock price and amounts of future dividends and share repurchases

• Legal and Regulatory Matters – protection and infringement of our intellectual property; the impact of legal and regulatory proceedings, including with respect to anti-corruption, environmental, health and safety, and trade compliance

• Other Financial Matters – fluctuations in pension costs and goodwill impairment

Our forward-looking statements are made only as of the filing date of this Form 10-Q. We assume no duty to update these forward-looking statements to reflect new, changed or unanticipated events or circumstances, other than as may be required by law.

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Avery Dennison Corporation

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions, except per share amount)			March 31, 2026						December 31, 2025
Assets
Current assets:
Cash and cash equivalents			$	255.1					$	202.8
Trade accounts receivable, less allowances of $27.1 and $28.1 at March 31, 2026 and December 31, 2025, respectively			1,647.1						1,503.9
Inventories			989.4						975.8
Other current assets			327.9						307.8
Total current assets			3,219.5						2,990.3
Property, plant and equipment, net			1,573.5						1,607.7
Goodwill			2,263.0						2,272.5
Other intangibles resulting from business acquisitions, net			801.2						827.5
Deferred tax assets			142.4						125.3
Other assets			979.0						978.4
Total assets			$	8,978.6					$	8,801.7
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings and current portion of long-term debt and finance leases			$	605.0					$	522.9
Accounts payable			1,329.5						1,261.7
Accrued payroll and employee benefits			200.2						232.7
Other current liabilities			665.0						636.3
Total current liabilities			2,799.7						2,653.6
Long-term debt and finance leases			3,185.1						3,210.0
Long-term retirement benefits and other liabilities			411.4						432.0
Deferred tax liabilities and income taxes payable			281.9						264.0
Commitments and contingencies (see Note 10)
Shareholders’ equity:
Common stock, $1 par value per share, authorized – 400,000,000 shares at March 31, 2026 and December 31, 2025; issued – 124,126,624 shares at March 31, 2026 and December 31, 2025; outstanding – 76,661,900 and 76,877,487 shares at March 31, 2026 and December 31, 2025, respectively			124.1						124.1
Capital in excess of par value			817.6						834.3
Retained earnings			5,709.4						5,597.5
Treasury stock at cost, 47,464,724 shares and 47,249,137 shares at March 31, 2026 and December 31, 2025, respectively			(3,957.6)						(3,904.1)
Accumulated other comprehensive loss			(393.0)						(409.7)
Total shareholders’ equity			2,300.5						2,242.1
Total liabilities and shareholders’ equity			$	8,978.6					$	8,801.7

See Notes to Unaudited Condensed Consolidated Financial Statements

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Avery Dennison Corporation

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

									Three Months Ended
(In millions, except per share amounts)															March 31, 2026						March 29, 2025
Net sales															$	2,298.5					$	2,148.3
Cost of products sold															1,633.7						1,526.8
Gross profit															664.8						621.5
Marketing, general and administrative expense															375.1						347.0
Other expense (income), net															17.8						19.9
Interest expense															35.6						30.9
Other non-operating expense (income), net															(4.1)						(3.3)
Income before taxes															240.4						227.0
Provision for income taxes															72.3						60.7
Net income															$	168.1					$	166.3
Per share amounts:
Net income per common share															$	2.19					$	2.10
Net income per common share, assuming dilution															$	2.18					$	2.09
Weighted average number of shares outstanding:
Common shares															76.8						79.2
Common shares, assuming dilution															77.0						79.4

See Notes to Unaudited Condensed Consolidated Financial Statements

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Avery Dennison Corporation

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

									Three Months Ended
(In millions)															March 31, 2026						March 29, 2025
Net income															$	168.1					$	166.3
Other comprehensive income (loss), net of tax:
Foreign currency translation															11.3						2.9
Pension and other postretirement benefits															—						.6
Cash flow hedges															3.1						4.9
Fair value hedges															2.3						(1.5)
Other comprehensive income (loss), net of tax															16.7						6.9
Total comprehensive income, net of tax															$	184.8					$	173.2

