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 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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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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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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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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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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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.