Avery Dennison Corporation

This call is being recorded and will be available for replay after 4 p.m. Eastern Time May 1st. To access the replay, please dial 1-800-770-2030 or 1-609-800-9909 for international callers. The conference ID number is 3299441. I'd now like to turn the call over to John Ebley, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, sir.

Thank you, Mandeep. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined qualified and reconciled from GAAP on Schedules A4 to A8 of the financial statements accompanying today's earnings release. We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are subject to the safe harbor statement included in today's earnings release. On the call today are Dion Stander, President and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Dion.

Thanks, John, and hello, everyone. We're off to a strong start to the year. In the first quarter, we again delivered sequential earnings growth, with earnings up significantly compared to prior year and slightly above our expectations. We grew volume in both segments, significantly expanded margins, generated strong free cash flow, and delivered significant growth in intelligent labels. Materials Group once again demonstrated its resilience, delivering significant volume growth and margin expansion, both above expectations, as downstream inventory destocking subsided and volumes continued to normalize. Label volume in Europe was particularly strong, as our teams managed through the now concluded Finnish port strike which resulted in slight customer order pull forward in the quarter. Volume in North America was up compared to prior year and improved significantly on a sequential basis, as inventory destocking moderated in the quarter as expected. Overall, emerging market volume was strong, with particular strength in India and the ASEAN region, and China was up mid-single digits in the quarter. Solutions Group delivered strong top-line growth, driven by high-value categories and expanded margins, despite apparel imports continuing to be below demand. While the apparel import trend has started to show slight signs of improvement in North America, retailers and brands remain cautious in their near-term sourcing plans, and we continue to expect apparel industry volumes to normalize mid-year. Enterprise-wide intelligent labels grew mid to high teens in the quarter, with particular strength in non-apparel categories, while apparel began to recover. In the quarter, logistics volumes, while strong, were below expectations due to lower domestic parcel volume. Overall, the ability of our solutions to help address industry challenges such as labor efficiency, waste, transparency, and consumer connection in very large volume categories like logistics and food is increasingly resonating with customers. Key pilots and rollout are delivering significant value for our customers and compelling proof points for broader segment adoption. We continue to invest to capture the significant opportunity ahead as we grow the size of the overall industry, further advancing our leadership position at the intersection of the physical and digital. As we continue to see adoption in new categories and a rebound in apparel, We're targeting to deliver roughly 20% growth in our intelligent labels platform in 2024. Stepping back, the underlying fundamentals of our business are strong. We're exposed to diverse and growing markets with clear catalysts for long-term growth. We are the industry leaders in our primary businesses with clear competitive advantages in scale and innovation. We have a clear set of strategies that have been key to our success over the long term and across a wide range of business cycles and We are uniquely positioned to connect the physical and digital to help address some of the most complex problems in the industries we serve. We remain confident that our strategies, along with our team's ability to execute in dynamic environments, will enable us to continue to generate superior value creation through a balance of GDP plus growth and top quartile returns over the long term. In summary, we delivered a strong quarter in a still uncertain environment. and reaffirm our full year guidance to deliver strong earnings growth in 2024. I want to thank our entire team for their continued resilience, focus on excellence, and commitment to addressing the unique challenges at hand. And with that, I'll hand the call over to Greg.