See Notes to Unaudited Condensed Consolidated Financial Statements

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Avery Dennison Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited**)**

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Operating Activities

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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 described 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, 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 the estimated impact of extra days in our fiscal year and the calendar shift resulting from extra days 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 began on December 29, 2024 and ended on December 31, 2025; fiscal years 2026 and beyond are 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 (used in) operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs, proceeds from company-owned life insurance policies and net cash used for Argentine Blue Chip Swap securities. 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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Avery Dennison Corporation

OVERVIEW AND OUTLOOK

Fiscal Year

The three months ended March 31, 2026 and March 29, 2025 consisted of 90 and 91 days, respectively.

Our 2026 fiscal year is coincident with the calendar year, beginning on January 1 and ending on December 31; our 2025 fiscal year began on December 29, 2024 and ended on December 31, 2025.

Net Sales

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

									Three Months Ended March 31, 2026
Net sales change									7		%
Foreign currency translation									(5)
Sales change ex. currency(1)									2
Acquisitions									(1)
Organic sales change(1)									1		%

(1) Totals may not sum due to rounding.

In the three months ended March 31, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume partially offset by the impact of raw material deflation-related price reductions and unfavorable mix.

Net Income

Net income increased from approximately $166 million in the first three months of 2025 to approximately $168 million in the first three months of 2026. The primary factors affecting this increase were:

• Higher volume

• Favorable foreign currency translation

• Benefits from productivity initiatives, including savings from restructuring actions, net of transition costs

• Prior-year losses on venture and other investments

• Net benefit of pricing and raw material costs, including material re-engineering

These items were partially offset by the following factors:

• Unfavorable mix

• Higher employee-related costs

• Higher provision for income taxes

• Higher restructuring charges, net of reversals

• Growth investments

Cost Reduction Actions

2026 Actions

We recorded $15.9 million in restructuring charges during the three months ended March 31, 2026. These charges consisted of severance and related costs for the reduction of approximately 370 positions, as well as asset impairment charges, at various locations across our company as a result of actions taken to optimize our operational footprint and workforce headcount.

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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Avery Dennison Corporation

Cash Flow

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Net cash provided by (used in) operating activities			$	136.5					$	(16.3)
Purchases of property, plant and equipment			(28.3)						(36.0)
Purchases of software and other deferred charges			(7.7)						(7.6)
Proceeds from sales of property, plant and equipment			.7						—
Proceeds from insurance and sales (purchases) of investments, net			3.2						6.8
Adjusted free cash flow			$	104.4					$	(53.1)

During the first three months of 2026, net cash provided by (used in) operating activities increased compared to the same period last year primarily due to lower incentive compensation payments and changes in operational working capital, partially offset by higher tax payments, net of refunds. During the first three months of 2026, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities.

Outlook

Certain factors that we anticipate will contribute to our 2026 results are described below.

• Based on recent rates, favorable impact from foreign currency translation to our full-year net sales and operating income

• Unfavorable impact from higher interest expense to our operating income

• Our full-year effective tax rate to be in the high-twenty percent range

• Incremental savings from restructuring actions, net of transition costs

• Unfavorable impact to our operating income from the normalization of the majority of our prior-year temporary cost savings, which was largely related to lower incentive compensation

ANALYSIS OF RESULTS OF OPERATIONS FOR THE FIRST QUARTER

Income Before Taxes

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Net sales			$	2,298.5					$	2,148.3
Cost of products sold			1,633.7						1,526.8
Gross profit			664.8						621.5
Marketing, general and administrative expense			375.1						347.0
Other expense (income), net			17.8						19.9
Interest expense			35.6						30.9
Other non-operating expense (income), net			(4.1)						(3.3)
Income before taxes			$	240.4					$	227.0

Gross Profit

Gross profit for the first quarter of 2026 increased from the same period last year due to higher volume, favorable foreign currency translation and the net benefit of pricing and raw material costs, including material re-engineering and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs.

Marketing, General and Administrative Expense

Marketing, general and administrative expense increased in the first quarter of 2026 compared to the same period last year primarily due to unfavorable foreign currency translation, higher employee-related costs and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs.

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Avery Dennison Corporation

Other Expense (Income), Net

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Other expense (income), net, by type
Restructuring charges, net of reversals:
Severance and related costs, net of reversals			$	14.5					$	4.7
Asset impairment and lease cancellation charges			1.3						.2
(Gain) loss on venture and other investments			1.3						14.3
Loss from Argentine peso remeasurement			.5						.7
Other items, net			.2						—
Other expense (income), net			$	17.8					$	19.9

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 first quarter of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025.

Net Income and Earnings per Share

			Three Months Ended
(In millions, except per share amounts and percentages)			March 31, 2026						March 29, 2025
Income before taxes			$	240.4					$	227.0
Provision for income taxes			72.3						60.7
Net income			$	168.1					$	166.3
Per share amounts:
Net income per common share			$	2.19					$	2.10
Net income per common share, assuming dilution			2.18						2.09
Effective tax rate			30.1		%				26.7		%

Provision for Income Taxes

Our effective tax rate for the three months ended March 31, 2026 increased compared to the same period last year primarily due to a higher net discrete charge from increases in tax reserves related to a court ruling impacting tax group requirements in a foreign jurisdiction. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

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Avery Dennison Corporation

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE FIRST QUARTER

Our chief operating decision maker uses segment adjusted operating income to evaluate segment performance and allocate resources. Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense; and other non-operating expense (income), net.

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)			March 31, 2026						March 29, 2025
Net sales including intersegment sales			$	1,683.0					$	1,524.0
Less intersegment sales			(33.7)						(43.9)
Net sales			$	1,649.3					$	1,480.1
Segment adjusted operating income(1)			254.2						230.3

(1) Segment adjusted operating income excluded other expense (income), net, of $7.7 million and $4.4 million in the first quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments, outcomes of legal matters and settlements, transaction and related costs and (gain) loss on sales of assets.

Net Sales

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

			Three Months Ended
			March 31, 2026
Net sales change			11		%
Reclassification of sales between segments			(1)
Foreign currency translation			(7)
Sales change ex. currency(1)			4
Acquisitions			(2)
Organic sales change(1)			2		%

(1) Totals may not sum due to rounding.

In the first quarter of 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by the impact of raw material deflation-related price reductions and unfavorable mix. On an organic basis, net sales increased by a low single digit rate in North America and by a high single digit rate in Asia Pacific, decreased by a mid-single digit rate in Latin America and were comparable in Europe, the Middle East and North Africa.

Segment Adjusted Operating Income

Segment adjusted operating income increased in the first quarter of 2026 compared to the same period last year primarily due to higher volume, favorable foreign currency translation and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs.

Solutions Group

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Net sales including intersegment sales			$	663.7					$	681.4
Less intersegment sales			(14.5)						(13.2)
Net sales			$	649.2					$	668.2
Segment adjusted operating income(1)			58.5						68.2

(1) Segment adjusted operating income excluded other expense (income), net, of $9.9 million and $10.1 million in the first quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions and (gain) loss on venture and other investments.

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Avery Dennison Corporation

Net Sales

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

			Three Months Ended
			March 31, 2026
Net sales change			(3)		%
Reclassification of sales between segments			3
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 first quarter of 2026, net sales decreased on an organic basis compared to the same period in the prior year due to a mid-single digit rate decrease in the base business, partially offset by a low single digit rate increase in high-value categories. Company-wide, on an organic basis, net sales of intelligent labels decreased by a low single digit rate compared to the same period in the prior year.

Segment Adjusted Operating Income

Segment adjusted operating income decreased in the first quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable volume and growth investments, partially offset by the net benefit of pricing and raw material costs and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.

FINANCIAL CONDITION

Liquidity

Operating Activities

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Net income			$	168.1					$	166.3
Depreciation			53.3						48.8
Amortization			33.5						29.1
Provision for credit losses and sales returns			11.6						11.9
Stock-based compensation			5.8						7.9
Deferred taxes and other non-cash taxes			(21.1)						(14.8)
Other non-cash expense and loss (income and gain), net			14.2						20.5
Changes in assets and liabilities and other adjustments			(128.9)						(286.0)
Net cash provided by (used in) operating activities			$	136.5					$	(16.3)

During the first three months of 2026, net cash provided by (used in) operating activities increased compared to the same period last year primarily due to lower incentive compensation payments and changes in operational working capital, partially offset by higher tax payments, net of refunds.

Investing Activities

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Purchases of property, plant and equipment			$	(28.3)					$	(36.0)
Purchases of software and other deferred charges			(7.7)						(7.6)
Proceeds from sales of property, plant and equipment			.7						—
Proceeds from insurance and sales (purchases) of investments, net			3.2						6.8
Proceeds from settlement of net investment hedges			—						6.2
Payments for acquisitions, net of cash acquired, and venture investments			(.5)						(2.6)
Net cash used in investing activities			$	(32.6)					$	(33.2)

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Purchases of Property, Plant and Equipment

During the first three months of 2026, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe, including Belgium and Luxembourg, and certain countries in Asia Pacific, including China and Malaysia; in our Solutions Group reportable segment, we primarily invested in equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, the U.S. and certain countries in Latin America, primarily Mexico.

During the first three months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S. and certain countries in Europe, primarily Belgium; 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 the U.S.

Purchases of Software and Other Deferred Charges

During the first three months of 2026 and 2025, we primarily invested in information technology upgrades in the U.S.

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

During the first three months of 2026, we received lower proceeds from sales of investments.

Proceeds from Settlement of Net Investment Hedges

During the first three 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 three months of 2026, we paid $0.5 million for purchase price adjustments related to our acquisition of W.F. Taylor Holdings, Inc. and for a venture investment. During the first three months of 2025, we paid $2.6 million for venture investments.

Financing Activities

			Three Months Ended
(In millions)			March 31, 2026						March 29, 2025
Net increase (decrease) in borrowings with maturities of three months or less			$	93.2					$	796.5
Repayments of long-term debt and finance leases			(1.7)						(525.0)
Dividends paid			(72.3)						(69.4)
Share repurchases			(60.6)						(261.6)
Net (tax withholding) proceeds related to stock-based compensation			(9.2)						(11.9)
Payments for settlement of fair value hedges			—						(13.5)
Net cash used in financing activities			$	(50.6)					$	(84.9)

Borrowings and Repayment of Debt

During the first three months of 2026 and 2025, our commercial paper borrowings were used to fund dividend payments, share repurchases, capital expenditures and other general corporate purposes. During the first three months of 2025, commercial paper borrowings were also used to fund the repayment of long-term debt.

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.

Dividends Paid

We paid dividends of $0.94 per share in the first three months of 2026 compared to $0.88 per share in the same period last year. In April 2026, subsequent to the end of the first quarter of 2026, we increased our quarterly dividend rate to $1.00 per share, representing an increase of approximately 6% from our previous quarterly dividend rate of $0.94 per share.

Share Repurchases

During the first three months of 2026 and 2025, we repurchased approximately 0.3 million and 1.4 million shares of our common stock, respectively.

Payments for Settlement of Fair Value Hedges

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

Analysis of Selected Balance Sheet Accounts

Long-lived Assets

In the three months ended March 31, 2026, goodwill decreased by approximately $10 million to $2.26 billion, primarily reflecting the impact of foreign currency translation.

In the three months ended March 31, 2026, other intangibles resulting from business acquisitions, net, decreased by approximately $26 million to $801.2 million, primarily reflecting current year amortization expense.

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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 March 31, 2026, the balance of our shareholders’ equity was $2.30 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

			Three Months Ended
(In millions)			March 31, 2026
Change in net sales			$	99

International operations generated approximately 69% of our net sales during the three months ended March 31, 2026. 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 favorable impact of foreign currency translation on net sales in the first three months of 2026 compared to the same period last year was primarily related to euro-denominated sales and sales in China.

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 below. 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 first quarter of 2026 decreased compared to the first quarter of 2025.

(In millions, except percentages)			March 31, 2026						March 29, 2025
(A) Working capital			$	419.8					$	77.6
Reconciling items:
Cash and cash equivalents			(255.1)						(195.9)
Other current assets			(327.9)						(299.0)
Short-term borrowings and current portion of long-term debt and finance leases			605.0						877.5
Accrued payroll and employee benefits and other current liabilities			865.2						802.7
(B) Operational working capital			$	1,307.0					$	1,262.9
(C) First-quarter net sales, annualized			$	9,321.7					$	8,593.2
Operational working capital, as a percentage of annualized current-quarter net sales: (B) ÷ (C)			14.0		%				14.7		%

Accounts Receivable Ratio

The average number of days sales outstanding was 65 days in the first quarter of 2026 compared to 64 days in the first quarter of 2025, 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 primarily reflected the timing of collections, partially offset by the impact of foreign currency translation.

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Inventory Ratio

Average inventory turnover was 6.7 in the first quarter of 2026 compared to 6.0 in the first quarter of 2025, calculated using the annualized first-quarter cost of products sold in 2026 and 2025, respectively, and divided by the inventory balance at quarter-end. The increase in average inventory turnover primarily reflected lower inventory balances.

Accounts Payable Ratio

The average number of days payable outstanding was 73 days in the first quarter of 2026 compared to 76 days in the first quarter of 2025, calculated using the accounts payable balance at quarter-end divided by the respective annualized first-quarter cost of products sold. The decrease in average number of days payable outstanding primarily reflected the impact of foreign currency translation, the timing of vendor payments and the impact of acquisitions.

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 March 31, 2026 or December 31, 2025.

As of March 31, 2026, we had cash and cash equivalents of $255.1 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of March 31, 2026, 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 $57 million in the first three months of 2026 to $3.79 billion, primarily reflecting higher commercial paper borrowings, partially offset by the revaluation of our euro-denominated debt.

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.

There have been no material changes to the information provided in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that have not been disclosed in our periodic filings with the SEC.

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Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our disclosure controls system is based upon a global chain of financial and general business reporting lines that converge in our headquarters in Mentor, Ohio. As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of such time to provide reasonable assurance that information was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to “Legal Proceedings” in Note 10, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements in Part 1, Item 1 for this information.

There have been no material changes to the risk factors included in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that have not been disclosed in our periodic filings with the SEC, except as set forth below.

The demand for our products is impacted by the effects of, and changes in, worldwide economic, geopolitical, social and labor conditions, which have had in the past and could in the future have a material adverse effect on our business.

We have operations in more than 50 countries and our domestic and international operations are strongly influenced by matters beyond our control, including changes in economic, geopolitical, social and labor conditions, tax laws, and U.S. and international trade regulations (including tariffs), as well as the impact these changes have on demand for our products. In 2025, approximately 69% of our net sales originated outside the U.S.

Macroeconomic developments such as impacts from slower growth in the geographic regions in which we operate; inflation resulting from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades.

Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all imports, with higher rates on certain goods. Additionally, it applied significant tariffs on goods from Canada, Mexico, China and the European Union, each of which announced reciprocal tariffs. The amount of these tariffs or the classes of goods on which they are applied continues to evolve and could significantly change. The U.S. government continues to negotiate with countries regarding the tariffs. In July 2025, the U.S. and the European Union agreed to a framework for a trade deal that included a baseline tariff rate of 15% on most goods imported from the European Union into the U.S. While the direct impacts on our operations after our mitigating actions have not been significant, our business could be materially adversely impacted by changes in U.S. and non-U.S. trade policies, including potential modifications to existing trade agreements and additional tariffs or other restrictions on free trade, impacting our raw materials or finished products. The indirect impact on demand for our products and solutions as a result of these events, which have resulted in softer consumer volumes, continues to be uncertain and elevated. We estimate that the indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in our overall apparel categories over the second, third and fourth quarters of 2025. On February 20, 2026, the U.S. Supreme Court issued a decision holding that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. While this may provide immediate relief from these specific duties, there will likely be a period of trade policy instability. Further developments in international trade relations, including increased deglobalization, could have a material adverse effect on our business.

In addition, business and operational disruptions or delays caused by geopolitical, social or economic instability and unrest – such as recent civil, political and economic disturbances in Syria, Yemen, Iran, Turkey, North Korea, and Bangladesh and the related impact on global stability, recent conflicts involving the U.S., Israel and Iran and related hostilities in the Middle East, the Russia-Ukraine war, the Israel-Hamas war, the U.S.'s engagement in Venezuela, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could have a material adverse effect on our business. Since the Russia-Ukraine war began in 2022, we have maintained our position of not shipping products to the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European Union and other jurisdictions, is unknown and could have a material adverse effect on our business. In addition, our sales in Israel have not recovered since the beginning of the Israel-Hamas war in late 2023, with sales representing less than 1% of our total net sales in 2025. The recent conflicts involving the U.S., Israel and Iran have affected our operations in the Middle East, a region that represented approximately 2% of our net sales in 2025. The continued impact of these conflicts and any related hostilities in the Middle East region or elsewhere is unknown and could have a material adverse effect on our business.

We are not able to predict the duration and severity of adverse economic, geopolitical, social, or labor conditions in the U.S. or other countries.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Not Applicable

(b)Not Applicable

(c)Repurchases of Equity Securities by Issuer

Repurchases by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Securities Exchange Act of 1934, as amended) of registered equity securities in the first quarter of 2026 are shown in the table below. Repurchased shares may be reissued under our long-term incentive plan or used for other corporate purposes.

Period			Total number of shares purchased**(1)**						Average price paid per share**(2)**						Total number of shares purchased as part of publicly announced plans**(1)(3)**						Approximate dollar value of shares that may yet be purchased under the plans**(3)(4)**
January			14.6						$	182.34					14.6						$	523.6
February			44.8						193.06						44.8						515.0
March			286.2						172.30						286.2						465.7
Total			345.6						$	175.42					345.6						$	465.7

(1) Shares in thousands.

(2) Average price paid per share includes transaction costs to acquire the shares and excludes the non-deductible 1% excise tax on the net value of repurchases imposed under the Inflation Reduction Act of 2022.

(3) In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750.0 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.

(4) Dollars in millions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable

There were no Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K) adopted or terminated by any of our directors or executive officers during the first quarter of 2026.

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Exhibit 3.1			Amended and Restated Certificate of Incorporation, as filed on April 28, 2011 with the Office of Delaware Secretary of State (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on April 29, 2011)
Exhibit 3.2			Certificate of Amendment to Amended and Restated Certificate of Incorporation of Avery Dennison Corporation, effective as of April 25, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 26, 2024)
Exhibit 3.3			Amended and Restated Bylaws of Avery Dennison Corporation, effective as of February 26, 2026 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 26, 2026)
Exhibit 10.1†*			Second Amendment to the 2017 Incentive Award Plan
Exhibit 10.2†*			Promotion letter to Divina Santiago, dated March 9, 2026
Exhibit 31.1*			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2*			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1**			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2**			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS***			Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH***			Inline XBRL Extension Schema Document
Exhibit 101.CAL***			Inline XBRL Extension Calculation Linkbase Document
Exhibit 101.LAB***			Inline XBRL Extension Label Linkbase Document
Exhibit 101.PRE***			Inline XBRL Extension Presentation Linkbase Document
Exhibit 101.DEF***			Inline XBRL Extension Definition Linkbase Document
Exhibit 104***			Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included as part of this Exhibit 101 Inline XBRL document set

---

†			Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-Q.
*			Filed herewith.
**			Furnished herewith.
***			Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			AVERY DENNISON CORPORATION
			(Registrant)
			/s/ Gregory S. Lovins
			Gregory S. Lovins
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)
			/s/ Divina F. Santiago
			Divina F. Santiago
			Vice President, Controller and Chief Accounting Officer
			(Principal Accounting Officer)
			May 4, 2026